RTL chief executive not letting the downturn get in the way of his plans

Didier Bellens believes there is plenty of scope to expand in the broadcasting world, writes Tim Burt

Broadcasting executives at most of Europe's commercial television companies would rather forget the past year, as "a perfect storm" of troubles has gripped the sector.

But Mr Didier Bellens, RTL's chief executive, remains remarkably unruffled by the catalogue of sector woes, including the worst advertising downturn in 40 years, mounting competition from pay-TV rivals, and problems at Kirch Gruppe and Vivendi Universal.

Belgian-born Mr Bellens heads the only true pan-European broadcaster, part of Germany's Bertelsmann media group, and is putting in place a strategy to weather the advertising drought and bring his loose confederation of European channels closer together.

"We have to allow development of large European groups because it's the only way to develop something large enough to challenge the Americans," says Mr Bellens.

He is not proposing, however, the sort of empire-building that brought down Mr Jean-Marie Messier, former head of Vivendi Universal.

Nor is he advocating the sort of centralised media group that ultimately cost Mr Thomas Middelhoff his job as Bertelsmann's chief executive.

Mr Bellens wants to assemble an inter-linked network of European television channels, where RTL exercises shareholder control but not outright ownership. The strategy has already enabled the company to build RTL into the dominant commercial channel in Germany and foster the fast-growing Channel 5 in Britain, along with M6 in France and Antena 3 in Spain.

The excursion into eastern Europe RTL Klub has seen it emerge as the most profitable broadcaster in the region, with margins of 10 per cent. M6 has margins of 25 per cent and a leading position in music sales and merchandising, adds Mr Bellens.

RTL now wants its executives to work more closely to share information and strategy.

Mr Bellens has set up two new management committees, one comprising RTL senior management and the chief executives of each station to explore expansion opportunities, and a second "energy committee" to share information on advertising, purchasing and other areas among the channels.

"There is a new executive committee from different channels to share best practices, synergies, diversification ideas and volume deals with content providers in the US," he says.

Mr Bellens says the co-operation will help expand subsidiaries such as Channel 5.

By introducing some of the strategies employed elsewhere in RTL, Mr Bellens says Channel 5 could increase its share of both audience viewing and the advertising market above 10 per cent.

"In my view, it's a strategic issue for advertisers to turn to Channel 5 as an alternative to ITV," he says.

"As we build audience we could become at least the number two commercial broadcaster in the UK."

Channel 5 is currently ranked fifth.

Britain, says Mr Bellens, is symptomatic of what is happening across Europe's commercial broadcasting sector.

Although it is distorted by the presence of the state-funded BBC, he says the market is fragmenting among commercial players as it has in France, Spain and, to a lesser extent, Germany.

However, following the departure of Mr Middelhoff, RTL has abandoned any intention of bidding for ITV's controlling companies, Granada and Carlton. Instead, it intends to increase investment in Channel 5 and co-ordinate its growth with other RTL broadcasters.

When Bertelsmann reports first-half figures next month, RTL is expected to contribute €2.04 billion of sales and €205 million of operating profit. Analysts expect the group as a whole to report sales of €9.22 billion and underlying earnings of €472 million.

Given the management shake-up at Bertelsmann, Mr Bellens says Mr Gunter Thielen, the new group chairman and chief executive, is relying on organic growth rather than acquisitions.

RTL also wants to increase its market share, particularly in Germany, where advertising rates and profits are lower than in other regions. And it wants to increase its radio and content production.

By doing all this, Mr Bellens says RTL could emerge as the group that helps persuade the Americans to stay away. - (Financial Times Service)