27/04/2020, Germany, Super RTL
In an interview with Benet, Claude Schmit, Managing Director of Super RTL, talks about the 25th anniversary of the channel, the new “Toggo Radio” and the coronavirus crisis.
Exactly 25 years ago tomorrow, on April 28, 1995, the German children’s channel Super RTL, a joint venture between Mediengruppe RTL Deutschland and Disney, was launched. The purely linear TV channel soon grew to become the children’s market leader in German television, a position it has held for 22 years now. And the TV channel evolved into a “content hub,” which not only delivers its content to children via television and various online offerings, but now also operates one of the most successful merchandising agencies in Germany. To celebrate its anniversary, Super RTL is giving itself a nice present: The channel is launching Germany’s first nationwide commercial children’s and family radio station. Claude Schmit was one of Super RTL’s very first employees, and has served as its managing director for 20 years, making him Germany’s longest-serving channel boss.
Mr. Schmit, Super RTL is celebrating its 25th birthday today, and you have been the channel’s Managing Director for most of that time. Where does Super RTL stand today?
There are two phases to be considered here: pre-coronavirus and post-coronavirus. Until March, Super RTL was in an excellent position, “super” as it were. 2019 was the year with the highest ad sales and the highest merchandising revenues in our history. Never in 25 years have we generated as much revenue as in 2019, and in terms of profit, too, it was the third-best year in our history. In 2020, this trend initially continued in the first two months. Then, from March onwards, the full impact of the coronavirus crisis became apparent. So as a first step, we worked with our marketer IP Deutschland and the Ad Alliance to estimate the decline in advertising business we can expect for the year as a whole. The result: We expect the coronavirus-related revenue decline to be around 20 percent. In a second step, we then reviewed whether we could offset this decline through cost savings. In this very constructive process, which was initially started without any stipulations from the management, the channel’s individual departments identified potential savings themselves. They came up with so much that we will hopefully be able to largely offset the revenue decline by our own efforts, through savings. So Effectively, if the forecast of a 20-percent decline materializes, we will be within our planning for this year. So we can say that the year will not be a good one, but it will not be a disaster either. For this reason, we have also made a very deliberate decision to forego short-time work for the time being.
And how do you think things will develop over the rest of this year?
At the moment, we are expecting a V-shaped development, in other words that an upswing will follow very soon after the crash. For us, this would mean that we would get off relatively lightly, since Super RTL actually makes almost half of its revenue in the last quarter of the year with the Christmas business. That’s why the current decline in absolute figures – in April it actually exceeded 30 percent – doesn’t hit us quite as hard. Our customers probably take a similar view of this. We’ve just signed a basic agreement on ad bookings for the full year with one of our major customers that is almost at the previous year’s level – and as I said, that was a record level. At the same time, incidentally, our reach has just increased enormously, by over 20 percent, which has also helped a bit.
Looking back, what do you see as the most important stages in the history of Super RTL?
The biggest highlight for me is that the channel exists at all. I was privileged to accompany Super RTL’s development from concept paper to proper company from the very beginning; you don’t often get a chance like that. There was a great start-up atmosphere at the time, with lots of experiments that fortunately worked out. At the end of the 1990s, we went through a critical stage, one that in retrospect determined out direction, when our shareholders RTL and Disney discussed the future of Super RTL and RTL 2, another channel in which both were owned a stake. Neither of them were making any money at that time, and the idea was born to simply merge the stations. Our counter-proposal was then to position Super RTL much more as a children’s and family channel and to develop RTL 2 towards a channel with a young-adult image. The shareholders finally agreed to this and gave us a year to get Super RTL into the black using this approach. For us, this served as an incentive not only to cut costs, but above all to tap new sources of revenue. At that time, the internet offered itself as a relatively new field of business, and we launched two online platforms, Toggolino Club and the Toggo Clever Club, as a subscription model – i.e. free of advertising, but with a monthly fee. That worked out very well, and we are still making money with that today. The second new mainstay was the establishment of our own merchandising business more than 15 years ago. However, this business was initially held back by the fact that Disney, the main supplier of our program content at the time, was involved in merchandising itself. When Disney withdrew its content from our programming with the launch of the German Disney Channel at the beginning of 2014, this freed us up not only in terms of designing our program lineup, but also with respect to merchandising. Subsequently, we were able to expand this business tremendously, and today handle such well-known brands as Paw Patrol, Peppa Pig, and Dragons.
And how will your strategic development continue from here?
The latest step was expanding Super RTL into a “content hub.” We have become a provider with the best content on a wide variety of platforms, so that children can watch what they want, whenever they want. To achieve this, we had to completely overhaul our structures as well as our management team. Fortunately, we were able to complete this transformation before the onset of the coronavirus crisis. Our next step is to set up a “one-stop shop” solution for our advertising customers. We want to be able to tell our customers: If you want to spend money on advertising to children, you’ve come to the right place. Whether TV, internet, YouTube, radio, or live events, we offer everything from a single source, and want to be the preferred advertising partner for all companies in this area.
How does it feel to be the longest-serving channel boss in Germany?
I must admit the title makes me a little proud! People in my position as head of a channel have a natural “expiration date,” so to speak. Every five years, my contract is up for renewal. It is renegotiated every time, and one does have to fight for it. For many years, this worked very well, partly because of our good results, of course. And interestingly enough, maybe was meant to be, every time my contract was up for renewal, there happened to be new and exciting developments at the station, new challenges. That’s why, for my part, I was always happy to decide to stay. And that, too, I admit I’m quite proud of.
Most of your team, and you yourself, are currently working from home. How do you run a children’s channel from home?
It works really well – thanks to RTL and CBC, Mediengruppe RTL’s technical services provider. CBC handles all the broadcasting for Super RTL, so we don’t need our own people on location. Our job is primarily to determine the daily broadcasting schedule, including all commercial breaks. Our planners can easily do this from home. And since the RTL broadcasting centre is fully digital, there is no longer any need to transport video tapes from A to B, as was previously the case. In fact, there are only two or three people at Super RTL who have access to the actual broadcasting centre – I’m not one of them, for example. And the various meetings with my management team or the shareholders, which normally entail physical attendance, are now held as video conferences.
Do you already have plans to return to the offices?
At the end of last week, we decided to keep working from home until 18 May for now. For the period after that, we have developed a step-by-step plan that divides our employees into three groups. These will alternate on a weekly basis. We’ve divided up each of the channel’s departments in this way – and that’s how we’ll gradually return to the office.
For its anniversary, Super RTL is giving itself the gift of a radio station for children and families. Why now?
It just feels like the time has come for this step. At Super RTL, we started discussing the idea of our own radio station years ago, but didn’t pursue the topic any further. But when Stephan Schmitter, CEO of RTL Radio Deutschland, approached me last year with this very idea of a radio station for children and families, we started looking into the idea again. Add to that the fact that for two years now, we’ve had colleagues at the channel who used to work in this field, i.e. they have radio experience. Suddenly our in-house expertise came together with Mediengruppe RTL Deutschland’s expertise and led us to the decision: Let’s do it. And it’s going to be a sensation!
How will kids be able to listen to “Toggo Radio”?
When “Toggo Radio” launches in four or five weeks, we will of course start by integrating it into all our digital services. That way we can already reach a lot of children in Germany. On top of this, there are other digital distribution channels such as in-car digital radio. Kids will also be able to access “Toggo Radio” directly via smart speakers like Alexa. Together with our colleagues at RTL Radio Deutschland, we will also be looking into terrestrial broadcasting, but that is very expensive; frequencies are scarce and in great demand. We believe that we can achieve a high overall reach right from the start.
And what kind of programming will children and families get to listen to?
“Toggo Radio” will start every day with a “morning show” with two presenters. It will be broadcast live and will consist of about 70 percent music and 30 percent spoken word. There will also be news for children and radio plays for the very young children in Toggolino’s age group, and the slightly older ones in Toggo’s age group. Our colleagues at RTL Radio Deutschland in Berlin will contribute the music. And for the first time in German history, we can offer our major advertising clients such as Lego, Hasbro and Mattel a nationwide children’s radio station for serving their ads. That’s completely new terrain for them as well. Our customers are delighted about this offer, and we’re are so optimistic that we plan to break even with “Toggo Radio” in just three years.
Disney has just launched its streaming service Disney+ in Germany. How dangerous is Disney+ for Super RTL?
Of course it’s still too early to say anything about the repercussions it will have for us. We believe that the Disney+ offer will be more at the expense of other streaming services like Netflix and Amazon Prime Video. But of course, anyone watching Disney+ can’ t watch Super RTL at the same time. Yet, the consequences for us will be relatively limited. I tend to ask myself instead what it will mean for the lineup of our free-TV competitor Disney Channel if Disney’s focus is clearly on its own streaming offer. This development could even benefit us in the end, but that’s pure speculation on my part.
Wasn’t Super RTL about to launch its own news programs for children right around now? What has become of that plan?
We are definitely sticking to the idea of Toggo Daily, i.e. a daily news format specifically for children. But producing an entirely new format while working entirely from home simply isn’t doable – the coronavirus crisis put a big dent in our plans. So for now, we’re starting with a news show on “Toggo Radio” and online – which is we’ve decided to postpone the trial and launch of Toggo Daily on TV.
Dare you venture a forecast? How will 2021 go for Super RTL?
Naturally I don’t have a psychic on my payroll! But it’s obvious that 2021 won’t be an outstanding year, as we will certainly still be feeling the effects of the coronavirus crisis. I’d say the same will be true for the years to come as well. What makes me confident are two decisions taken at the recent – virtual of course – meeting of the channel’s Advisory Board, a board of our shareholders that discusses and approves all our major investment projects. During the meeting, we got the green light for two major projects: The first is our radio station “Toggo Radio”, which I’ve already talked about. And the second concerns the expansion of our merchandising activities. For one, we plan to expand this business to include the children’s station Gulli in France, which became part of RTL Group last year. Here, we are generally working on coordinating as many things as possible, from program buying to the merchandising business. We will also be bringing our colleagues from RTL Nederland on board, which will raise our merchandising business to a European level. And for another, we will expand our portfolio in this area, i.e. beyond the range of brands such as Paw Patrol, Peppa Pig, and Dragons, which are based entirely on video. We expect a high added contribution margin from both businesses – radio and merchandising – so that despite coronavirus, we believe we can achieve the goals we had set ourselves before the coronavirus crisis.