Gains for Diversity in Austrian Media

International Herald Tribune – March 21, 2005

Eric Pfanner

Upstart's formula: Newer, not better

VIENNA A camera follows a septuagenarian property developer and his young wife around the glitzy Austrian ski resort of Kitzbühel. They shop, bicker and make up. It is Austria's answer to "The Osbournes," and you will not find it on the country's public broadcaster, ORF.

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No, to watch "Die Lugners," about the Austrian real estate executive Richard Lugner and his wife, Mausi, you have to turn to ATV+, a privately owned television channel that is trying to shake up this country's staid television market.

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As in some other small European countries that share a language with a bigger neighbor, the native Austrian private television industry has been slow to bloom - and, in Austria's case, was triply hampered by regulatory foot-dragging and tough commercial realities.

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In 2001, 17 years after Germany and three years after Albania, Austria finally liberalized the broadcast TV market, allowing the first privately owned domestic rival to ORF. Now ATV+, which started broadcasting in 2003, is trying to attract young viewers who it says are ready for a change.

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"They love us because we are newer," said Franz Prenner, chief executive of ATV+, in an interview in his Vienna office. "It's not necessarily because we are better or higher quality."

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By opting for a steady diet of reality shows and "docusoaps" featuring well-known Austrians like the Lugners, ATV+ is acknowledging ORF's lock on the highbrow end of the market. Instead, it is trying to go head-to-head with German broadcasters that have been providing some competition for ORF by beaming their programming into Austria via cable and satellite.

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The German channels, primarily public broadcasters and private services owned by RTL and ProSiebenSat.1 groups, tailor their offering for Austria with local advertising "windows," and some Austrian news shows replace the German versions, for example.

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But the bulk of their content remains German, and that limits their appeal to Austrians, who are touchy about the issue of cultural domination from their larger neighbor. As a result, ORF has managed to maintain a market share that would be the envy of many other public broadcasters, even powerhouses like the BBC.

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Last year, ORF's two television channels had a combined 46 percent of the audience of the roughly 85 percent of households that have cable or satellite TV. (The BBC gets about 33 percent.)

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And because it can deliver by far the biggest audiences, ORF had an even larger share of television advertising spending, at more than 75 percent, even though close to half of its budget of roughly €850 million, or $1.1 billion, comes from a license fee on television viewers.

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ATV+ still struggles to gain significant audiences, attracting only 1.7 percent of viewers last year, according to figures that are compiled - to the annoyance of ATV+ - by ORF. But in 2005, Prenner said, it is doing better, attracting 3 percent to 4 percent of the audience, with its share more than doubling during prime-time hits like "Die Lugners."

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ATV+ cannot compete with ORF on the production of relatively big-budget Austrian movies, or for rights to popular programming like ski racing, so it has taken a different approach.

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"The only niche where they can compete are Austrian shows that are cheap enough that they can produce them, but strange enough that ORF doesn't do it," said Alexander Wrabetz, chief financial officer at ORF. "We have some strange people in Austria, but not enough that you can keep these shows going forever."

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For now, there seems to be enough oddball characters and locally tinged, offbeat themes to keep the reality-TV pipeline full.

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In September, the station started airing "Operation Schönskile" ("Operation Beauty"), a plastic surgery makeover show. Coming this autumn is "Bauer Sucht Frau" ("Farmer Seeks Wife"), in which women will have to spend time in an Austrian farmhouse, deciding whether they can live with the prospective groom and his cows.

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In its early days, ATV+ made a splash with "Tausche Familie," a local variation on the family-swapping reality theme popular in many markets today, prompting unexpectedly serious discussion of sensitive social issues. In one case, a woman of Turkish background was placed in the home of a conservative anti-immigrant family, for example.

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Not every show has been a roaring success, however. "Die Skilehrer" ("The Ski Instructors"), which chronicled the on-slope and après adventures of ski instructors and their vacationing students in popular Austrian resorts, had only a short run last autumn.

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"It was made by a German production company, and they were too straight," Prenner said, lamenting the series' lack of titillation. "I was hoping they would show more."

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ATV+, a private company whose largest shareholders are Bawag, an Austrian bank, and companies controlled by Herbert Kloiber, a Munich-based investor, is said to be losing around €30 million a year, a number that Prenner declined to confirm.

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Still, German companies, who opted not to compete for the broadcast license when the government made it available in 2001, now are said to be interested in ATV+. Insiders say RTL, which is controlled by Bertelsmann of Germany, is considering an investment.

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RTL declined to comment on speculation about a possible deal with ATV+ or one of its shareholders. But for RTL, as for its German commercial rival, ProSiebenSat.1, which is controlled by the American investor Haim Saban, Austria has already been a highly profitable market.

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Last year, RTL sold €56.1 million of advertising in Austria for the four channels it sends there via cable and satellite - RTL, RTL2, Super RTL and Vox. ProSiebenSat.1, meanwhile, sold €61.5 million worth, on the channels Sat.1, ProSieben and Kabel1. Because most programming is the same as in Germany, the German companies' costs of operating in Austria are low.

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Nonetheless, RTL and ProSiebenSat.1 are keeping close tabs on ATV+ as it tries to steal away some of those advertising euros.

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"I'm sure that within the next few years they will be one of our main competitors," said Gerhard Riedler, managing director of RTL's Austrian sales organization.

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For technical reasons, no further nationwide broadcast licenses are likely to be issued, at least until Austria switches over from analog to digital TV in a few years. The country's mountainous terrain makes analog broadcasting tricky, and because it is landlocked in the middle of Europe, the need to coordinate frequencies along Austria's borders further limits airwave space.

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A few local TV licenses have been issued, but those services struggle to attract viewers even in the cities they serve. Prenner, the ATV+ chief executive, sees a potentially attractive business in taking advantage of the peculiarities of the Austrian market while accepting its limitations.

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"We can't be everything to everyone," he said. "It's about finding your niche. Fortunately, that is that we speak Austrian."

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