Mr. Stoessel, in October 2020 PPF Group completed the acquisition of CME. What were your first steps as the CME CEO for the Czech Republic, Slovakia, Romania and Slovenia and were you happy with the financial results of the company under its previous management?
We found no big surprises. The organization was underinvested and didn’t have a thriving entrepreneurial esprit but that was to be expected for an organization that was for sale for the last few years. All that said, the media industry continues to be resilient and there is a lot of momentum and opportunities for investment and growth. What were the main changes that you introduced, or you plan to introduce in CME's strategic plans for your territories?
Our strategic focus can be summarized with two words: Content & VOD. We are heavily investing in a content strategy, which features international and local formats, fiction and non-fiction and best in class premium sports. Our aim is to release a total of 20 new titles/year for the Czech and Slovak markets, and we plan for this figure to grow over the next three years. We are also improving and expanding our VOD offering and creating a parallel revenue line. VOD is not yet mainstream, revenues are still below the European average, but we see this segment as one that has great growth potential. VOYO’s performance has over exceeded our expectations and is well positioned to become the number 1 local SVOD service on our markets. 2020 was a very difficult year for the broadcasting and digital industries. How did the pandemic affect CME's operations in the Czech Republic, Slovakia, Romania and Slovenia and what was your action plan for 2021?
2020 was hard for almost every industry, ours included. We followed strict COVID measures both on set and at the office but have witnessed a swift recovery. Financially, 2020 ended similarly to that of 2019 and I take personal pride in the incredible service that our entertainment and news teams offered in the last 18 months. Our priority was to keep staff and partners safe, help our advertising clients with their outreach needs, while still aggressively moving ahead with investments into content and VOD. Do you expect a quick recovery of the ad market in the region?
There is currently a very high demand, and this demand is growing. We have noticed across the group that the traditional advertisers have been joined by new clients, for example from the e-commerce industry. We have also noted across all the markets that there is a shift in spending; the planning period in 2021 was significantly shortened and has created more ad-hoc demand, requiring a greater degree of flexibility. Buyers who were cautious at the start of 2021 are having difficulty contracting additional volume now in the fall because of that spending shift. PPF, the owner of CME, also owns telecommunications operators in some of the territories where CME operates, i.e. O2, Telenor. What will be the synergies between CME's broadcasting operations and PPF's telecommunications companies?
If you look at both telecommunications and media sectors, you will see that our challenges meet. In the Czech Republic and Slovakia, our strategy is focused on creating a parallel B2C revenue stream next to the traditional B2B model, and that is something that telco operators have mastered. We can leverage that knowledge and technology, which is a real commercial advantage. On the other hand, telecommunications are looking to expand their offer as much as possible and being so close to exclusive high-quality, content is a unique opportunity to potentially add to its portfolio. Currently both organizations are working on new offers and products for its demanding customers, and we are well positioned for the future.
There were some concerns about the editorial policy of CME following its acquisition by PPF. How would you ensure the freedom of expression and the upholding of journalism ethics in your broadcasters?
Once we completed the acquisition, we expanded the CME Editorial Board from one to three members, and they work independently to ensure that there is strict compliance to the CME Media Guidelines. You have appointed a new manager who will look after your digital strategy and you announced plans to increase your revenues from premium services. What is your latest strategy for your SVOD service Voyo, especially in the wake of the launch of numerous international services?
Over the last 12 months, our observation is that strong local players can compete, and co-exist quite well with the big international players. As SVOD household penetration and the number of subscriptions in each household grow, there will be significant room for growth for VOYO. In the Czech Republic and Slovakia, our digital results 12 months post acquisition has over exceeded our expectations. The key will be to be able to continuously offer premium local and live content based on the preferences and habits of our consumers. Tell us more about your content strategy. Will you have a different approach for every territory you operate in?
Each market is totally different, you never know what will work where. Look at the Netflix series Squid Game from South Korea that is a huge hit in the US. It’s almost impossible to predict this result, but it’s great if something works in two countries at once. But it’s not the general rule.
In terms of our content strategy, the local aspect makes a big difference and without a doubt it’s why our countries operate independently.
It is very diverse; from local & international, scripted to non-scripted, infotainment and edutainment, we’ve put a huge effort and investment to create culturally engaging content for everyone. In the Czech Republic and Slovakia, we have significantly invested in our fall schedule and have grown audience share compared to the competition. We have introduced new sports channels in the Czech Republic and Slovakia with strong rights such as Champions League, Bundesliga and LaLiga. All of these initiatives are the backbone to our content strategy. CME has significant revenues from distribution in Romania and Bulgaria. In other territories like the Czech Republic DTT still holds a major share. Do you see room for growth in the pay TV sector? Will we see new channels from CME?
In the Czech Republic, we have just launched a new channel Nova Lady, and we intend to increase our niche channel portfolio. HD, delayed viewing and archives are reason for which people subscribe to pay TV, even in countries where DTT holds the share. So yes, we do see room for growth in the pay TV sector.