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Business

Television? Sure, if It’s Free

Unlike their counterparts in the United States and the United Kingdom, German TV-viewers are hesitant to dish out money for television. Had Leo Kirch realized that earlier, his media empire might still be around.

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Plenty of choice already

Pay TV in England might not be booming anymore, but its success over the last few years is more than enough to sustain it through the current slowdown. The industry in America looks more promising, particularly after the slow-to-change cable industry discovered the digital market.

In Germany, Leo Kirch’s billion euro attempt at similar success met with a failure that dismantled his entire empire.

The reason, say analysts, has to do both a stubborn media market and a German viewer not willing to shell out money when it comes to their TV.

High hopes

Pay TV was not on the map in Germany before Kirch introduced Premier Live in 1997. The channel promised exclusive viewing of Germany’s premier football leagues, old German films and soft porn among other programming.

In trademark style, the 75-year-old Leo Kirch gambled big – and expected to win just as big.

He spent millions on exclusive rights to broadcast Bundesliga games and premier soccer matches. Premier promised its investors, among them Rupert Murdoch, subscribers in the millions and returns in the billions. But the subscriber count stagnated after hitting around 2 million. Premier began racking up losses that analysts now estimate at 3.2 billion euro, as much as half of KirchGruppe’s current debts.

Watching their wallets

Unlike their TV-watching colleagues in the United States and England, Germans didn’t adapt well to paying money for television.

"There’s just more choice on regular channels," said Rebecca Ulph, an analyst at Forrester Research Tracking consulting group. "There’s much more of an attitude among Germans of ‘why would we want to pay for something I already have.’ (Premier) didn’t give them anything much different."

Kirch also overestimated the desire of German viewers to watch their favorite football team. Rupert Murdoch’s BSkyB experienced skyrocketing growth after buying up the rights to broadcast England’s Premier League games. The fact that Kirch’s Premier hasn’t says something about the German football fan, Ulph said.

"In certain cases there’s a lot more widespread interest," in England, Ulph told DW-WORLD.

Success inthe UK

BSkyB was also able to carve a niche because of the UK media market’s fragmentation said Ulph. The market allowed for bold ventures like pay TV when BSkyB introduced it 15 years ago and greatly expanded the viewing choices of the British public.

... and the US

A similar evolution occured in the United States, where viewers frustrated with a limited choice and bad reception turned to cable TV and set it on a decade of steady growth.

The industry has been doing even better recently, according to the country' largest industry trade association. More than half of the television viewing public turn to cable TV over regular, free, broadcast networks, estimates Marc Smith, of the Washington-based National Cable & Telecommunications Association.

To keep viewers, the cable industry increased investment and improved the quality of the shows available to subscribers, Smith said. They packaged shows with a common denominator together and put them on separate channels, giving birth to the Home & Gardening network and the Race Channel.

The moves were necessary even in the steady growth US market, said Smith.

"I wouldn’t go so far as saying the US has embraced paying for television. People have such an intimate connection with their television set and people can remember when it was free," he told DW-WORLD. "There is the feeling of entitlement."

It is that feeling that Leo Kirch underestimated. Now, he's paying dearly.

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