Media mogul Rupert Murdoch is evidently dissatisfied with the development of German pay-TV platform Premiere and has struck with an iron rod: CEO Michael Börnicke (pictured, left) has been replaced with immediate effect by Murdoch confidante Mark Williams.

Börnicke asked the supervisory board for an early release from his contract and to accept his immediate resignation. The supervisory board accepted his request and released him from his obligations.

Börnicke was hired as Premiere’s CFO in 1995 (he joined from ProSieben), and took over as CEO when Georg Kofler left the company a year ago on Sept 1 2007.

Williams, who was until now a member of Premiere’s supervisory board, is currently chief financial officer Europe and Asia of Murdoch’s international media concern News Corp as well as non-executive director on the board of News Corp’s Italian pay-TV platform Sky Italia.

News Corp became Premiere’s largest single shareholder in January when it acquired a 14.58% stake and since then has gradually increased its holding. It currently owns 25.01% of the company which gives it a blocking minority.

“For personal reasons, I have decided to resign as CEO of Premiere. In the last months, the management has set the course to get Premiere back to a long-term, sustained growth development,” said Börnicke.

Williams explained: “I am pleased to accept the new responsibility as CEO of Premiere, which came unexpectedly. I am looking forward to working with the management team to ensure the success of Premiere. I am convinced of the great potential of pay-TV in Germany. I know this view is shared by News Corp.”

According to industry sources, the drastic measure was prompted mostly by Premiere’s continuing negative economic development and the considerable drop in subscription figures. In the second quarter Premiere slipped deeper into the red, losing 84,657 subscribers in comparison with first quarter figures.

While Börnicke blamed the subscription downturn on security problems with the encryption system, critics pointed towards company mismanagement. “Too little money has been being invested into attractive programme rights. Subscribers are instead presented with B-grade programmes or repeats,” said one industry observer.

The latest marketing strategies are also believed to have attributed to the managerial restructure. “Pre-paid subscription models and large-scale marketing campaigns for cheap packages available at petrol stations and discount stores lead to short-time boosts in subscription figures. However, instead of premium customers, which Premiere needs for enduring growth, these campaigns attract bargain hunters who drop away at the first opportunity,” continued the critic.

Börnicke’s ambition to win 10 million subscribers by 2012 is also believed to have been met with disbelief by Murdoch managers. At June 30 the broadcaster had 4.16 million subscribers, of which just 3.55 million were direct customers with the rest receiving Premiere’s channels through third party platforms such as the soccer Bundesliga partner Arena.

With BSkyB in the UK and Sky Italia in Italy, News Corp has shown how to operate pay-TV in Europe with economic success. Germany’s television market has, until now, been dominated by free-to-air broadcasters, but the increasing penetration of digital television is opening the possibility of attracting new target groups to pay-TV. Without doubt, Murdoch recognised this chance and now, sceptre in hand, plans to use it.

Source: Rapid TV News 2008

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