RTL, one of the largest TV groups in Europe and 75% owned by the influential Bertelsmann Group, has bought into the new YouTube channels, by taking a $36 million investment, which represents a 51% shareholding in one of YouTube’s biggest channel suppliers BroadbandTV
BroadbandTV is a Canadian multi-channel network which so far is the fifth largest on YouTube, managing more than 7,800 channels and generating around 800 million video views per month. With RTL’s help it could soon be doing very much more than that.
Bertelsmann has long been a conservative business and when it moves in media, it is usually decisive and for the long term. It has the assets both in terms of content reach as well as existing channel partnerships with pay TV customers, to turn Broadband TV into one of the largest online video players in the world.
RTL’s initial investment is part of a planned series of investments in the company, presumably other investments will either give it a bigger shareholding or be debt based in order to leave its management team with a substantial shareholding.
Broadband TV was founded by Shahrzad Rafati, a Canadian entrepreneur and she is accredited with being the first person to develop a business model that made people a little bit happier about copying on YouTube. She is supposed to have first written software to detect pirated content, and then made it ‘brand safe,’ in other words taking out anything that damaged the brand in any way, and then sold ads against it, giving the lions’ share of the money back to the original content owner. Rafati will stay in charge of the operation, which now has tools for content management, optimization, protection and monetization.
BroadbandTV works through its network brands VISO and TGN. The number of video views to BroadbandTV sites grew by 169% year-on-year, reaching 2.1 billion in the first quarter of 2013 alone. The two companies say they have worked out an aggressive growth plan fuelled by further investments in technology, advertising sales, content, international expansion and talent and RTL will put three members on the board of BroadbandTV.
This is not the first move that RTL has made on YouTube content, its global
content arm, FremantleMedia, has become the highest-rated TV producer on YouTube, with 135 channels currently generating 400 million video views a month. This is very much a case of a traditional TV player, making a major play for online.
Bertelsmann has taken a number of controversial moves in online content in the past and in 2002 it bought and continued to fund Napster, at a time when all of the global record labels were after Napster’s blood. It bought the remnants of the music piracy business for $8 million and put another $85 million into it, but ended up paying out a lot more in compensation to record labels in settlements, some 5 years later, after Naspter closed once again and changes its business model in a final attempt to be legal.