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MTV Makes Mark in Enemy Camp

While Ali G was insulting German celebrities in a naff bit of hosting in the country’s financial capital, many people were wondering why MTV had selected the less than musical city on the Main for this year’s event. Was it for the internet address, MTV.de, which was held by a local transit company until MTV announced that it had decided to come to Frankfurt?

More probable is that the music television pioneer was trying to boost its visibility in Europe’s largest media market, a place where the locals are, in US parlance, kicking its ass.

Viva Media, which is listed on the Neuer Markt, relies on German-speaking VJs (video jockeys) and domestic bands to attract viewers, at least in Germany, Switzerland and Austria. It also has operations in Italy, Poland and Hungary, but it has become the dominant force in its home country. According to recent ratings, Viva has 5.2m of Germany’s 14 to 19-year-old viewers.

MTV has a mere 3.7m. Significantly, Cologne-based Viva says its advertising revenues from January to August rose 26%, the largest gain for a German TV station. The network is 75%-owned by companies including Warner Music and EMI.

There are a number of reasons Viva is trouncing MTV, according to analysts. One is the increase in households with increased satellite coverage. Further, Viva is tailored for the German market while MTV has a piecemeal format with so-called local packages for Germany, says one analyst.

Not that all is well in Cologne. The network’s Viva2 channel is eating money like a rock band’s expense account and the company is preparing it for a relaunch early next year. Viva2’s malaise and a sharp downturn in advertising in the German market sparked Viva last week to buy Brainpool, a German TV production company.

In a stock swap, Viva paid E54m (GBP33m) for the company and plans to issue 4.8m new shares to cover the deal. Analysts welcomed the deal. The network’s Viva flagship channel is dependent on trend scouting, a mission that will go to Brainpool, says Annelie Hoppe, a media analyst at WestLB in Dusseldorf.

The deal has been done to let the network keep up with what is going on. The Brainpool move brings content to Viva which will be used to revamp Viva2 and help offset a decline in advertising, analysts say.

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