Premiere cans free-TV operation

German pay-TV operator Premiere will shut down its free-to-air channel GIGA at the end of March.

On the channel’s website, Stephan Borg, GIGA’s managing director, blamed the channel’s closure on a strong falloff in advertising revenue as a result of the financial crisis. “For small channels like us, that has shocking consequences.” According to Borg, Premiere wants to concentrate more on its core business, subscription television, in future.

With immediate effect, only repeats are being screened on GIGA with all new productions cancelled. In the coming weeks all possibilities will be evaluated to at least keep the channel’s internet community afloat, explained Borg. “We are negotiating this with possible partners.”

According to industry sources, the channel has considerably improved its performance since its re-launch in August 2008, but continues to operate in the red. In the face of the expected heavy drop off in advertising revenue, Premiere evidently saw no perspective for reaching break even within the foreseeable future. All the channel’s 53 employees have been made redundant.

GIGA, which was launched in 1998 focusing on themes such as digital lifestyle, games and e-sports, is available via cable, satellite, ADSL and the internet. Premiere acquired the Cologne-based channel in January 2008 from financial investors Wellington Partners and Atlas Ventures, holding company Cuneo AG owned by TV manager Michael Wölfle, e-sports leagues operator Turtle Entertainment and US media concern NBC Universal. At the time, industry insiders raised doubts as to whether it made sense for a pay-TV operator to acquire a small free-to-air thematic channel.

The move was part of a strategy of Premiere’s then-CEO Michael Börnicke to create additional income sources in order to reduce the broadcaster’s dependency on pay-TV and thereby spread the risk. In the process of the strategy Börnicke acquired a majority stake in the online shop Home of Hardware and bought into auction channel and internet sports portal Spox. The shares in Home of Hardware were sold for €1 in December 2008 to Cancom IT Systeme.

Industry insiders speculate that in the process of the current restructuring through new CEO Mark Williams, Premiere will turn away from other engagements which do not belong to the core business.