John de Mol, founder of Endemol Entertainment, is proving that a European TV producer can challenge America's giant studios. The 55-year old Dutchman was the brains behind the global hit Big Brother, in which a group of strangers are put in the same apartment for 10 weeks and viewers phone in to vote on who gets kicked out. Its French version, called Loft Story, is now drawing record ratings -- and provoking furious reactions against "trash TV."
De Mol is also hitting the Internet. Spain's Telefonica paid $5.5 billion to buy Endemol last March, just before the telephone sector crashed. The new owner has named de Mol content czar for all its media and Internet operations.
De Mol started out as a radio technician for a private Dutch station -- or, as he likes to say, as "the assistant to the assistant of the producer." He soon moved on to television and started his own company in 1979. It grew fast, as Europe privatized its airwaves. His younger sister Linda is a well-known TV talk-show host on RTL in both Holland and Germany.
He recently spoke with BusinessWeek's William Echikson about Telefonica's buyout, his new role in the company, and his response to critics. Edited excerpts of their conversation follow:
Q:What do you think about the controversy in France concerning the show Loft Story? A: I don't plan controversy. I was surprised. France is the 20th country showing Big Brother, and everywhere it has caused commotion -- but the reaction in France has been extreme. It has been about politics rather than about real issues. To a certain extent, the publicity helps us. But the show doesn't need it. Even in those countries where it started smoothly, we have gotten good ratings. And I don't think we will be forced from the air -- all they ask is that we shut off the cameras one hour a day in one of the bedrooms. We had to do this also in Germany, and it wasn't a problem.
Q:Were you happy about selling out to Telefonica? A: I have to say the timing was quite O.K. It has allowed me to shift more and more to what I like to do, creating television. Instead of being just CEO, I now am returning to be a CCO -- chief creative officer. I can do my presidency with a minimum amount of time. I am now hiring a new vice-president to take away the remaining paperwork, so I can spend more and more time in creative development and synergy.
The relationship with Telefonica is going well. They support us anywhere they can. They realize we are a creative company and don't get in the way.
The stock hype about the whole telco and new-media area has disappeared, but I still believe it is the future. And Telefonica is one of the top three in global-telco companies. Geographically, the fit has been excellent. During the past year, we have opened in Argentina, and we are close to doing deals in Brazil and in Mexico. That will assure a substantial growth element for the next three years.
In terms of new media, if we work with Telefonica's Internet division, Terra Lycos, and its mobile-phone company, Telefonica Moviles, we could create beautiful things.
Q:But Endemol is a minnow, accounting for only about 2% of the giant Spanish telephone company's $26 billion turnover. And Telefonica is not, after all, a media powerhouse. Its Spanish and Argentinean TV stations produced a $450 million overall loss in the media division. London bankers tell me they believe the Madrid bosses may try to unload them or float them in an IPO. Is it really that great to be in such company? A: We are not really part of Telefonica media. We are directly reporting to Telefonica in the practical sense. I don't think an IPO is on the table. It's not good timing. Someday, that may become an issue, but not right now.
Q:Convergence between television and telephones and the Net seems to be out of fashion. So didn't Telefonica overpay for Endemol? A: I still think this is a big opportunity. If we manage to create one Big Brother for third-generation UMTS [universal mobile telecommunications system] mobile phones, then I think Endemol will be worth three times the price Telefonica paid for us. When critics say Telefonica overpaid, I say you can't judge right now. You have to see in three years' time.
Q:What about the Internet? A: The Internet of today is not where I see the huge opportunities. But in one year's time, it will look totally different. The quality of the pictures and sound will improve. Right now, you need television to trigger the Internet. So we don't do stand-alone Internet projects. They are always an extension of our TV show. And that's why, even though I can't give you concrete numbers, our Internet business is very profitable.
Q:But the voting on Big Brother is done via the telephone, not the Net. Why? A: The voting is 95% for the telephone business. [Since each call carries a charge,] we get a cut of every vote. This income has been substantial. But we also make money from the Net. On Big Brother, the ISPs pay to have streaming-video [feeds from the location]. In France, we have gotten 85 million page views in two weeks. In Germany, after 100 days, we received 250 million page views. Those numbers are interesting for advertisers.
Q:What happens after Big Brother dies down? Aren't you dependent on this one hit's success? A: No, we are not a one-trick pony. In terms of press and attention it may look like Big Brother is all our business. But in fact, it accounts for only about 4% of our sales.
Q:What are the next projects, the successor to Big Brother? A: We have exciting new ideas. The successor to Big Brother is a show that will be called Blind Faith. Couples are split up, and they are shown what is happening to their partner. The partners don't know if what they are seeing is true or not. We can manipulate the video.
For this project, we are now building a huge infrastructure in the Algarve. We have taken over a small five-star hotel and totally rebuilt and redecorated it. The show will start in the Netherlands, Portugal, and Germany. Contestants won't be voted out. There won't be a winner. There will be no cash prizes. This is simply a program [on which a] relationship is tested, a psychological test.
Q:Big Brother wasn't such a great success in the U.S. Why not? A:Big Brother was a success in America. It's only if you compare it to Europe that you can say it was not as huge. But it did good enough to do a second series that we are preparing with CBS. We have just found the perfect executive producer.
I've always wanted to build a serious production company in the U.S. We are making good progress. We have good deals lined up. As soon as Blind Faith succeeds in Europe, then I will be on the first plane with the tapes to show them to the networks.
Q:Personally, how does it feel to no longer be your own boss? A: I really enjoy my present role. It's much more fun than dealing with financial analysts and investors, quarterly figures, and the press. I want to be creative. I can play a very positive role in the content in Telefonica's new media platforms.
Q:How do you feel when people say that you will only be remembered as the king of trash television? A: I couldn't care less. I work for the viewers, not the critics.
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