CLOSE UP: LIVE ISSUE/DIXONS - Dixons' bust-up with News International is a sign of the times, Claire Beale writes

There's nothing new about a bloody punch-up between a big

advertiser and a big media owner. Over the years the press has slavered

over stories of Unilever pulling its ads from the various ITV regions or

Mars eschewing Channel 4, for example. It's all part of the armoury of

the big advertisers' negotiating arsenal. But, inevitably, compromise is

eventually reached, wounds patched and the advertising status quo

restored.



So the news that Dixons has pulled all of its advertising out of News

International titles scores high on the interest barometer but is hardly

surprising. In fact, Dixons has something of a history of playing the

negotiating tough guy. Not only has it caused News International more

than a few headaches in the past, but it gave the Daily Mail and The

Mail on Sunday a bit of a kicking with a six-month sulk when it couldn't

reach a satisfactory deal.



The electronics stores giant, whose brands include Currys, PC World and

the Link Store as well as the Dixons chain, spends more than £80

million on advertising each year, and an estimated £20 million of

that goes into News International titles, with The Sun taking the

largest slug.



So in one sense this is simply yet another case of bullyboy negotiating

tactics, with one of the UK's biggest advertisers revelling in duffing

up one of the biggest and ugliest media owners. Nice to turn the tables

sometimes, although few advertisers enjoy that luxury outside of agency

deals.



But the Dixons/News International spat is also a sign of the times. The

deal has been based on circulation and RPI figures, all very standard

but perhaps not so smart in the current climate. After all, RPI might be

holding up pretty well, despite talk of a recession, but the ad market,

in press as in other media, has slumped. So press rates have been

falling and advertisers on long-term deals could find themselves paying

ahead of the market rates. It would be odd if Dixons didn't want to base

a new deal on the current advertising market conditions.



Consider, too, that there could hardly be a better time for a big

advertiser to flex its muscles. With the national newspapers looking at

vastly reduced figures for this year, they're not exactly in a strong

position to hold out against one of their major advertisers. And Dixons

has its timing pretty shrewdly sorted. The retailer's key advertising

period is the last quarter of the year, so pulling spend for a few

months across the quiet summer period as a negotiating tactic is hardly

rocket science.



News International won't be drawn into debate on the subject, but it

seems unlikely that this will be a long-term separation. Ads for Dixons,

Currys and so on are little more than catalogues for the companies'

wares and as such are vital tools for drawing customers into the stores

and to the cash tills.



Come the peak end-of-year season, Dixons will need to ensure a strong

presence in its key media and normal relations will probably resume.

Unless, of course, this really is a recession, and we know what many

advertisers are tempted to do in one of those.