MEDIA ANALYSIS FORUM: Is C5’s deal with Columbia and Unilever a one-off? - Was the move a matter of expedience or a ground-breaking victory, asks Alasdair Reid?

A couple of weeks ago, things were looking pretty grim for Nick Milligan, the sales director of Channel 5. Whatever the rights and wrongs of Carat’s spat with Channel 5, Carat’s decision to pull all its clients off the station left him in a potentially awkward situation.

A couple of weeks ago, things were looking pretty grim for Nick

Milligan, the sales director of Channel 5. Whatever the rights and

wrongs of Carat’s spat with Channel 5, Carat’s decision to pull all its

clients off the station left him in a potentially awkward situation.



Not only was money flying out the window but Milligan was being

portrayed in some quarters as the villain of the piece, a man who had

become too big for his boots, attempting to implement a greedy sales

policy at the expense of beleaguered advertisers.



Last week, in unveiling a ground-breaking three-cornered deal between

Channel 5, Columbia Tristar and Unilever, Milligan gave a masterclass in

turning a threat into an opportunity. Unilever paid dollars 10 million

for the UK broadcast rights to more than 100 of the studio’s back

catalogue of films, including hits such as Sleepless in Seattle and

Philadelphia. Unilever then transferred the rights to Channel 5 in

exchange for a package of airtime. The inventory in question is the

share of Channel 5’s airtime previously allocated to Carat clients.



In fact, there were more than three corners to this deal. Also involved

were the advertiser-funded programming and sponsorship specialist

Malcolm Grant Associates and Unilever’s media specialist Initiative

Media.



Nick Milligan explains: ’Dawn (Airey, director of programmes at Channel

5) was about to buy the Columbia film library for cash. I suggested we

buy it with airtime instead and Malcolm Grant brokered the deal on

behalf of Unilever. We now have a four-year deal with Unilever that

covers both cash and programmes. Dawn keeps the money she would have

spent for a football fighting fund.’



Milligan points out that Channel 5’s audience grew by 30 per cent last

year and should grow by 20 per cent this year. He says: ’We have a

three-point strategy for this airtime. We will give credits to those

agencies that support us, develop advertiser-supplied programming and

take equity in internet companies before their flotation.’



There is a more cynical interpretation of the events. Sources at rival

broadcasters maintain that this was a deal motivated principally by

expedience.



Realising decent value for the Carat airtime on the open market would

not have been easy and, according to the expediency theory, Columbia was

also desperate to do a deal, following the collapse of another

agreement.



In other words, critics argue that this is potentially a one-off

deal.



But those closest to the agreement dismiss that interpretation out of

hand. This, they say, is a deal of classic elegance - a win-win-win

scenario that the rest of the market would do well to learn from.



Are we likely to see more of this sort of thing? Keith Le Goy, senior

vice-president, European distribution, of Columbia TriStar, says: ’Does

this have wider application? It should do. We’d love it to. Do we want

to explore it further? Absolutely. Unilever would be our first choice

but we would clearly be interested in exploring the possibilities with

other parties. No two sets of circumstances will ever be identical, but

I think what you can say is that it’s a great time to think

imaginatively about how you go about constructing deals. We are very

enthusiastic about that prospect.’



It certainly raises a whole host of issues. For instance, it puts back

into focus the rather innovative notion that the airtime market should

be about partnerships, as opposed to adversarial posturing. It also

reflects another trend - dotcom companies buying airtime for equity.



This, too, is a form of barter. Not barter syndication - a very 80s

concept in which advertisers acquired a programme, packaged it up with

sponsorship break bumpers, colonised the centre break with its own

advertising and then gave the whole package away to broadcasters. But

this deal involves a form of barter nonetheless. Does that have

implications for the way airtime is traded across the rest of the

market? And where does the media specialist fit in? David Cuff, the

broadcast director of Initiative Media, says: ’Media specialists are

central to making this happen and it has a huge synergy with the

conventional trading area. Advertisers can’t really do this sort of deal

on their own because they need to have a broad understanding of the

value of the airtime they are offered in exchange.



’This sort of deal will be more widespread. Initiative certainly intends

doing more, though I can’t speak for other agencies, obviously, and

there are clearly still a few dinosaurs out there. There is one factor

that might hold this market back - some broadcasters are relatively cash

rich and might not need to do this sort of deal. But the growth in

television revenue cannot keep pace with the cost of producing quality

programming.



So even ITV may find itself under pressure in funding its off-peak

schedule and most other channels, even those with subscription revenues,

might find it impossible to produce quality schedules without

enterprising initiatives.’



Is it the sort of thing other media operations will want to become

involved in? Possibly, Graham Duff, chief executive of Zenith Media,

responds: ’It’s certainly an interesting deal - this whole area has been

talked about for ages but this is the first demonstrable example of any

scale in the UK market. Whether it has any ramifications for the

operating procedures of the airtime market remains to be seen. What, for

instance, will other clients think of this deal and how it affects their

price on Channel 5?



It may also have interesting implications for media agencies. I don’t

think anyone knows that answer at this stage. But I don’t think this

deal will be a one-off.’



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