MEDIA FORUM: Will the Unilever deal change client relationships? - ’Too much stick, not enough Carat.’ This, from Channel 5’s sales boss, Nick Milligan, will take some beating as media quote of the year. It helps to explain how his

With a single bound, he is free. A couple of weeks ago, things were looking pretty grim for Nick Milligan, the sales director of Channel 5.

With a single bound, he is free. 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 (and there

are some who believe it is reminiscent of the old bully-boy days of the

TMD culture), Carat’s decision to pull all of its clients off the

station had left Milligan in a potentially awkward situation.



Not only was money flying out the window but Milligan was also 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. The deal saw Unilever paying

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.



Actually 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.



Milligan explains: ’Dawn (Airey, director of programmes at Channel 5)

was about to buy the Columbia film library for cash. I suggested that 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, which he believes puts it

in an enviable position. ’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

pre-flotation.’



There was, of course, a more cynical interpretation of events doing the

rounds last week. 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 (and, for Columbia, potentially more

lucrative) agreement.



In other words, they argue that this was potentially a one- off. 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.



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

vice-president, European distribution, of Columbia Tristar, states:

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

we want to explore it further? Absolutely. With Unilever as first choice

obviously, 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 none-the-less. Does that have

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

market?



And where does the media specialist fit into all of this. David Cuff,

the broadcast director of Initiative Media, comments: ’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

being offered in exchange.



’I believe 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 a few dinosaurs still 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 that other media operations will want to become

involved in? Possibly, Graham Duff, the 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 be the view of other clients 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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