NBC left $200M at altar

Apr 1, 2002  •  Post A Comment

Talk about a bad hangover.
$200 million on the negotiating table when it reversed its watershed decision to accept hard-liquor advertising. At the time of the surprise reversal, announced March 21, NBC was deep in discussions with Diageo about a distilled-spirits advertising deal worth “at least” that much over five years, according to a number of executives with knowledge of the situation.
But that’s not all. A second multiplatform, multimillion-dollar deal between another broadcast network owner and Diageo was in the works, the executives said. Together, the two deals would have represented perhaps the largest “single-source television deal” in the medium’s history, confirmed Jon Mandel, co-managing director and chief negotiating officer of Diageo media agency MediaCom. While declining to reveal the second network, Mr. Mandel said, “I’ve been doing this 27 years. [The combination of these two deals] would have been bigger than anything I have ever done.”
The second network was either CBS or ABC, sources said, though sales executives at both networks reiterated long-standing policies against accepting hard-liquor advertising.
The cross-platform NBC deal would have included not only the network but the NBC owned-and-operated stations group, according to a senior NBC executive. “It would have been a five-year network and station deal that would have been allocated out, like the old days of [Procter & Gamble],” the executive said.
Mr. Mandel confirmed those aspects of the deal and added that MSNBC probably would have been involved as well. “Ideally, I would [have liked to] do it as a mix of things,” including the network, the stations and cable, he said. Mr. Mandel is generally regarded as the Madison Avenue architect of the campaign to bring distilled-spirits ads to network television.
Mr. Mandel was “being very flexible,” the NBC executive said. “He was giving us the opportunity to design it the way we wanted to design it. He was trying out a big number, a couple hundred million. He said, `Come back to me. Tell me how you want to spend it.”’
Mr. Mandel said that ultimately he had been prepared to spend significantly more than $200 million with NBC properties. In fact, he claimed that via the aborted deals, over time Diageo would have spent more than beer companies do on those two major broadcast networks. As a point of comparison, beer marketers spent a total of $480 million on the national broadcast networks last year, according to CMR.
“If it had happened, [these deals] would have been a very huge shot in the arm for the industry,” Mr. Mandel said.
“Absolutely,” the NBC executive echoed.
But NBC never came back to Mr. Mandel. Instead, faced with the prospect of congressional hearings, the network, owned by conglomerate General Electric, abruptly reversed its policy. “We cannot figure this out for the life of us,” Mr. Mandel said. “The only thing I can figure is that somebody in Washington threatened a [General Electric] jet engine order or something.”
Disney dabbling in liquor ads
Owned by The Walt Disney Co., ABC might have faced stiff opposition from some special interest groups if it had joined NBC in taking distilled-spirits advertising. But the running of such ads would not be unprecedented within the Disney family.
For example, hard-liquor ads on TV are more common in Latin America, and Disney’s Latin American ESPN operation already takes advertisements for hard liquor, adhering “strictly” to local guidelines for such advertising, according to one Disney official. ESPN the Magazine also accepts distilled-spirits ads.
Furthermore, some senior executives in the Disney family of networks have lobbied in the past for accepting such ads.
As for CBS, a cross-platform deal with a number of properties controlled by CBS owner Viacom would no doubt have been lucrative. And Viacom President and Chief Operating Officer Mel Karmazin has proved with his embrace of Howard Stern-and some of the marketers that property attracts-that he’s not afraid of controversy. But it has also been said that Mr. Karmazin wants to sit out the hard-liquor controversy.
One result of the firestorm over NBC’s original decision to take distilled-spirits ads was that Mothers Against Drunk Driving-an organization that, surprisingly, has never been against liquor advertising on TV-decided that standards for any alcohol advertising, including beer and wine, need to be tightened.
“In a certain sense I can understand where MADD is coming from,” Mr. Mandel said. “If [hard liquor] is equivalent to beer is equivalent to wine, why don’t we all sit down and pick a number-[say] 75 percent legal age and above [for audience composition in programming that accepts any alcohol advertising]-and don’t glamorize the product.”