Another big deal for OMD

May 20, 2002  •  Post A Comment

OMD USA, which became the talk of the media community two weeks ago when it became known that the company was working on a pair of billion-dollar-plus multiplatform deals, has been talking to AOL Time Warner about massive single-year, multiple-property deal.
According to executives familiar with the discussions, the AOL Time Warner deal is worth $200 million to $300 million, though a senior executive who is close to the discussions insisted that the deal was for less.
The AOL Time Warner deal is “not nearly as big” as OMD’s proposed paradigm-shifting Viacom and Disney/ABC deals (EM, May 6), according to the senior source. The AOL Time Warner talks have not progressed beyond the initial stages and in fact were in abeyance for upfront week, according to the source.
The media agency’s proposal would include buying ad space for myriad clients on numerous AOL Time Warner properties, including The WB, the Turner cable properties, Warner Bros. Domestic Television syndication and many of the company’s print vehicles. Similar to the OMD-proposed billion-dollar deals with The Walt Disney Co. and Viacom, the deal would include both upfront and scatter monies.
All three deals also would include all relevant operating divisions. Also, they are all deals between the mega-media companies and the mega-agency itself, which then will put its various clients in place within each deal’s overall structure.
OMD CEO Joe Uva, who formerly headed ad sales for the Turner entertainment cable networks, is said to be the alpha point man on the AOL Time Warner talks.
Mr. Uva declined to comment on the specifics of the various deals, but he did reflect on their precedent-setting nature, saying, “Let’s look at the context of the media landscape today. There are five mega-media owners. They’ve assembled these vast portfolios. Our clients are consistently transacting across the majority, if not all, of those platforms within those portfolios, whether it’s on a scatter basis, an opportunistic basis, an upfront basis, a promotional basis. There are for all intents and purposes seven mega-media agencies today. If you know pretty much what your client’s spending has been and is likely to continue to be in terms of what types of media are going to be strategic fits for their brands, we believe that we can [structure] a deal … that helps it be a far richer discussion in scope and in relevance. That’s the point of this.”
An AOL Time Warner spokesman declined to comment.
The new AOL Time Warner proposal is on the table, even though OMD has not closed either of its proposed billion-dollar-plus pacts with Disney or Viacom. Of the two companies, most sources said it is more likely OMD will actually consummate a deal with Disney.
“Dan Rank, who is doing the heavy lifting on these two deals for OMD, is fairly close to Mike Shaw, who heads up our sales,” said one executive at the ABC TV network. “Plus, word is that [Disney President Bob] Iger and [Disney Chairman Michael] Eisner really want this thing to happen.”
This executive said Mr. Eisner and Mr. Iger originally wanted the deal done in time to be unveiled May 13, on the eve of ABC’s upfront announcement. “With the year ABC had last year, Iger and Eisner really wanted to announce a billion-dollar deal just as they were about to announce their new schedule.”
But it wasn’t to be.
According to network sources, OMD was initially looking for a concept deal that called for costs-per-thousand at minus 1 percent on the ABC network and minus 3 percent on the Disney cable networks. But a major stumbling block arose when OMD later asked for minus 2 percent on ABC, the sources said.
“I was told that the deal is off the table now,” one source said. But other senior executive sources said that the deal has just hit a temporary snag and that talks will soon continue.
Those sources said the talks have not yet reached the stage of price discussions and that when they resume, CPMs will be on the table for the first time.
“We are still trying to put together things like flexibilities,” said one senior executive familiar with the talks. “How do we work in promotions that may or may not involve the theme parks, the studio and home video division?”
By press time, Disney/ABC spokespersons had not returned calls requesting specific comment about these matters.
After a lengthy period of discussions, the Viacom talks also are in abeyance, with both sides insisting they’re waiting for the other to come in with a new proposal. A Viacom spokesman declined comment on those talks, citing company policy about not responding to “rumor and speculation.”
“What may very well happen is that one or both of these deals get done, but not as pre-upfront deals,” said one executive with knowledge of the talks. “After the talks became public, both ABC and CBS got calls from other major agency players saying they wanted the same `most favorable nation’ terms that were being offered to OMD. So things got real sticky.”
“I’m not big enough to do a mega-deal,” said one buyer at a mid-sized agency, who added that he doesn’t believe in the kind of deals OMD is trying to pull off. “But I think it forces me to be a better negotiator, a better reader of the market. I have to be more savvy, and I think that benefits my clients. Clout is not everything.”
Viacom, while not close to an OMD pact, is nevertheless said to be on the verge of renewing its landmark $300 million pact with Procter & Gamble. In addition, the media giant is in discussions about other multiplatform mega-deals, though apparently none is of the magnitude of the P&G agreement.#
Chuck Ross contributed to this report.