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OMD doing $1 billion deals

May 6, 2002  •  Post A Comment

The rules are about to change when it comes to negotiations between mega-agencies and the massive companies that own myriad media properties.
OMD USA is working on two separate multiplatform deals-one with Viacom and another with The Walt Disney Co.-each worth more than $1 billion, according to network TV executives familiar with both discussions.
The OMD deals, which are between Viacom and Disney and the agency itself-as opposed to any one client-would blow away the scope of any previous multiplatform deal.
Heretofore, the multiplatform deals that have closed have been with specific clients-a Procter & Gamble or a Tricon Global Restaurants (KFC, Pizza Hut and Taco Bell). And the biggest deal thus far has been a multiyear pact in the $300 million range.
The two pending OMD billion-dollar deals would include just about all the upfront, scatter, cable and spot dollars that the mega-media-agency plans to spend on all of the Viacom and Disney media properties over the next year. Ideally, OMD would like to close both deals, which would be single-year pacts.
The Viacom deal would include
CBS, UPN, all the MTV Networks, BET, the company’s CBS and UPN TV stations, syndicator CBS Enterprises, the Infinity radio stations, Viacom Outdoor and the company’s Internet properties.
The Disney pact would include ABC, the ABC cable TV properties-among them the ESPN channels, A&E Networks and Lifetime Television-ABC TV stations, syndicator Buena Vista Television, ABC Radio and Disney’s print publications and Internet properties.
“Everyone talks about size and the leverage that brings,” said one of the network executives familiar with the discussions, “but no one has brought something of this gargantuan size to the table before. This is a game changer.”
From the Viacom and Disney sides, those executives need to be convinced they are “getting something worth closing the deal [for],” said the executive. “They need to look beyond the billion-dollar-plus number of these deals and say, `OK, but am I really getting a bigger share of budget?’ On the OMD side, they need it to make sense both pricewise and propertywise for their clients.”
Many media executives have speculated that the first mega-agency to undertake this kind of deal would be Interpublic’s Magna Global. The two media shops that comprise Magna Global, Initiative Media Worldwide and Universal McCann, had more than $16 billion in capitalized billings last year, according to Advertising Age. And that doesn’t even include the media billings of FCB Worldwide and Lowe Lintas & Partners, which are also part of Magna.
Magna’s billings dwarf the $7.6 billion in capitalized media billings that Omnicom’s OMD did last year, according to Ad Age figures. OMD comprises the media units of BBDO Worldwide, TBWA Worldwide and DDB Worldwide. The blue-chip clients OMD buys for include McDonald’s, Visa International, PepsiCo and Hershey Chocolate USA.
Even if these deals close, OMD plans to buy time on NBC, Fox and other broadcast and cable networks during the upfront.
OMD was the nation’s biggest single media agency buyer of network TV last year, spending $2.8 billion, according to Ad Age. OMD was the No. 3 spender in cable TV, syndicated TV and spot and network radio, and the No. 6 spender in spot TV.
Negotiating for OMD are CEO Joe Uva and Dan Rank, managing director for broadcast TV. Neither was available for comment. ABC referred an inquiry to OMD.
As media shops have evolved into mega-media shops, OMD has been working overtime to distinguish itself from the crowd. For example, on the TV programming front, it has been looking into financing music specials-such as the Jennifer Lopez show that aired earlier this season on NBC-for its clients.