Big fat deal

Jun 10, 2002  •  Post A Comment

The Monster of Madison Avenue meets the Behemoth of Broadcast Row.
It’s not a myth, after all! It’s one for the new millennium and the brave new era of consolidation: The billion-dollar multiple-platform deal between a mega-media agency and a mega-media company.
For a while, this Colossus of Clout will be the talk of the town, just like the latest superhero movie at your local megaplex. But hyphens (and superlatives) be damned, here’s the real question: Will the billion-dollar mega-deal have the lasting power of, say, “Wheel of Fortune,” or is it just the genre du jour, the ad game’s answer to “Who Wants to Be a Millionaire”?
Given the Four Horsemen of the buying and selling upfront marketplace-fear, greed, ego and arrogance-it’s likely more a “Millionaire”-style phenomenon.
For example, consider this: Late last week, as NBC was mopping up its phenomenal $2.7 billion prime-time upfront, it received a call from the chief of a mega-media agency. Hold everything, this media agency chief said excitedly. I can get you that extra $200 million that you didn’t get from us last year if you can cut me a deal.
Well, hold on yourself, partner, the NBC exec said. If you had come to me a week ago with that proposition, I mighta been eager to oblige. But now I’m mopping things up and I just don’t know.
Angry words were exchanged. Cellphones were slammed shut.
Eventually, just before it hung out the “sold out” sign, NBC took about $100 million of the agency’s money, but that was it. Big still, no mega-deal there either. Stories like that abound at this upfront.
And consider this: We reported last week that mega-agency Magna Global was talking to Viacom Plus about a mega-deal. While Magna did do a significant upfront deal with CBS last week, it was an old-style one-network deal; a mega Magna-Viacom Plus deal did not materialize, and for more reasons than just that it’s a mouthful to say.
Why not? Why is the largest Viacom Plus deal this upfront simply an extension of last year’s $300 million Procter & Gamble deal? Why do none of the other OMD cross-platform deals still under discussion-with the likes of AOL Time Warner, Vivendi Universal and Discovery Communications-come near to crossing the nine-zero threshold? Why isn’t there a mega-deal being done by BCom3, which owns Starcom and MediaVest? And why do we hear not a mega-peep from MindShare Worldwide or Zenith Media Services?
Because of the Marketplace, with a capital “M.” Mogul to mogul, these deals make sense; in fact, you might consider that one rationale for all the consolidation in the media and advertising industries of the past couple of years was precisely so that such grand alliances would be possible.
When Magna’s Bill Cella sits across the table from Viacom’s Mel Karmazin, they’re grand strategists, commanding vast armies and resources, and they see the worldwide chessboard whole.
But then, once the Marketplace actually breaks, the grunts and the foot soldiers take over, pure buyers grappling with pure sellers. In the fog of upfront war, marketplace psychology takes over and trumps all. Added value be damned! Claims of higher strategy and superior market intelligence get swept aside. No one wants to be left behind, no one wants to miss out on the best avails, the sweetest deals.
Then we’re right back in the Kingdom of the Four Horsemen. Perhaps that’s why during this upfront, the cocktail chatter was all about the client with an interest in Thursdays that broke away from the Grand Strategists to cut its own deals before it was too late.
Consider too that the foot soldiers in the armies the Grand Strategists have mustered have their own relationships, their own careers, their own reasons for making (or not making) a particular deal. “Hold fast!” the Grand Strategists cry. “Yeah, so who’s gonna pay the mortgage?” the foot soldiers reply. Grand strategy may sound grand in the boardroom, but just ask the coupon-clipping shareholders of AOL Time Warner and Vivendi Universal what they think of grand strategies and you might get an earful (in two languages, no less).
So let’s all toast the biggest ad deal ever made and raise our glasses to Messrs. Joe Uva and Dan Rank and Michael Eisner and Bob Iger. They saw the vision and they carried it off, despite objections from some of the foot soldiers.
OMD USA was the nation’s biggest single media agency buyer of network TV last year, spending $2.6 billion, according to Advertising 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.
OMD clients are also traditionally the biggest single buyer of the Academy Awards, the Super Bowl and the National Basketball Association Finals, according to a senior ABC executive.
And what network just happens to be airing all three of these high-profile mega-events this coming season?
So just don’t look for this kind of a deal too often, regardless of the consolidation of buyers and sellers.
What happened between Disney and OMD was “The Perfect Storm.”