MTV Close to $250 Million Deal

May 19, 2003  •  Post A Comment

Omnicon Group’s OMD USA is nearing an agency-wide $250 million cable upfront deal with Viacom’s MTV Networks, striking early in what is expected to be a frenzied market that already has networks asking for pricing increases as high as 19 percent. The deal is expected to close this week, according to executives close to the companies.
OMD USA has a number of key young-skewing clients that already buy a lot of time on the MTV Networks. PepsiCo’s Pepsi-Cola and Frito-Lay brands spend $50 million on MTV Networks alone. Other marketers on the cable channel include Sony’s PlayStation, Wrigley & Sons, Vivendi Universal’s Universal Pictures, MGM Distribution Co. and McDonald’s Corp. MTV Network annual events include The Video Music Awards and MTV Movie Awards.
For the past several years, MTV Networks has commanded higher cost-per-thousand viewer price increases vs. other similar-size cable networks, thanks to its highly coveted audience of teens and young adults. During last year’s upfront, when some mature cable networks struck lower-priced deals over the year before, MTV Networks improved by some 9 percent in its CPMs.
Two weeks ago, MTV Networks held its first-ever upfront presentation. John Swift is the OMD senior media executive who negotiates Viacom cable network advertising deals. The idea behind the combined network presentation was to demonstrate to buyers that MTV properties are competitive with broadcast nets for highly coveted younger-skewing viewers.
Executives at OMD wouldn’t comment. An MTV spokeswoman said the two companies do not yet have a deal.
Overall, sharply higher TV prices are expected as TV’s advertising upfront market gets under way, with broadcast networks asking for hefty 12 percent to 19 percent increases on CPMs.
Media-buying executives said deals will be settled for somewhat less, with 5 percent gains for UPN, 6 percent for ABC, 9 percent at CBS, 11 percent for NBC, 11 percent for Fox and 15 percent for The WB.
Industry estimates are that overall ad dollars could be up more significantly than previously thought for broadcast networks: at the low end, up 9 percent over last year’s upfront to $8.7 billion; at the high end up 13 percent to $9.3 billion. NBC could rake in the most at just a shade south of $2.6 billion.
“The [broadcast] networks are just starting to count the house,” said Mike Drexler, CEO of Publicis Groupe’s Optimedia USA. “Budgets are going to be submitted [this] week.