Hereiam
18-12-04, 12:04 PM
Kerry Stokes's Seven Network has emerged as the main loser in the talks between television networks and the big media-negotiating groups over advertising rates and deals for 2005.
The talks, which will determine the fate of 70 to 80 per cent of the $3.3 billion that is expected to be spent on TV advertising next year, will be wrapped up over the next few days, although some deals might not be finalised until early January.
Seven is believed to have secured good deals for some specific programs, but media buyers said overall the network's ad rates would be flat or, in the case of some media groups, lower than this year. A Seven executive denied it was cutting its ad rates.
Ten Network and Kerry Packer's Nine Network have secured higher ad rates for 2005, but the increases are smaller than they wanted. Media buyers said Ten was forced to cut its increase from 13 per cent to about 8 per cent.
Nine had to abandon a proposed 8 per cent increase and the introduction of a floating rate card, which would have seen ad rates in key programs change each week according to demand.
Nine's rate increase is an estimated 6 per cent.
One buyer claimed that Nine offered him two rate reductions before any formal meeting to discuss 2005 deals.
Seven's strategy of offering a zero rate increase in exchange for ditching the bonuses and discounts it traditionally gives big-spending clients was not successful. (Ten has removed its bonuses over the past three years, while Nine removed most bonuses last year.)
Two of the four negotiating groups, Zenith Media and Mitchell & Partners/Initiative, have struck deals with the networks, while the Equmedia and OMG groups are expected to wrap up their talks early next week.
"The negotiations were vigorous, it was a good outcome for everyone" the chairman of Mitchell & Partners, Harold Mitchell, said.
Zenith trading director Henry Tajer said it had completed its 2005 deals with all three networks. Paul Leeds, the lead negotiator for Equmedia (which accounts for about 40 per cent of all TV ad dollars) and chief executive of the media agency Starcom, said he would finalise his group's metropolitan TV deals next week.
Neither Mr Mitchell nor Mr Tajer would discuss the details of their deals nor the ad rate increases the networks achieved.
But Mr Tajer said the TV ad market was weakening. "The oomph the networks were counting on is not there," he said.
The networks entered the negotiations convinced that the strong growth in the TV ad market this year would roll into 2005.
By December 31, the market will be up about 13 per cent to an estimated $3.2 billion. But growth has slowed in recent weeks and will continue to slow next year.
A survey of marketers by Starcom found that TV ad budgets would rise 4 per cent next year. Mr Tajer predicted a 6 per cent increase, driven solely by ad rate increases.
Seven's offer to freeze its ad rates if media buyers agreed to give up bonuses and discounts met a stony reception.
"It was mission impossible," said one buyer. "Seven was never going to get away with that. Removing all the bonuses and discounts would have given it an effective rate increase of 11 to 13 per cent. It was dreaming."
Media buyers said the outcome of the negotiations could have been worse for Seven, given the 6.8 per cent decline in its audience during the key prime-time session of 6pm to 10.30pm (which accounts for about 75 per cent of total TV ad revenue).
In the key age groups of 25 to 54 and 16 to 39, Seven's audience fell 10 per cent and 3 per cent respectively.
"Seven faces a very difficult time," said one buyer. "Given its ratings performance this year, some of its deals for 2005 will involve rate cuts.
"But looking at Seven's program line-up for next year, it might achieve some audience growth.
"Next year is the year that Seven must consolidate its program schedule, get some audience back and deliver consistent results."
"The negotiations were vigorous. It was a good outcome for everyone."
Harold Mitchellchairman Mitchell & Partners
Source : afr.com.au
The talks, which will determine the fate of 70 to 80 per cent of the $3.3 billion that is expected to be spent on TV advertising next year, will be wrapped up over the next few days, although some deals might not be finalised until early January.
Seven is believed to have secured good deals for some specific programs, but media buyers said overall the network's ad rates would be flat or, in the case of some media groups, lower than this year. A Seven executive denied it was cutting its ad rates.
Ten Network and Kerry Packer's Nine Network have secured higher ad rates for 2005, but the increases are smaller than they wanted. Media buyers said Ten was forced to cut its increase from 13 per cent to about 8 per cent.
Nine had to abandon a proposed 8 per cent increase and the introduction of a floating rate card, which would have seen ad rates in key programs change each week according to demand.
Nine's rate increase is an estimated 6 per cent.
One buyer claimed that Nine offered him two rate reductions before any formal meeting to discuss 2005 deals.
Seven's strategy of offering a zero rate increase in exchange for ditching the bonuses and discounts it traditionally gives big-spending clients was not successful. (Ten has removed its bonuses over the past three years, while Nine removed most bonuses last year.)
Two of the four negotiating groups, Zenith Media and Mitchell & Partners/Initiative, have struck deals with the networks, while the Equmedia and OMG groups are expected to wrap up their talks early next week.
"The negotiations were vigorous, it was a good outcome for everyone" the chairman of Mitchell & Partners, Harold Mitchell, said.
Zenith trading director Henry Tajer said it had completed its 2005 deals with all three networks. Paul Leeds, the lead negotiator for Equmedia (which accounts for about 40 per cent of all TV ad dollars) and chief executive of the media agency Starcom, said he would finalise his group's metropolitan TV deals next week.
Neither Mr Mitchell nor Mr Tajer would discuss the details of their deals nor the ad rate increases the networks achieved.
But Mr Tajer said the TV ad market was weakening. "The oomph the networks were counting on is not there," he said.
The networks entered the negotiations convinced that the strong growth in the TV ad market this year would roll into 2005.
By December 31, the market will be up about 13 per cent to an estimated $3.2 billion. But growth has slowed in recent weeks and will continue to slow next year.
A survey of marketers by Starcom found that TV ad budgets would rise 4 per cent next year. Mr Tajer predicted a 6 per cent increase, driven solely by ad rate increases.
Seven's offer to freeze its ad rates if media buyers agreed to give up bonuses and discounts met a stony reception.
"It was mission impossible," said one buyer. "Seven was never going to get away with that. Removing all the bonuses and discounts would have given it an effective rate increase of 11 to 13 per cent. It was dreaming."
Media buyers said the outcome of the negotiations could have been worse for Seven, given the 6.8 per cent decline in its audience during the key prime-time session of 6pm to 10.30pm (which accounts for about 75 per cent of total TV ad revenue).
In the key age groups of 25 to 54 and 16 to 39, Seven's audience fell 10 per cent and 3 per cent respectively.
"Seven faces a very difficult time," said one buyer. "Given its ratings performance this year, some of its deals for 2005 will involve rate cuts.
"But looking at Seven's program line-up for next year, it might achieve some audience growth.
"Next year is the year that Seven must consolidate its program schedule, get some audience back and deliver consistent results."
"The negotiations were vigorous. It was a good outcome for everyone."
Harold Mitchellchairman Mitchell & Partners
Source : afr.com.au