GroupM’s Channel 4 Deal

By The Cog Blog Archives
Cover image for  article: GroupM’s Channel 4 Deal

Another day, another deal.

A few weeks back Campaign reported that GroupM has struck a two-year deal with Channel 4 apparently worth £500m. The deal is alleged to include the provision of some advertiser-funded shows from the agency’s sibling GroupM Entertainment. It’s strange that any agency would want to publicize an over-arching deal like this, especially in the current climate where clients’ trust in their media buyers’ objectivity is at a low point. The logic for Channel 4 talking about this is a little clearer: It makes some sense for them to promote their ability to attract serious money under the current model while rumours of government discussions over future funding mechanisms continue to ebb and flow.

Anyhow, as is unfortunately too often the case with our trades, the Campaign story didn’t explore the implications of the largest media buyer in the UK selling shows to one of our largest broadcasters. The story concluded that this arrangement is “similar … to the previous deal.”

So that’s all right then.

As some loud-mouth (me) said from the stage in front of 800 anti-advertising TV producers at the Edinburgh TV Festival a million years ago (1989), TV back then had to look for new ways of bringing in funding. Sadly, as levels of ad expenditure don’t expand at the same rate as the number of TV channels on offer, it was always going to be essential to look for new, editorially acceptable ways of bringing advertisers into the medium.

As the same loud-mouth (hello again) then demonstrated (in 1990) it is possible to bring an advertiser’s money (Kellogg’s in this case) into TV production (“The Magic Mirror,” a children’s animated series made with Anne Wood’s Ragdoll Productions) and then sell the show to a commercial broadcaster (ITV) without in any way compromising editorial integrity.

Another age, a different solution, so who am I to criticize the evolution of this model? (“The Magic Mirror” was the first or certainly one of the first examples in the UK of this sort of co-funding.)

First there’s the matter of where the broadcaster’s money goes. In our case the answer was “back to Kellogg’s.”

In second place there are the conditions: Our sale to ITV was for cash and there wasn’t any element of airtime included. The two decisions (buying a show; buying airtime) were entirely separate. We offered ITV’s editors and controllers a children’s show which they bought on merit.

No commercial sales person was in any way involved in that deal.

Kellogg’s as a large TV advertiser continued to buy airtime in the same way that they had always done which as it happened was not through my agency.

I don’t know the details of the Channel 4 GroupM deal so what comes next is speculation.

GroupM Entertainment (GME) has brought much needed fresh thinking into the funding of TV productions in the USA. If GME underwrites a deal, and if they say to their advertisers, “Are you interested in coming in with us, in return for some commercial benefits (sponsorships, or even product placements might be examples)?” always assuming the show airs, then that seems to me fair enough.

If on the other hand GroupM Entertainment offers shows to a broadcaster at (let us assume) a below rate-card price in return for large swathes of airtime, and if their advertisers aren’t informed about the arrangements, then that strikes me as fraught with problems.

First, the broadcaster’s editorial team might be persuaded to take something they wouldn’t necessarily have commissioned/bought because of commercial pressures.

Second, the agency’s planners might be persuaded to include the broadcaster on plans where it might not sit comfortably just because there is a shedload of airtime that needs shifting.

This leads to two questions.

One: Is it a good thing for the viewer that the editorial and sales activities of a broadcaster are becoming so intertwined (if indeed they are)?

Two: Is it fair on advertisers that their plans are based not on what’s best for them but on what’s needed to fulfil a deal of which they quite possibly had no knowledge?

You might have to be content to ask yourself these two questions. Campaign sadly hasn’t asked them of those involved on your behalf, yet.

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