Somebody's going to have a very Happy New Year. Unless Wal-Mart changes its mind -- again. Linda Blakely, a spokesperson for Bentonville's behemoth big-box retailer, Thursday confirmed that the retail giant's $580 million re-staged account review was already hearing presentations from agencies, and is on track finalize and name new media and creative shops by the first week of January. She would not, however, confirm or deny reports in Advertising Age that Publicis-owned MediaVest has been asked to join the media pitch process. "The marketing department tells me that we're not going to be talking about the review during the process," Blakely said. If that claim is true, it would suggest the client will likely split the account between a creative agency. The Martin Agency and Ogilvy & Mather are the lone finalists, following the self-removal of incumbent GSD&M and a media shop. Media agencies in the review include Carat, which originally won the pitch partnered with DraftFCB. That win was rescinded, and the latter agency tossed from the follow-up. Mediaedge:cia is also in contention. Early in the Wal-Mart review, MediaVest was partnered with another Publicis agency, Saatchi & Saatchi, until the shop won JC Penney's creative business, leaving MediaVest without a creative partner. Now, all the agencies are pitching separately, sources say, leaving the door open for MediaVest. Representatives for the media company did not return phone calls or emails by press time.
Are big online portals AOL and Yahoo about to go into play, and could a major traditional media company like, say News Corp. or Comcast, be preparing to buy one or the other? That's what Wall Street is beginning to buzz about, according to a report released Friday morning by the equity research team at Merrill Lynch. "We believe there are several trends that could push either AOL or Yahoo! Towards a major transaction, with each other or with another competitor," the securities report speculates. "In the past year, AOL has shifted towards an advertising-supported model, but is still losing significant share in search. Likewise, Yahoo's technology and revenue results have fallen behind Google, resulting in a lagging stock performance." The note predicts those trends could lead AOL and/or Yahoo to explore a "transformative transaction" over the next 12- to 24-months, and likely scenarios include: * An AOL-Yahoo "tie-up," which Merrill Lynch deems the "most logical" outcome. * An acquisition by Microsoft (the next most logical conclusion). * An acquisition by a major traditional media player such as Comcast or News Corp. While the least likely scenario, Merrill Lynch's analysis is that the math of a traditional media company play "could work," citing News Corp.'s previous acquisition of MySpace.com. "News Corp. and Comcast are two media companies that have been speculated as potential candidates to purchase Yahoo!. Although we understand the rationale for each, neither appears likely," writes the firm, throwing water on the traditional media scenario. "Of the two, we see more logic in a possible News Corp.-Yahoo combination."
Fox Broadcasting Co. told a panel of appellate judges on Wednesday that FCC sanctions levied against the network over the use of profanity for its Billboard Awards were not warranted. The net argues that the agency didn't provide a "reasoned analysis" of why it changed its policy. "We have 30 years of unbroken precedent, where the commission recognizes that the use of its expletives is offensive to some, but has never declared that the use of these expletives is the basis for any kind of sanction," Fox's counsel Carter Phillips told the Second Circuit Court of Appeals in New York City. The oral arguments arose from FCC sanctions against Fox for the airing of the Fox Billboard Awards in 2002. During the broadcast, Cher responded to her critics by saying, "Fuck 'em." Then in 2003, Nicole Richie commented on the Billboard Awards Show about her own show, "The Simple Life": "It was hardly all that simple--does anyone know how fucking hard it is to get cow shit out of a Prada purse?" There were no monetary penalties imposed by the FCC against Fox for either incident. The FCC doesn't categorically bar these words, said Phillips, although he says the federal agency has declared them profane. "I don't think there is a reasoned analysis," he said, concerning the FCC ruling. Judge Pierre Leval believed the FCC seemingly gave Fox a "reasoned" argument--that it could be harmful to children. "Can you regulate this kind of speech?" asks Phillips. "I don't think so." He doubted that a child could be damaged by the utterance of a single profane word. "That would have to be what you are looking for," explained Judge Rosemary Pooler. "Their [FCC] argument that they really are preventing harm to an identifiable population." At the end of the day, Carter says, it's about recognizing the First Amendment protections. "Speech that is indecent must involve more than an isolated use of a word," says Phillips, gleaning his position from a 1978 Pacifica decision on several words deemed profane by the FCC. Phillips notes that there were numerous cases of so-called "fleeting expletives" on TV and radio between the 1978 Pacifica decision and a 2004 FCC ruling of profane use of words during the Golden Globe Awards. Phillips wonders why words become overwhelming in 2004, but were not a "source of any concern from 1978 to 2004?" Eric Miller, an attorney for the FCC, responding to the charge of non-action on fleeting expletives: "There is nothing in the record to the extent that they existed during that time. But what the commission did in its [Pacifica order of 1978] was to say that evaluation of context is critical." "So therefore, it is inappropriate to take what ought to be just one factor--mainly a statement repeated or isolated--and elevate that one factor to determine significance. Rather, it's appropriate to view all the factors together," says Phillips. He added that the FCC doesn't have any rule that multiple expletives are indecent. The court now has to weigh the arguments, with a decision not expected until February or March. But profanity issues will be front and center in the new year. By December 26, the FCC will defend its CBS-Janet Jackson Super Bowl fine.
When ratings come in for the next new episode of NBC's "The Office," the data are likely to show that a full one-fourth--25%--of 18-to-49 viewers watched via DVRs. Bottom line: networks' failure to get paid for more than just "live" viewing could cost them big dollars. And that may have a major impact on next year's upfront. Recent episodes of the niche NBC hit have been posting jaw-dropping increases in the number of viewers watching in time-shifted fashion, likely with commercials skipped. In fact, "The Office" is believed to be the first show in which more than 20% of 18-to-49s watched an episode with a DVR in the week after its on-air premiere. Signaling that the 25% mark is imminent are the DVR ratings for the Nov. 30 "Office" episode--the latest available--that showed 23% of 18-to-49 viewers watched via DVRs in the seven days following its Thursday night "live" premiere. The episode posted a 3.9 "live" rating--and this soared to a 4.8 in the "live plus seven" category, which adds DVR viewing in the week after broadcast to the "live" figure. The striking increases augment recent Nielsen research showing that DVR viewing is growing at a faster pace than buyers and sellers thought just a few months ago. At the time, NBC research chief Alan Wurtzel called it "stunning" that 18- to-49-year-olds in DVR homes take in more than 40% of their prime-time viewing in time-shifted mode. "The Office" appears to be a prime example of the shifting dynamic. "It may be an indication of how that segment of the audience will ultimately watch television," says Bill Carroll, vice president/director of programming at Katz Television Group. "They're not the people who are watching "According to Jim." The Nov. 30 episode of "The Office" isn't an anomaly. DVR viewership for the comedy has been on a seemingly unstoppable trajectory, which should continue as more DVR homes are added to the Nielsen sample. (The figure is 11.4%, and expected to reach 12% by Jan. 1.) The three preceding "Office" episodes--which all ran in the November sweeps--also showed that 20%-plus of the 18-to-49 audience watched the show with DVRs after the Thursday 8:30 p.m. broadcast. For Nov. 2, "live" 18-to-49 ratings were a 3.8, which leaped to a 4.6 (up 21%) in "live plus seven." The following two episodes both posted 22% jumps. In light of the Nielsen research showing a boom in time-shifted viewing--probably more than networks anticipated--it appears that there is now much at stake. Significant DVR-infused ratings for pricey shows, such as "The Office," raise the question of how much money networks may be "leaving on the table" this season and whether they will be able to extract dollars for DVR ratings next season. (Advertising Age says a spot on "The Office" goes for $219,000.) CBS CFO Fred Reynolds signaled recently that networks will take a harder line next round. Reynolds says many DVR viewers are actually watching commercials, meaning that CBS is "delivering free goods." "We ought to get paid for it and ... we'll have a stronger position in the 2007-08 upfront," Reynolds adds. For now, "The Office," which is sparking a DVR-ratings debate, will be a TV-based phenomenon. NBC's top television executive, Jeff Zucker, recently said that the network has opted not to stream "The Office" on NBC.com in order to maintain its eventual value in syndication. But another reason may be to limit the number of DVR-aided viewers who watch it outside its broadcast window. (Another may be to preserve revenues from iTunes downloads.) NBC executives were not available for comment. In comparison to the much lower-rated "Office," top-five hits "Grey's Anatomy" and "Lost" have seen "live plus seven" ratings increase by a respective 18% and 17% over "live" ratings, but no episode appears to have crossed the 20% line. Nielsen's report on the top time-shifted shows for 2006 was based on household ratings, not the 18-to-49 demo in which DVRs are more pervasive. The show posting the greatest increase between "live" and "live plus seven" household ratings in the Nielsen poll was NBC's "Studio 60," up 10.9% on average, followed by the network's "Heroes" at 9.1%. Networks arguably took a pie-in-the-sky approach in the most recent upfront as they sought to press buyers to pay for some DVR-aided ratings. ABC's sales chief Mike Shaw led the charge. But buyers closed rank and refused, on the grounds that DVR viewership arguably is a euphemism for commercials-skipped. Of course, if "commercial ratings"--and that is a big "if"--become an industry standard and provide hard data on the breakdown of how many commercials are watched and skipped with DVRs, the issue could become moot. "Commercial ratings are the answer," says Geoff Robison, senior vice president, national broadcast for Palisades Media Group. "But I can't imagine the issue will be resolved by this upfront. It's a pretty steep mountain to climb that quickly." On some levels, it isn't surprising that rabid DVR users are watching "The Office" via the devices. Viewers have demonstrated a willingness to watch the show on-demand, with a large number doing so via iTunes downloads (costing $1.99 each), although NBC declined to provide exact figures. Yesterday, an episode of the "Office" was listed as iTunes' top-downloaded show, and the series accounted for three of the top 10, more than any other program. "The Office" also runs in the same time slot as two strong-performing shows--"Ugly Betty" on ABC and "Survivor" on CBS--perhaps leading some viewers to record "The Office" and watch one of the other shows live. "Survivor" may fall into that category, since it has an immediacy factor with contestants voted off each week. "People want to see that in real-time," says Gail Ettinger, executive vice president, national broadcast at KSL Media. "Office" viewers are also believed to be more upscale and tech-savvy than the general public--iTunes use is an example--and to own more DVRs on average. The show is in the top-10 most-recorded shows among TiVo users, considered to be even more upscale than the general DVR universe. NBC executives frequently trumpet the role that iTunes downloads have played in improving ratings for the "The Office," arguing that alternative distribution forms add to--rather than cannibalize--ratings. But any ratings increases appear to be modest. Before the show was made available last season on iTunes, it was averaging a 3.9 in the 18-to-49 demo. It finished the season with a 4.0--a 3% increase. This year, it averaged a 3.7 "live" rating in sweeps--down from the pre-iTunes days.
Is TV Killing Magazine Liquor Ads? The upswing in advertising for alcoholic beverages on cable TV would seem to be bad news for magazines, which traditionally dominated the market--but is it? The question is complicated, and depends on what kind of alcohol is being advertised. Even within specific categories, it's hardly a zero-sum game. There is no question that TV is profiting from the end of a voluntary ban on alcohol advertising in 1996. According to the Center on Alcohol Marketing and Youth at Georgetown University, which tracks ad spend by medium, TV ad budgets for alcoholic products increased by 32% from 2001-2005, translating into $780 million in 2001 to more than $1 billion in 2005. Cable TV is driving the boom, with ad dollars up from $156.7 million in 2001 to $441 million in 2005. Distilled spirits (hard liquor) advertising has grown especially fast, increasing 2,300% since 2001 to $121.5 million. But magazines have taken a hit in hard-liquor advertising, which declined about 6% between 2001-2004--falling from $254 million to $239 million. Still, it's not all bad news for magazines--or good news for TV. While magazines are seeing hard liquor ad dollars erode, beer companies are pouring it on, boosting spending from $31 million in 2001 to $65 million in 2004. Wine companies are also upping their budgets, from $29 million in 2001 to $47 million in 2004. Prevention Gets New Editorial Director for Web Site Nicola Bridges has been named the editorial director of Prevention.com--the companion Web site to Prevention magazine, one of the country's leading health magazines. The move is part of publisher Rodale's larger restructuring of its print and online business. Bridges will be in charge of creating content that relates to the magazine, but also expands on it. Previously, she served as vice president of editorial programming for iVillage. Publishing Group of America Seeks Fulfillment The Publishing Group of America, publisher of newspaper magazine inserts American Profile and Relish, has hired a fulfillment agency to help with the processing of orders, inventory management and product shipping. Since 2000, the circulation of American Profile has expanded from about 1 million to 9 million, and the company has partnered with Pro Flowers, Big Idea Entertainment, Time-Life and Gardener's Supply to market products related to magazine content. San Diego Magazine Launches Web PortalSan Diego Magazine, covering travel and leisure in Southern California, has launched a new regional Web portal for the magazine, as well as related magazines like Travels, San Diego At Home, Charitable Events Registry, and Medical Guide. San Diego Magazine, published by CurtCo Media Labs, has an audited circulation of 54,000. The new Web site was produced in partnership with Godengo, Inc. Mainline to Launch A new magazine covering culture, leisure and lifestyle along Philadelphia's Main Line is launching this January. Produced by the editorial team behind Bucks, the first issue of the new publication will include a tour of Vanderbilt's mansion and profiles of various Mainline residents made good, including Sixers President Billy King.