• by Joe Mandese  @mp_joemandese, August 7, 2007

In a move bound to send shockwaves through the interactive TV advertising business, Turner Media Group has filed for Chapter 11 federal court protection. Until early this year when EchoStar cut a deal with Google to handle some of its advertising sales, Turner (also known as The Media Group) was the exclusive national advertising sales representative of EchoStar's DISH satellite TV service, which offered the best national footprint for advertisers of any interactive TV service in the U.S. In April, EchoStar unveiled a plan to begin selling DISH's national advertising inventory via Google's automated online media buying systems, and since then the relationship between Turner and EchoStar has grown rocky as the satellite service began renegotiating its carriage agreements for Turner's eight cable and satellite TV channels, which were the basis of much of its interactive TV applications.

Turner appears to have also lost some additional aspects of its advertising sales role with EchoStar, according to agency executives who say they were informed by EchoStar's in-house sales team that Turner would no longer represent them. At least one media buyer tells MediaDailyNews that his client's inventory was "preempted" without their knowledge and that the time was inexplicably allocated to Tribune Media Services. The executive declined to comment on the record, because his company was trying to recover its advertising payments to Turner.

While it was unclear at presstime what other advertising creditors Turner might have, the company said its Chapter 11 filing was intended to allow it to "reorganize" and "restructure its obligations and promptly repay all of the debts legitimately owed."

As part of that process, Turner said it also filed "a number of 'first day' motions intended to allow the company to achieve a smooth landing in Chapter 11 and to ensure employees continue to be paid and receive all of their benefits. TMG has retained the services of the nationally recognized law firm Baker & Hostetler LLP as its bankruptcy counsel."

It's been a while since Madison Avenue faced the bankruptcy of a major media sales organization, but the Turner move is likely to have a ripple effect well beyond its immediate advertising creditors. Turner's eight interactive channels, coupled with DISH's 13 million subscriber base, gave it the best national footprint and the only real scale within the fledgling interactive TV industry, which has routinely been beset by fits, false-starts and empty promises for transforming the way advertisers interact with TV viewers.

"It's a concern," Mitch Oscar, the influential executive vice president and director of Aegis' Carat Digital unit, said prior to Turner's bankruptcy filing. Oscar, a champion of the interactive TV business, was speaking about the growing fallout between Turner and EchoStar and the fact that it was becoming increasingly unclear who was representing the valuable DISH network inventory.

A Turner spokesman told MDN that the company's advertising sales representation agreement with EchoStar became "non-exclusive" at the beginning of this year. In April, EchoStar announced its deal with Google. While it was never clear how much of DISH's inventory Google was responsible for, a significant aspect of the deal was also the exchange of information from DISH's digital set-top database.

"This partnership extends Google's current advertising platform to a national TV audience with the aim to deliver more relevant and measurable ads," the companies stated. "EchoStar and Google are working together to provide automated online campaign planning, scheduling, delivery and measurement of ads on the DISH Network."

An EchoStar spokesperson declined to comment on the status of its relationship with Turner.

DISH network's carriage agreement represented a significant portion of the distribution of Turner's eight cable programming lifestyle channels.