• by John Gaffney , June 1, 2003

The press and some special interest groups have been quite critical of the FCC rule changes expected to be passed today in Washington. And some within the media business have claimed that if media conglomerates are allowed to snap up more properties they will be tougher to negotiate rates with. But a MediaPost survey of some key executives found that buying and selling media may actually be unchanged, or even more creative, with the new rulings.

In fact, some executives believe stronger media companies will be better negotiation partners. For example, Deutsch chief media officer Peter Gardiner thinks that a Viacom, Newscorp or Disney that has more media properties under its wing can be more creative at the negotiating table.

"It could make it easier to think in a more strategic fashion," Gardiner said. "It would concern me a little bit when big media companies control too much media from a content standpoint. But from the standpoint of serving our clients, if a company comes to the bargaining table with more assets, that's means we have more assets to work with. It makes integrated marketing easier to operate."

"This could lead to a whole different level of new cross-platform deals," said Brian McHale president of Empower Media Marketing in Cincinnati. "You know a lot of advertisers are important in this marketplace even though they don't have million dollar campaigns running all the time. This could create opportunities for those advertisers in local markets."

Both McHale and Gardiner believe competitive pricing will have to stay in effect as long as there are at least two competitors playing for a market. For example, Clear Channel has been able to lock up a competitive advantage in several major radio markets, but it has not been able to unduly drive up ad rates because there is still a competitive option in its markets. In fact, it is known within the media business as an effective marketing partner. For McHale, the jury on rate hikes as a result of consolidation is still out.

"There is always the danger that it could happen," McHale said. "But I don't feel like it has happened in some other situations where companies have been able to become very powerful within a marketplace. I don't know what kind of power you'd need to amass to make rate hikes stick. I think as long as there are at least two competitors and there are people who have dollars to spend, the marketplace will stay competitive."

Not everyone of course thinks the FCC ruling can do down without a hitch. For example, if the rule regarding TV station ownership is changed today, one company could own three stations in a major market. The danger of that is expressed by Aaron Cohen, Horizon Media's EVP and director of broadcast media.

"If there are five or six stations in a market how do you put three of them in the hands of one company," Cohen said. "You have to believe that would lead to a long term rise in the cost of buying TV time in that market. It's going to increase prices and eliminate competition."

Cohen's main concern is in buying on a local basis. He does not believe more powerful media giants would affect a process such as the upfront. Still he believes that anything that supports more media consolidation is bad for the media business because it benefits the seller with no apparent benefit to the buyer.