Consolidation of specialties a mixed blessing

Mergers and consolidations. If you're looking to compile a list of the major business trends of the past five years, that one would definitely have to rank somewhere near the top. Whether the industry in question is telecommunications, transportation or entertainment,...

Mergers and consolidations. If you’re looking to compile a list of the major business trends of the past five years, that one would definitely have to rank somewhere near the top.

Whether the industry in question is telecommunications, transportation or entertainment, the big seem to keep on getting bigger. And no one – regulators included – seems to know just how big is too big.

In the realm of specialty television, certainly, this whole issue has sparked considerable discussion and debate.

If CTV succeeds in its attempt to acquire NetStar Communications – the deal still awaits approval from the Canadian Radio-television and Telecommunications Commission – the broadcaster will add The Sports Network (TSN), Discovery Channel and Reseau des Sports to its stable of specialty channels, which already includes CTV Sportsnet, CTV Newsnet and Outdoor Life Network.

This comes on the heels of last year’s merger agreement between Alliance Communications Corporation and Atlantis Communications, which brought together four specialty services – Life Network, HGTV Canada, Showcase Television and History Television – under the broadcasting division of a single corporate owner: Alliance Atlantis Communications.

This is by no means the last word in consolidation of ownership, either. Indeed, industry watchers foresee many more such deals in specialty TV during the years to come.

‘No one specialty network can probably exist on its own these days,’ says Bruce Baumann, vice-president, media director with Toronto-based Ammirati Puris Lintas. ‘The only way to stay current is to have multiple entities under one corporate banner.’

Ultimately, it’s about ‘optimum utilization,’ Baumann says. When specialty services share equipment, infrastructure and behind-the-scenes personnel, the cost efficiencies for the broadcaster are considerable.

There are, however, concerns about what increased ownership consolidation means for advertisers and their agencies.

On the one hand, Baumann says, it works to the advantage of media buyers by reducing the number of individuals they need to deal with when executing plans in specialty TV.

If, on the other hand, broadcasters grow too large and powerful through consolidation, buyers could find themselves negotiating from a position of relative weakness. ‘We’ve had situations in the past where some broadcasters have gotten a little big for their britches,’ Baumann says.

Still, this may not be quite so grave a risk as it appears to be. Specialty programming options are now more abundant in Canada than ever. If an advertiser doesn’t feel like paying the rates that, for example, the Alliance Atlantis channels are charging…well, there are plenty of other places to shop. Nothing is a must-buy anymore.

‘We are reaching a time where there’s an abundance of signals out there, and therefore an abundance of choice for the advertiser,’ Baumann says. ‘This makes it difficult for any one player to be as dominant as they might have been [previously], or to charge exorbitant increases from year to year.’

The desire on the part of the major broadcasters to snap up ownership of specialty services is understandable, says Hugh Dow, president of Toronto-based Initiative Media. The future of television, it’s generally agreed, is in specialty. And besides, from a pure bottom-line perspective, these channels are attractive properties, given that they have two separate revenue streams: cable subscriptions and advertising.

For advertisers, he says, specialty offers opportunities for more creative use of media than traditional network television. And consolidation of ownership may add to those opportunities, by making it possible for an advertiser to buy across a broadcaster’s entire specialty portfolio.

While no one in the advertising community is exactly overjoyed to see broadcasters acquiring more clout, it should be noted that there is a counterbalancing trend – namely, consolidation of media management agencies.

‘Consolidated buyers are dealing with consolidated owners,’ Dow says. ‘The concern is that the playing field between the two stays level.’

Sunni Boot, president of Toronto-based Optimedia Canada, agrees. Whether a firm is in broadcasting or media buying, she says, consolidation is probably the only way to ensure survival anymore.

While concentration of ownership in specialty TV inevitably exerts upward pressure on pricing, Boot shares the view that this will be offset by the plethora of choice in the medium. But she does see other risks associated with consolidation, the most serious of which can be summed up in a single word: influence. As individual broadcasters gain control of more channels, growing in size and power, there is the danger that a single large player could exert undue influence in areas of collective industry concern, such as research and measurement.

‘You can become the architect of a policy that might not necessarily be in the best interest of the industry as a whole,’ she says.

Significant changes to the specialty ownership picture are almost certain to continue, Baumann predicts, as major broadcasters move to acquire established services or launch new ones of their own.

CanWest Global Communications, he says, is one player that can be expected to move into the specialty arena much more aggressively in the near future. ‘They have all the equipment and personnel and what they don’t have they can certainly hire.’

Specialty channels in general, he adds, will proliferate further – but not until the framework for digital distribution is fully in place.

Also in this report:

- It’s a harsh realm: In today’s network television environment, the chances of a show’s success are slimmer than ever p.TV2

- Spotlight on…Televion Creative p.TV18

- Specialties take branding to the Web: Treat online presence as destination in and of itself p.TV21

- Drop the Beat busts an interactive move: Alliance Atlantis hip-hop drama invites viewers to participate via Web site and interactive TV p.TV23

From Karen Howe’s dining table: Creativity, COVID and Cannes

ICYMI, The Township's founder gathers the best of the best campaigns and trends so far.

Cannes Base Camp

By Karen Howe

I’m attending Cannes from the glory of my dining room table. There’s not a palm tree in sight, yet inspiration and intel are present in abundance.

Cannes Lions is a global cultural pulse check. The social course correction in the wake of the murder of George Floyd and BLM has delivered far greater diversity in the judging panels as well as the work. And we are all better for it.

I’m proud to say that creativity defeated COVID, which speaks to its power. Great work and big ideas flourished, despite unimaginable odds.

The work from the past two years spans a vast emotional range. From the profundity of Dove’s “Courage is Beautiful” to the hyper exuberance of Burberry’s “Festive,” they are opposite ends of the spectrum, but each answered a need in us.

Take note, the ascendency of gaming cannot be understated. Smart brands have embraced the channel. It makes sense, because gamers participate to meet others around the world, not just to play. And they represent a huge and powerful community. That’s why QSR Wendy’s gamified their iconic gal in RPG’s Feast of Legends.

Burger King sponsored the unknown Stevenage Football Club, transforming the team into online heroes and vaulting BK into the fray at the same time. Once again, the brand embedded itself in culture.

The birth of gaming tourism arrived when Xbox snuggled up to travel guides and created a brilliant baby: a travel guide for gaming worlds. It, too, embedded itself in culture.

From the standpoint of social good, Reporter Without Borders showed how it worked with Mindcraft for its “Uncensored Library” to bypass press censorship, with Minecraft providing a loophole to a space where young people could be educated. It provided youth with a powerful tool to fight oppression: truth.

COVID changed us in unexpected ways. We learned how to pay attention again and there was a notable lack of 30-second commercials. Instead, longer format content thrived. Apple’s WFH was seven minutes long. Entertainment reigned king, so we find ourselves returning to our advertising roots.

Seeing competitive brands form partnerships was one of this year’s other great surprises. The brilliantly simple “Beer Cap Project” by Aguila to reduce binge-drinking saw the brand reach out to competitive beers to join in. Aguila put incentivizing (keyword: free) reminders to drink water, eat food and get home safely on its bottle caps from all sorts of fast food chains, ride-share co’s and H2O brands.

On a personal level, I’m so proud of Canada again this year. Given that it was two years of work from all over the world being judged, even making the Cannes shortlist was an accomplishment. Canada is herding in the Lions in tremendous numbers – and it’s not even over. Fingers are crossed.

KAREN-HOWE-PIC-higher-rez-300x263Karen Howe is a Canadian Cannes Advisory Board Member and founder of The Township Group