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

In Brief: The Garden picks CDs to take on daily creative leadership

Plus, Naked names two new leaders of its own and Digital Ethos comes to Canada.

The Garden promotes two creative directors

ACDs Lindsay Eady and Francheska Galloway-Davis have taken over responsibility for day-to-day creative leadership at The Garden after being promoted to creative director roles.

The pair will also help develop the agency’s creative talent, formalizing mentorship and leadership activities they have been doing since joining the agency four and three years ago, respectively. In addition to creating the agency’s internship program, the pair have worked on campaigns for Coinsquare, FitTrack and “The Coke Challenge” campaign for DanceSafe.

Eady and Galloway-Davis will continue to report to The Garden’s co-founder and chief creative officer Shane Ogilvie, who is stepping back from daily creative duties to a more high-level strategic role, allowing him to focus on client relationships and business growth.

Naked Creative Consultancy names new creative and strategy leadership

Toronto’s Naked Creative Consultancy has hired Yasmin Sahni as its new creative director. She is taking over creative leadership from David Kenyon, who has been in the role for 10 years and is moving into a new role as director of strategy, leading the discipline at the agency.

Sahni is coming off of three years as VP and ECD at GTB’s Toronto office, where she managed all the retail, social and service creative for Ford Canada. She previously managed both Vice Media and Vice’s in-house ad agency Virtue.

Peter Shier, president of Naked, says Sahni’s hiring adds to its creative bench and capabilities, as well as a track record of mentorship, a priority for the company. Meanwhile, Kenyon’s move to the strategy side, he says, makes sense because of his deep knowledge of its clients, which have included Ancestry and The Globe and Mail.

Digital Ethos opens a Toronto office

U.K. digital agency Digital Ethos is pursuing new growth opportunities in North America by opening a new office in Toronto.

Though it didn’t disclose them, the agency has begun serving a number of North American clients, and CEO/founder Luke Tobin says the “time was right to invest in a more formal and actual presence in the area.” whose services include design, SEO, pay-per-click, social media, influencer and PR,

This year, the agency’s growth has also allowed it to open an office in Hamburg, Germany, though it also has remote staff working in countries around the world.

Moray Hickes was the company’s first North American hire as VP of sales, tasked with business development in the region.