Is Viacom's deal with Sky good for the TV sector?

How would the move affect Channel 4 and the wider ad sales marketplace, Arif Durrani and Gurjit Degun ask.

What will happen to the TV advertising marketplace now that it has consolidated into three main sales houses?

Most agency leaders agree that Viacom’s decision to strike a deal with Sky Media to handle all ad sales for Channel 5 was no great surprise. However, the timing caught everyone on the hop.

The exact shape of the marketplace from next month is still being debated, but the latest data obtained by Campaign suggests Channel 4’s insistence that it will remain bigger than Sky Media’s operation (as we reported last week) might be a little wide of the mark.

In terms of how much adspend they are likely to attract – based on current market trends – the new Sky Media, including Channel 5, will take 28 per cent of spend and attract 35 per cent of the TV audience (in commercial impacts terms).

In comparison, Channel 4 will handle about 26 per cent of adspend from a 26 per cent share of audience. ITV has 45 per cent of spend and 35 per cent of impacts.

This leaves a remaining 4 per cent of commercial impacts currently with other smaller players.

From a trading point of view, all agencies will now be forced to deal with just three main sales houses, which may have an adverse impact on pricing.

The Viacom and Sky Media deal has, of course, been lauded as being beneficial for both viewers and advertisers by David Lynn, the president for the UK, Australia and Eastern Europe at Viacom. Andrew Griffith, the chief financial officer and managing director for commercial businesses at Sky, says that advertisers will "have access to a broader range of opportunities".

Channel 5 has enjoyed a strong reputation for developing unique opportunities for advertisers of all sizes by creating deep partnerships that went beyond traditional advertising. Many will be watching on the sidelines to see if Sky can maintain this innovation, building on its expertise through data integration and content creation.

The deal will certainly boost Sky’s AdSmart offering – it could yet prove to be the catalyst that really puts the nascent targeted service on the map.

MAYBE Bob Wootton, director of media and advertising, ISBA

"Channel 5 has struggled in a market where critical mass matters. It will do better as part of Sky’s trading bloc. But it has carved out a reputation for doing things differently – it would be a pity if this were to go by the wayside."

NO Andrew Stephens, founder, Goodstuff Communications

"Too much of the market is in too few hands. Channel 5 brought a lot of innovation to commercial TV and I believe would have continued to bring in many new advertisers. I’m not convinced that innovation is so easy to replace."

MAYBE Chris Locke, trading director, Starcom MediaVest Group

"It is a natural evolution of the marketplace. Channel 5 was too weak from a trading point of view. Sky always had a thumb on Viacom’s windpipe because of the carriage deal. It will be interesting to see how Channel 4 reacts."

YES Pedro Avery, chief executive, Arena

"If Viacom can be confident that investment in programming will be rewarded with guaranteed revenue, it will commission high-quality content. This will be good for advertisers as we want a strong competitor to ITV and Channel 4."

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