Channel 4 under pressure to strike a deal with Group M
Channel 4 is under increasing pressure to make a deal with the media buying arm of Sir Martin Sorrell’s WPP or it faces a second month without their advertising, costing the broadcaster over £40m in revenue.
Group M annually spends about £250 million on Channel 4 advertising for its clients; however it is looking to drastically cut this cost in a revised deal.
According to the Guardian, the last formal talks between the two sides took place on 21 December. Unfortunately for Channel 4, Group M has failed to accept what is understood to be an improved offer by Channel 4 compared with its previous deal.
If both sides remain unwilling to move on their position when talks do restart in January, when TV ad booking deadlines are set, then there is a chance the ad freeze could run into February, costing Channel 4 another £20 million.
A media buying executive told the Guardian: "Right now it is too early to say that [February] will be affected but from mid-January onwards it will start to get close. Rivals are already on standby for Channel 4's February money."
Additionally for Channel 4, the longer Group M withholds its advertising the longer other advertisers will pay less for an ad spot.
TV spots on Channel 4 are currently about 30 per cent cheaper year on year as the price of TV advertising for each broadcaster is set by a ‘station average price’, with Group M’s withdrawal significantly affecting this.
It is understood that Channel 4 has clawed back some of the lost Group M money by striking other ad deals, but it is still suffering a significant revenue loss.