Private Treaties -2

January 30th, 2008 doshiamit Posted in Business, media No Comments »

Ajay Shah has some thoughts on Private Treaties.

He quotes a Sucheta Dalal article about an email forwarded by the editor of the Economic Times.

At ET, we are carving out a separate team to look into the needs of Private Treaty clients. Every large centre will have a senior editorial person to interface with Treaty clients. In turn, the senior edit person will be responsible, along with the existing team, for edit delivery.

This is obviously unethical. ET should most definitely not be in the business of selling editorial coverage. I dont think any marginally intelligent person would argue otherwise.

My point about Private Treaties is that if its an advertising ONLY deal, I dont see an ethical issue. Instead of paying in cash the company is paying in equity. Equity has a value, and the stake divested is based on that.

If there is an editorial coverage component to the Private Equity deal its no different from the reprehensible practice that Bennett Coleman has with Medianet. It is however an ethical failing of that particular company. I do not believe that invalidates the potential benefits of Private Treaties to both, a hopefully ethical Media Company, and the company gaining ad inventory for stake.

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Private Treaties

January 17th, 2008 doshiamit Posted in Business, media 1 Comment »

Read about this on India Uncut today, and have some thoughts on it.

This is a recent phenomenon in Indian business, where companies give up stake to major media companies in exchange for Ad Inventory. I first heard about this a year and a half ago or so, when a friend was considering this. He never went ahead with the whole thing for many reasons.

I really don’t see anything fundamentally wrong with the concept. If anything its an innovative way for Bennett Coleman, HT Media, or any other media group for that matter, to book ads well in advance. For companies that need to build a brand through advertising, its a fantastic deal. You give up a little stakes for a minority investor, who doesn’t try and get involved in your business. As mentioned in this article, its a win win for both.

And it is not difficult to see why. Share swaps for ad space is a win-win deal for both sides. For a start, it is almost a zero-cash transaction.

What this neglects is the 3rd stakeholder implicit in the arrangement, the reader or viewer or listener. And that is the objection most people have to this kind of arrangement. Disclosure is the most obvious solution.

But here’s my question: Do newspapers or TV channels disclose every bulk advertising deal they do? What’s the difference between stake and cash when it comes down to it?

As usual the devil is in the details, its not about the ways in which the Times Group or anyone else sells their advertising, the issue is the separation between advertising and content. I think that’s pretty much the only issue. Bombay Times with their Medianet, pay for publicity, model, has destroyed the Times of India’s credibility amongst many readers. And those readers see this Private Treaty business as an extension of that.

Once the slime is introduced it covers everything. Even an interesting idea is tarred with the same brush.

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