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New Strategist Helps Nova Settle Ad Rates
April 18, 2006, Czech Business Weekly
Reproduced from April 18, 2006 Czech Business Weekly
By: Marius Dragomir
After several months’ scuffling with the country’s largest advertisers over the contracts for this year, TV Nova, the largest commercial station in the country, has managed to settle the conflict and broker fresh agreements by offering its clients sweeter terms and conditions.
“This situation in TV Nova is now history,” said Florin Alexandrescu, the station’s newly appointed ad sales strategist. He added that the station has implemented a new sales model complying with the requirements of the Office for the Protection of Competition (ÚOHS) and accepted by all the media agencies and clients on the market.
Alexandrescu was brought to Prague by TV Nova’s owner, Central European Media Enterprises (CME), from Romanian station Pro TV — also owned by CME – to handle ad sales in the Czech Republic and in Slovakia, where CME operates TV Markíza. Alexandrescu said that the station’s focus is now on improving communication with its clients.
The conflict erupted last fall when the Czech Association for Branded Products (ČSZV) complained about TV Nova’s commercial practices to ÚOHS. Among other things, the station was giving better deals to clients who weren’t buying ads on Prima TV. In early 2006, ÚOHS ordered TV Nova to halt these practices. As a result, the station increased its ad prices for all clients by approximately 30 percent. Irate advertisers boycotted the station. In early March, the ČSZV and Association of Communication Agencies (AKA) complained about TV Nova’s conditions in a letter sent to CME’s head, Michael Garin. In the end, the station agreed to slash its tariffs.
Now the prices are only 15 percent higher than last year, according to Jan Levora, executive director of the ČSZV. He added that most of the largest advertisers grouped in the ČSZV had reached an agreement with TV Nova, although Levora couldn’t say exactly which companies were still in negotiations. ČSZV has over 50 members, chiefly manufacturers and fast-moving consumer goods players, including large ad spenders such as Nestle Česko, Unilever ČR, and Coca-Cola Beverages. Mobile phone operators also take part in some of its meetings, Levora said.
Although the advertisers’ relations with TV Nova are more or less normal, the station’s dominant position will continue to dampen competition on the Czech TV market. “All these [problems] showed how TV Nova can abuse its position,” Levora said. TV Nova has some 65 percent of the ad market, worth around Kč 6 billion (€ 210 million) annually.
No digital solution
Levora said digitalization won’t mend the market. “The new digital stations will have, at least in the beginning, narrow target groups,” he said, adding that the new digital players will together grab maybe 5 percent of the market. Alexandrescu said that in the short term he doesn’t see any danger from next year’s launch of the digital channels, but as of 2007 TV Nova’s sales strategy will adapt to all the changes in market.
In early April, the Czech Radio and Television Broadcasting Council (RRTV) granted digital TV licenses to news station Z1, children’s channel TV Pohoda, regional news station Regionální televizní agentura (RTA), general interest channels Febio TV and TV Barrandov and music station Óčko.
“We don’t think that the digital licenses, with very few exceptions, were given to strong players,” Alexandrescu said. Levora said if they want to shake TV Nova’s stranglehold on the Czech ad market, digital channels must be backed by solid financing. He expects most of the advertising now pulled in by public service broadcaster Česká televize to go into the pockets of TV Nova. By law, Česká televize must stop accepting almost all advertising by 2008.
As of this year, CME has carried out a far-reaching restructuring. TV Nova commercial director David Bártík and his deputy, David Menšík, quit at the end of March. The most radical move was the appointment of Romanian Adrian Sarbu, co-owner of CME’s Romanian operation, to head CME’s businesses in the Czech Republic, Slovakia and Romania.
The station is also considering selling ads on a regional basis, an idea rejected by TV Nova’s ad sales vehicle, Mag Media 99 (swallowed this year by the newly created CME Media Services), in the past. “We evaluate this possibility for the medium and long term, considering that many of our partners – media agencies and multinational companies – operate in all the countries where CME owns TV stations,” Alexandrescu said. CME runs stations in Romania, Slovenia, Croatia, Ukraine, Slovakia and the Czech Republic.
For additional information, please contact:
Romana Tomasova
Director of Corporate Communications
Central European Media Enterprises
+44 (0)20 7430 5357
romana.tomasova@cme-net.com
