Five locked in battle with BT over prices

by Fiona Ramsay Media Week 13-May-08, 07:30

LONDON - Five is making 15 people redundant in a cost-cutting drive and is locked in a battle with another advertiser over TV prices, with BT pulling its advertising from the channel.

The BT spat follows the reappointment of Publicis agencies Starcom and Zed Media to the telco's consolidated £65m media planning and buying account in January after a hard-fought pitch with WPP's Mediaedge:cia.

There were suggestions that the winning agencies had promised BT much lower media prices.
It is believed BT's total TV spend is about £20m. Its ads were pulled from Five last month, at the start of BT's financial year.

Five's ad revenue was dealt another blow earlier this year when Aegis clients were pulled from Five's schedule for the first quarter of 2008. Five is understood to be increasingly unwilling to give agencies the prices they are demanding as it tries to maintain revenue share in a cautious TV market.

Chris Locke, Starcom MediaVest Group UK trading director, said it was a "short-term issue" with Five and that progress was being made in negotiations. A meeting between the two sides was believed to be taking place as Media Week went to press.

Locke added: "We look at everything from the cost offered and coverage achievable and if it works in a more enhanced way by removing one media owner while still benefiting the client, why wouldn't you? In future, maybe the model is that you pick your partners more carefully. Everyone is replaceable."

Jason Talley, Five's controller of sales, said the channel was also "open to negotiations".
Meanwhile, Five is engaged in a consultation process with the redundant employees, which were said to be mainly back-office jobs in sales operations and marketing. Five said it was a cost review to enable it to "compete effectively in a rapidly changing marketplace".