The WIR: Bertelsmann Pauses Mega Merger Plans, S4 Reaches £1 Billion in Revenues, and Channel 4 Trials Less Cluttered Ad Breaks

Tim Cross 31 March, 2023 

In this week’s Week in Review: Bertelsmann pauses its merger plans, S4 passes £1 billion in revenues, and Channel 4 experiments with less cluttered ad breaks.

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Bertelsmann CEO Pauses Plans for TV Mega Mergers
Thomas Rabe, CEO of European media giant Bertelsmann, told the Financial Times this week that he’s putting plans to create national TV giants via mergers between European broadcasters on hold.

In recent years Bertelsmann has attempted to sell its French TV business M6 to fellow French broadcaster TF1, and to merge Dutch broadcasters RTL Nederland and Talpa Network. Rabe has previously expressed his belief that such mergers would create national TV champions, more capable of competing with the international streaming businesses thanks to their increased scale.

But both of these mergers were blocked by competition authorities. And Rabe now says these decisions indicate that other, similar efforts elsewhere in Europe would also be blocked.

“It’s very clear [that in] the next two to three years, it doesn’t make sense to come up with large-scale merger plans in TV, because the position which the authorities took in France and the Netherlands is likely to be the same in other countries,” Rabe told the FT.

S4 Capital Passes $1 Billion Annual Revenues Landmark
Sir Martin Sorrell’s ad agency holding company S4 Capital reached £1.07 billion in revenues in 2022, passing a significant milestone, according to the company’s full year financial results posted this week. But the company also saw its losses tripled compared with 2021, as the costs of building the business continued to mount.

S4 Capital has spent heavily to acquire a wide portfolio of businesses with a focus on digital marketing and advertising. And this investment has allowed the company to rapidly grow in scale. It’s still got a way to go to catch up with Sorrell’s previous company WPP, which brought in over £14 billion in revenues last year. But it puts S4 in a similar ballpark to Havas, which reported just over €2 billion in revenue last year.

“We have momentum going into 2023 and are cautiously optimistic, despite the slowdown of growth in our major addressable markets,” said Sorrell in a statement. “We expect to make continued progress, stimulated, in particular, by the early and rapid implementation of revolutionary new technologies such as AI.”

Channel 4 Trials Fewer Ads, Less Clutter Campaigns
Channel 4 has launched an experiment to test whether reducing frequency and clutter creates more effective campaigns. The trial will compare the impact of deploying fewer ads from a single brand in a less cluttered advertising environment with that of a standard campaign. 

Around 30 brands, including Boots, John Lewis and Toyota, are signed up to the 12-week trial on Channel 4’s streaming service All 4. Research agency BRDC will partner with the broadcaster during the experiment. It follows similar research by US AVOD service Peacock, whose success saw the test rolled out across the entire NBCU ad network.

“Improving the advertising experience on our streaming platform is critical to future growth both from a viewer and advertiser perspective,” said Jonathan Lewis, Channel 4 Head of Commercial Innovation and Partners. “We are delighted to be leading the way again in such a hotly debated area and are confident this is something the market will want to embrace, particularly when they see the results.”

The Week in Tech

CMA Narrows Microsoft/Activision Probe Amid Preliminary Approval
The Competition and Markets Authority (CMA) has published provisional findings and narrowed its enquiry into Microsoft’s proposed takeover of Activision. The watchdog found that the acquisition “will not result in a substantial lessening of competition in relation to console gaming in the UK.” The competition concerns have centred around the financial incentives for Microsoft to make Call of Duty exclusive to its own consoles, but new evidence suggests this strategy “would be significantly loss-making under any plausible scenario.” As a result, the merger investigation will proceed in relation to the impact on cloud gaming services, not consoles. A final decision will be given on 26th April 2023.

Google Seeks Dismissal for Justice Department Advertising Lawsuit
Alphabet is seeking dismissal for a Justice Department lawsuit accusing Google of illegally abusing its advertising dominance. In January the US Government called for the tech giant to sell its ad tech business. The company argues the case should be thrown out because the government has failed to define the online advertising market, and excluded large competitors such as Facebook. It added that the government’s estimate of Google controlling “more than 50 percent” of the online ad market fell short of the 70 percent constituting market power. “Plaintiffs remain unable to find support for their claimed antitrust harms,” Alphabet said in a court filing.

Meta to Allow European Users to Opt Out of Targeted Ads
Meta is planning to let European users opt out of personalised ads on Facebook and Instagram, the WSJ reported on Thursday. The move comes ahead of a compliance deadline issued by Ireland’s Data Protection Commission, which in January issued the tech giant a fine for requiring users to contractually consent to behavioral ads. Now EU users will be able to choose a version of the apps that only target them with ads based on broad categories, such as age range and general location, rather than current targeting data, including what videos people watch or content they click on.

CTV Accounts for 56 Percent of Video Ad Viewing in Europe
Video ad views grew 13 percent YoY in Europe in H2 2022, according to FreeWheel, with 56 percent taking place via CTV. The report notes that programmatic deals now account for 32 percent of all transactions in the US, driven by the adoption of CTV and the rise of FAST channels. In Europe the share of programmatic is much smaller at 14 percent. “With premium video consumption continuing its steady climb, advertiser interest in the medium is expected to continue to increase, with more brands diverting to premium video as one of the most effective strategies for connecting with highly engaged and targetable audiences,” said FreeWheel.

Zefr Launches Brand Suitability Verification for Facebook Feed
Zefr has made its brand suitability verification tool available for Facebook Feed, the company announced on Friday. Advertisers can now measure, verify and understand the suitability of Facebook Feed content against their ads, according to Zefr. “By partnering with Meta, we’re applying our AI to give advertisers more transparency into the content adjacent to ads in their campaigns,” said Zefr co-founder and co-CEO Rich Raddon.

Lenovo Late Night I.T. Returns for Second Season
Technology TV series Lenovo Late Night I.T. will return for a second season, Lenovo and CLICKON announced this week. The series sees comedian, writer and cultural critic Baratunde Thurston joined by assorted guests to discuss the IT topics affecting the future. The first season was picked up by Bloomberg TV last year and won awards at the ANA and Shorty Awards. “Building off the premier season of Lenovo Late Night IT, this season breaks down trending topics and translates their importance for IT leaders and businesses deciphering the constantly-shifting tech landscape,” said Lenovo North America CMO Gerald Youngblood.

The Week in TV

Apple Seriously Considers Premier League Bid
Apple is getting serious about a bid for English football rights, according to Bloomberg, reportedly eyeing up English Football League and Premier League packages when the rights go up for auction this year. An acquisition would allow Apple to show matches in the UK, thereby attracting customers to its Apple TV+ SVOD service, and competing with Amazon Prime Video. It would also dovetail with its hit Premier League comedy Ted Lasso. The company has already moved into live sports in the US with a $2.5 billion Major League Soccer deal.

Joyn Takes Centre Stage as ProSieben Refocuses on Entertainment
German broadcaster ProSiebenSat.1 on Tuesday announced it is sharpening its focus on its entertainment business, which encompasses its traditional TV business, its streaming efforts, and its production studios Seven.One Studios. And the broadcaster says that Joyn, its hybrid streaming service initially co-founded with Discovery but now wholly owned by ProSieben, is at the heart of this strategic refocus. Read more on VideoWeek.

ITV “Couples Up” Linear and VOD Love Island Inventory
ITV is “coupling up” its linear and VOD inventory around its hit show Love Island, the commercial broadcaster announced this week. Following a winter trial, the company is expanding the test to include 50 packages that combine linear and VOD inventory into a single transaction. The offer is only available through Planet V, ITV’s addressable advertising platform.

ARF Calls to Update “TV Households” to “TV-Accessible” for Accurate Measurement
US trade association the Advertising Research Foundation (ARF) has called for a “gradual migration” away from “TV households” to “TV-accessible (TVA) households” as the basis of TV measurement. The move is said to account for shifts in viewing dynamics driven by broadband access and mobile devices. It follows research revealing that 5 percent of US households do not own a TV set, but the majority of those (4 percent) have broadband access and consume TV on devices through streaming services and virtual MVPDs. “Using TVA households as the basis of measurement includes this emerging segment of TV-set-less TV watchers,” the group said.

Salto Ceases Streaming as Molotov Makes Moves
French SVOD service Salto has ceased streaming operations as the business enters liquidation. Salto had already stopped taking new subscriptions from mid-February, when joint operators TF1, M6, and France Télévisions confirmed plans to shutter the service. Existing customers will be compensated for the remainder of their subscriptions, the companies said. Meanwhile rival streaming service Molotov is making a play for those consumers, offering a free year to Salto subscribers who were still signed up for March.

UK Drafts Legislation to “Level the Playing Field” Between Streaming Services and PSBs
The UK Department for Culture, Media and Sport has published draft legislation to protect public service broadcasters (PSBs) from international streaming dominance. The bill grants Ofcom jurisdiction over Netflix, Amazon Prime Video and Disney+, and offers PSBs safeguards for discoverability on smart TVs and streaming sticks. Streaming services will also be required to provide subtitles, audio description and signing to support people with disabilities. “These new laws will level the playing field with global streaming giants, ensuring they meet the same high standards we expect from public service broadcasters and that services like iPlayer, All4 and ITVX are easy to find however you watch TV,” said Culture Secretary Lucy Frazer.

DAZN Scores IPL Rights in UK and Ireland
DAZN has landed Indian Premier League (IPL) rights, allowing the streaming service to air the 2023 season in the UK and Ireland. DAZN said the sport will appeal to its subscribers based on data revealing strong correlation between IPL and boxing fans. Financial details were not disclosed but IPL rights are said to be among the most valuable in the world, reaching a total $6.2 billion in 2022. “The IPL is the world’s foremost T20 cricket competition, which features the biggest names in cricket battling it out over 74 matches, all of which are available live and exclusively to DAZN’s UK subscribers,” said DAZN Group CEO Shay Segev. 

Dyn to Land in Germany in August Armed with Handball
New sport streaming service Dyn will go live in Germany on 23rd August, the company announced this week. A joint venture between Axel Springer and former DFL chief Christian Siefert, Dyn will cost €14.50 per month. When signing up, subscribers are asked which sports they particularly want to support, and 10 percent of the fee goes directly to the relevant league.  Its flagship properties will be the EHF Champions League and European League handball competitions, via a rights deal with DAZN. “The partners of our Dyn Media Network are given the opportunity to distribute more moving image content than ever before via their own channels,” said Dyn COO Marcel Wontorra. “In this way, specialist and regional media can also benefit from the attractiveness of our sports with game images and at the same time further increase their media presence.”

The Week for Publishers

The AOP says Verification Vendors are Stealing Publishers’ IP
The Association of Online Publishers (AOP) this week issued an open letter to advertisers and ad agencies calling for an end to publisher intellectual property (IP) theft, whereby ad tech vendors excessively scrape metadata from publishers’ websites. The AOP specifically called out content verification vendors, which have privileged access to publishers’ web page data in order to verify ad placement and quality to buyers. The AOP says some of these vendors have begun adding in unseen extra tags into authorised in-header wrappers, or running bots to crawl open publisher domains, scraping more extensive meta data and article text. They’re then using this data to build out contextual audience segments which they then monetise themselves – without the permission of the publishers they work with. Read more on VideoWeek.

New Publisher Lawsuit Against Google Launches in UK
A new multi-billion pound lawsuit seeking compensation from Google for revenues lost by publishers has been launched in the UK. The lawsuit, launched by ex-Guardian technology editor Charles Arthur, argues that Google abused its dominant position in online advertising to illegally squeeze revenues from publishers. A similar lawsuit, seeking £13.6 billion in damages, was launched by former Ofcom director Claudio Pollack last year, meaning the UK’s Competition Appeal Tribunal will have to choose which case to proceed with.

UK Government Plans to Force Platform Payments for Publishers
The UK government is planning to push legislation which would force online tech platforms Google and Meta to pay publishers in order to publish snippets and links to their news stories, Press Gazette reported this week. Other markets including Australia, Spain, France and Canada have introduced similar laws in recent years.

Telegraph Media Group Buys Chelsea Magazine Company
Publishing business Telegraph Media Group has acquired lifestyle publisher Chelsea Magazine Group, which owns titles including The English Home, Discover Britain, and Artists and Illustrators. Telegraph Media Group says the acquisition fits with its subscription strategy, allowing it to reach new subscribers and offer broader subscription bundles.

TikTok Enters UK’s Top 20 Publishers
TikTok now sits in the top 20 publishers in the UK, according to Press Gazette’s analysis of Ipsos data measuring publishers’ total UK reach. TikTok now reaches 43 percent of the UK adult population according to the data, putting it ahead of The Guardian and Future. The BBC meanwhile is the largest news publisher, reaching 78 percent of the UK adult population.

Digitalbox Revenues Fall Amid Ad Struggles
Digitalbox, the publishing group which owns The Tab and Entertainment Daily, reported a 2.4 percent drop in group revenues in 2022, as wider trends affecting the advertising market dented income. However audience engagement increased, with the number of sessions on Digitalbox properties up by seven percent year-on-year.

The Week For Agencies

Magna Slightly Downgrades US Ad Spend Forecast
Interpublic Group media agency Magna released an updated ad spend forecast for the US market, in which it slightly downgraded its 2023 forecast from 3.7 percent growth to 3.4 percent. But Magna’s overall outlook was upbeat, saying the media innovation should prevent a much worse scenario for the ad industry. “In a similar economic climate, ten or twenty years ago, the US advertising market would almost certainly fall off a cliff,” said Vincent Létang, EVP of global market research at Magna. Létang cited retail media networks and the growth of ad-supported streaming as two major organic drivers of ad spend.

WPP Acquires Influencer Marketing Agency Obviously
WPP this week announced the acquisition of Obviously, a technology-led social influencer marketing agency based in New York, with plans to fold the business into VMLY&R’s network. Obviously’s tech automates workflows in influencer marketing, provides campaign and audience insights, and also runs predictive analysis to assess campaign pricing and benchmarking. The news comes just a week after the agency group announced the acquisition of Goat, another influencer marketing agency.

Publicis Sapient Expands to Latin America via Practica Acquisition
Publicis Groupe’s digital transformation unit Publicis Sapient this week announced the acquisition of Argentina-based business Practica for an undisclosed fee. Publicis Sapient is planning to significantly expand Practica’s business in markets it already operates in, but is not planning to launch in other new markets just yet, according to Reuters.

WPP Joins the Media Freedom Cohort
WPP this week announced it has signed up to the Media Freedom Cohort, an organisation which advocates for free and independent media worldwide. Through its media investment arm GroupM, WPP has committed to:

  • Create dedicated marketplaces exclusively with domains vetted by Internews’ Ads for News for responsible journalism across its top markets
  • Drive awareness among its clients and the wider industry about the importance of investing in responsible journalism.
  • Add the domains for responsible journalism in local media supply offered to its clients.

Diageo Spent $527 Million on Diverse-Owned Suppliers Last Year
Drinks maker Diageo provided an update on its effort to funnel more marketing spend to diverse-owned suppliers to The Drum this week, reporting that $527 million was spent with diverse-owned suppliers in 2022, a 65 percent increase on 2021. This equates to around 4.8 percent of Diageo’s marketing spend – the company’s aim is for 15 percent of media investment to be spent with diverse-owned companies.

Eurostar Launches Media Review
Train operator Eurostar is launching a review of its media account across all of its brands, covering the UK, France, Germany, Holland, and Belgium. WPP’s Wavemaker, which currently holds the account, will compete for the business, according to Campaign.

New IPA President Lays Out ‘People First’ Agenda
Josh Krichefski, the newly elected president of advertiser trade body the IPA, says he wants to open eyes, hearts and minds through his “People First” agenda. Krichefski defined these objectives as the following:

  • Opening eyes: Re-frame advertising’s cultural and societal relevance in modern Britain to attract the best talent.
  • Opening hearts: Help retain and nurture advertising talent by being more inclusive than ever.
  • Opening minds: Look after the wellbeing of everyone working in the ad agency business by focusing on and supporting initiatives that promote positive mental health.

Hires of the Week

Snapchat Snaps Up Microsoft Ad Chief Rob Wilk
Snap has hired Microsoft’s former Global Head of Advertising to oversee its American sales. Rob Wilk becomes Snap’s first President of Americas following eight years at Microsoft. His appointment follows last summer’s shake-up when Snap’s top ad sales execs, Jeremi Gorman and Peter Naylor, left the company for Netflix.

Digital 3&4 Names Steve Holebrook MD
Channel 4 and ITV’s multiplex service Digital 3&4 has named Steve Holebrook as Managing Director. The appointment follows the departure of Greg Bensberg MBE after 10 years in the role. Holebrook previously spent 16 years at British telco Arqiva.

Brainlabs Appoints Adam Potashnick North American CEO
Digital marketing agency Brainlabs has appointed Adam Potashnick as North American CEO. Potashnick served as MediaCom COO before it merged with Essence, when he became CRO.

M&C Saatchi Enlists Future’s Zillah Byng-Thorne as Chair
M&C Saatchi has made Zillah Byng-Thorne chair of the advertising group, effective 15th June. Byng-Thorne steps down as CEO at publishing giant Future on Friday after nine years. M&C Saatchi also confirmed interim Chief Financial Officer Bruce Marson as its permanent CFO.

This Week on VideoWeek

The AOP says Verification Vendors are Stealing Publishers’ IP, read on VideoWeek

Joyn Takes Centre Stage as ProSieben Refocuses on Entertainment, read on VideoWeek

The Future of FAST Guide 2023 is Now Available to Download, read on VideoWeek

UK Sets Out its Plans to Protect Public Service Broadcasters, read on VideoWeek

Wall Street is Getting A Lot Wrong About the Streaming Business says Tom Rogers, read on VideoWeek

Monitoring Carbon and Attention Tells Brands to “Run Away” from Programmatic Display, read on VideoWeek

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About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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