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As Part of Comcast Deal, GE Promises to Keep Advertising

NBC's Biggest Marketer Agrees to Spend 'Not Less Than $59 Million' Annually for Five Years

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LOS ANGELES (AdAge.com) -- Now that Comcast and NBC Universal have agreed to merge, what happens to all the ad revenue NBC properties get from their No. 1 advertiser, General Electric? Turns out, part of the deal includes a guarantee that GE will continue to advertise on NBC properties.

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As Part of Comcast Deal, GE Promises to Keep Advertising
NBC's Biggest Marketer Agrees to Spend 'Not Less Than $59 Million' Annually for Five Years
As part of the purchase agreement, GE is contractually obligated to continue to spend "no less than $59 million of gross advertising" with the merged Comcast-NBCU each year, for a five-year period starting the year after the deal closes. And it must purchase an additional $50 million in connection with the 2012 Olympic Games.

The new company, however, has built in some assurances that both sides will still benefit. GE and its subsidiaries get to keep the perks that come with being an owner, including "preferential client treatment, including access to marketing execution and placements, comparable to the top tier or highest spender category of advertising or past practice, whichever is more favorable to GE," according to filings with the U.S. Securities and Exchange Commission about the terms of the deal.

During the first nine months of 2009, GE spent $145.9 million on its NBCU properties, down 16.6% from the previous year, according to TNS Media Intelligence.

The majority (60%) of that spending came from NBC Universal units: Movie and DVD promotion accounted for 49.5% of GE spending on NBC Universal media properties in the first nine months of 2009; ads for NBCU media properties -- a Bravo ad on USA Network, say -- accounted for 9.7%; Universal Studios theme-park ads represented 0.7%. Ads promoting GE products and services (appliance ads, for example) accounted for the remaining 40% of measured spending.

Given that NBC Universal's ad revenue is less than robust, it makes sense for Comcast to lock in the revenue GE has been contributing. NBCU's second- and third-largest advertisers, Johnson & Johnson and Procter & Gamble, each dropped their spending on NBCU properties by 33.1% and 38.6%, respectively, during the first nine months of 2009. And even though No. 4 spender AT&T is down 28.6%, telecom has shown some signs of growth, with No. 5 advertiser Verizon Communications boosting its spending by 1.6% and No. 7 Sprint Nextel upping its outlay to 38.1%. Automotive has already fallen out of the picture, with only Toyota (No. 6) ranked in the top 10, with a 5.8% decrease to $116.3 million. That leaves pharmaceuticals (Pfizer, No. 8), beer (Anheuser-Busch InBev, No. 9) and fast food (Yum Brands, No. 10), all categories showing flat-to-little growth in 2009.

Top 10 advertisers on NBCU properties

Media Jan. -
Sep. 09
Jan. -
Sep. 08
%
Change
2008
1 General Electric Co.1 $145.9 $175.0 -16.6 $219.0
2 Johnson & Johnson $139.1 $208.1 -33.1 $243.3
3 Procter & Gamble Co. $138.8 $226.1 -38.6 $304.3
4 AT&T $124.6 $174.5 -28.6 $222.3
5 Verizon Communications $123.6 $121.6 1.6 $163.5
6 Toyota Motor Corp. $116.3 $123.5 -5.8 $171.2
7 Sprint Nextel Corp. $95.9 $69.5 38.1 $116.3
8 Pfizer $83.2 $84.3 -1.3 $104.4
9 Anheuser-Busch InBev $76.3 $86.6 -11.9 $108.9
10 Yum Brands $75.9 $75.7 0.3 $96.9
Source: TNS Media Intelligence. Dollars are in millions
1. GE owns 80% of NBCU

Top 10 advertisers on Comcast cable networks

Media Jan. -
Sep. 09
Jan. -
Sep. 08
%
Change
2008
1 Procter & Gamble Co. $16.5 $18.9 -12.3 $27.5
2 Nutrisystem $10.2 $4.8 114.3 $6.4
3 Maximizer Health Products $7.8 $4.6 71.3 $6.3
4 IdeaVillage Products Corp. $7.7 $2.1 258.1 $4.3
5 AT&T $7.6 $5.0 53.7 $9.4
6 Rosetta Stone $7.5 $5.2 45.9 $8.1
7 Johnson & Johnson $7.5 $7.3 2.8 $9.3
8 L'Oreal $7.4 $6.2 19.9 $9.3
9 1-800 Contacts $6.9 $3.0 132.5 $3.9
10 Nestle $6.6 $5.2 27.5 $5.9
Source: TNS Media Intelligence. Dollars are in millions

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