Coke, Turner ink $200 mil pact

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Coca-Cola Co. has inked an estimated $200 million, 10-year sponsorship agreement with Time Warner's Turner Broadcasting System that gives the marketer ad time on networks such as TBS Superstation, TNT, CNN/SI and the Cartoon Network. But the deal's value could grow by 10% to 15% because of a provision that gives the cola company proprietary status with Turner for future opportunities.

Because Coca-Cola has committed so many dollars during the next decade, Turner agreed to give the beverage giant the chance to take a first look at new sponsorship avenues it develops. Possibilities include product placement on shows developed for TBS and TNT; cross-promotions with its Nascar and National Basketball Association broadcasts; ad time on the personal TV Replay Network and interactive Open TV, in which Turner has invested; and ads on new Internet and international networks it may launch.

Turner is also in discussions with Princeton Video Image to use technology that enables virtual product placement, which could open more opportunities for Coca-Cola.

Jack Hanrahan, Coca-Cola exec VP-director of strategic media, said the deal "provides mechanisms to earn benefits as our spending grows."

"It just makes our dollars work harder," he added.

Under the pact, Coca-Cola will boost its annual spending with Turner. The marketer spends more than $354 million a year in measured media in the U.S. Of that, some $50 million is spent on cable, according to Competitive Media Reporting.

The deal provides a spending framework, but does not lock in costs for specific programs or sponsorships. Coca-Cola generally has not bought space with Turner during the traditional upfront buying period, instead opting for a separate annual negotiation, which will continue under the new deal.

"We have not negotiated firm prices on any specific programs," Mr. Hanrahan said. "There still has to be the annual dance between advertiser, agency and media."

Turner networks reach a range of demographics, from the youth-targeted Cartoon Network to the older-skewing CNN, enabling Coca-Cola to support any of its brands.

"It allows Coke flexibility to link their brands with key franchises and key consumer groups," said Joe Uva, president of Turner Entertainment Group Sales & Marketing.

The decadelong pact could be viewed as a potential liability, but it's pint-size for Coca-Cola, which has a 100-year sponsorship deal with the NBA, a spokesman said.

Coca-Cola declined to comment on whether it is in negotiations for cross-media pacts with other media companies. The soft-drink maker recently struck deals with America Online and MBC Network, an African-American cable network.

The Turner collaboration grew out of negotiations with Coca-Cola to become one of nine founding sponsors of the Philips Arena that opened last year adjacent to CNN Center in Atlanta. Word of the deal first leaked in December at an investors conference, when Turner President-Chief Operating Officer Steven Heyer said Turner was negotiating with Coca-Cola on a wide-ranging cross-media deal.

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