Consolidation by Tricon shifts TV marketplace

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Tricon Global Restaurants, the PepsiCo spinoff consisting of KFC, Pizza Hut and Taco Bell, is eyeing a consolidation of its $300 million in national TV buying.

The Tricon move could have a significant impact on the national TV marketplace, especially since it comes as fast-food leader McDonald's Corp. is reallocating about 25% of its national ad budget to local markets.

With McDonald's move, No. 2 Burger King Corp. will become the biggest buyer of national TV time in the category. As such, it will be the first fast-food advertiser approached for category exclusivities for key TV properties.

Tricon, with a consolidation, becomes a critical rival for TV deals with McDonald's.


Only incumbent media shops have been invited to participate in the review.

TN Media, New York, handles buying for Taco Bell; and creative shops BBDO Worldwide and Y&R Advertising, both New York, do their own buying for Pizza Hut and KFC, respectively.

Tricon said each chain will retain its local buying.

Lauren Heller, VP-media and entertainment at Taco Bell, is believed to be a key player working on the review.

She could not be reached; other agency executives would not comment.


Longtime Oklahoma City KFC franchisee Bob Peck said he favors a media buying consolidation, but only if each brand's position is protected.

"We have the three most popular brands in their segments in the world. It makes sense to get the synergies as long as each brand has controls," said Mr. Peck.

According to Competitive Media Reporting, McDonald's spent $410 million on national TV and rival Burger King Corp. $378 million during the 12 months ended Nov. 30, 1997. By comparison, the three Tricon chains spent a combined $305 million.

But with a McDonald's reallocation of 25% of its budget to local campaigns, that reduces its annual national TV spending to $307 million, almost exactly that of the Tricon group.

A Tricon consolidation "really changes things when you talk about exclusivity in the fast-food category in major TV events," said one network executive.


The Tricon restaurants have pulled together their media clout already for a multiyear deal to be the exclusive fast-food sponsor of the National Collegiate Athletic Association's championship games in 22 sports.

"As a standalone company, they are going to more effectively execute at the unit level," said Mitchell Speiser, a restaurant analyst at Lehman Bros., New York. "The media support should actually bring out this change in their operation."

Copyright February 1998, Crain Communications Inc.

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