Karmazin's View

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[New Orleans] Viacom President-Chief Operating Officer Mel Karmazin has acquisitions on his mind. In a Q&A conducted by Advertising Age's Scott Donaton at the 4A's management conference last week, Mr. Karmazin said Vivendi's USA Network and SciFi Network "would really fit well" into Viacom's cable division. CNN is also attractive, but, Mr. Karmazin said, the cable news network's parent, AOL TimeWarner, has "zero" interest in selling it. "We love the cable network business, we'd like to be able to acquire more cable networks," he said, but added he is enthusiastic about all Viacom's businesses. "We like the outdoor business. We'd like to do more in that area. And we like the television business."

Despite shrinking network TV audiences, Mr. Karmazin sees CBS broadcast network as significant to Viacom's future. "What we've not seen has been a shift in dollars away from network television. Because...network television has become increasingly important as everything else has fragmented. Audiences have shrunk, [but] they are so much larger now than anything else was."

Asked whether he still expects upfront pricing to jump as much as 15%, Mr. Karmazin was coy. "The thing that affects pricing is just the demand. The marketplace dictates whether or not there's a lot of demand for the inventory. ... No advertiser in the last year has benefited from not participating in the upfront. Scatter pricing in cable and the broadcast networks ranged from 10% higher to 60% higher than the pricing in the upfront. So if I were an advertiser and I had a choice...history would show that it is obviously a whole lot better to buy in the upfront because the pricing would be higher in scatter. ... I'm not a big fan of the upfront. I didn't create it. I'm also not going to eliminate it."

Mr. Karmazin applied the law of supply and demand to agencies as well. "There is an extraordinary amount of respect that exists on the part of clients for their agency. ... If it didn't exist, I would think that more of these clients would be taking their advertising in-house. So, I assume there's a great deal of value that is being added. I think you just need to raise your rates."

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