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SPRINT AND NEXTEL PLAN $35 BILLION MERGER

Move Would Meld Two Different Marketing Worlds Together

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SAN FRANCISCO (AdAge.com) -- The planned merger of Sprint Corp. and Nextel Communications shakes up not only the cellular telecommunications category but the media marketplace as well.
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Sprint and Nextel this morning announced a $35 billion merger deal that would create a new company, called Sprint Nextel, to be headed by Gary D. Forsee, Sprint's chairman-CEO. Nextel CEO's Timothy M. Donahue, would become chairman of Sprint Nextel, with executive headquarters in Reston, Va.

Different ad strategies
Just as the two companies have different underlying cellular technologies, they also have different marketing strategies and creative executions.

Publicis Groupe's Publicis & Hal Riney, San Francisco, is the agency for Sprint and its long-running ad campaign featuring man in a black trench coat who mysteriously appears to solve customers' cell phone problems. Each ad ends with a decades-old "pin drop" motif -- meant to show a phone service so clear one can hear a pin drop -- that dates to Sprint's touting its fiber-optic network of land lines. For a more wireless era, recent ads sell a "fair and flexible" program that protects against the high cost of exceeding one's alloted minutes covered by the plan.

The Sprint mystery man is "the familiar face behind the brand," said a Sprint spokeswoman, who did not know what his marketing fate would be.

Nextel and Nascar
Meanwhile, Omnicom Group's TBWA/Chiat/Day, New York, has developed a humorous campaign targeting large and small businesses with the tagline "Nextel. Done" intended to underscore the effectiveness of Nextel's signature walkie-talkie-like service. One of Nextel's marketing anchors is its first-year sponsorship with Nascar. A spokesman for the racing organization last week said, "The possibility of a merger was addressed in our contract with Nextel. ... Our premier [racing] series will have full sponsorship for the length of Nextel's 10-year contract in any scenario."

Nextel also has targeted a younger consumer with its subsidiary Boost Mobile, whose ad account is handled by WPP Group's Berlin Cameron, New York. Sprint has a joint venture with Virgin Mobile USA that targets the same youthful consumer. Publicis' Fallon Worldwide handles Virgin Mobile's advertising.

Spokesmen for the advertising agencies either could not be reached for comment or declined comment.

Who will be the CMO?
Of importance to those ad agency executives is who would take over as Sprint Nextel's chief marketing officer. Timothy E. Kelly in October became president of Sprint Consumer Solutions, from senior vice president of marketing, product development, advertising, strategic planning and business development, which was the top marketing title at Sprint; that post has not been filled. Over at Nextel, Mark Schweitzer is senior vice president of marketing. Another Nextel executive, Tom Kelly, executive vice president and chief operating officer, has been named Sprint Nextel's chief strategy officer.

The merger would create a stronger No. 3 player in the telecommunications marketplace. Sprint has 20.1 million subscribers, 2.8 million of those through its Mobile Virtual Network Operator facilities. Nextel has 15.3 million subscribers. The announcement comes just weeks after Cingular Wireless completed its acquisition of AT&T Wireless, creating the new No. 1 wireless carrier with 47 million subscribers. Verizon Wireless ranks second with 42 million subscribers.

Cingular's ad blitz
Cingular launched its new service with an intensive marketing blitz estimated at close to $300 million and focused on an eight-week period in the fourth quarter, and a similar effort can be expected once the Nextel Sprint merger is approved. Longer term, however, media spending in the category may face a hit as fewer layers compete for consumers, and the Bell companies such as Bell South and SBC, continue their push to bundle cell phone plans in packages with long-distance, local and broadband service.

In 2003, measured media in the category with six leading players approached $3.7 billion, according to Advertising Age figures and TNS Media Intelligence/CMR. But as the number of major players shrink, presumably so too will the overall ad spend. Last year Nextel spent $209.8 million; Sprint $755.6 million. Cingular Wireless spent $622.5 million, while AT&T Wireless spent a whopping $799.2 million. Verizon Wireless alone spent $945 million.

"If you go to market and compete with Verizon Wireless you've got to be very strong across the brand," said one executive working on the wireless business.

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Rich Thomaselli contributed to this report.

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