Super Bowl

What GNC's Feud With Fox Means for Future of Super Bowl Advertisers

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A still from GNC's intended Super Bowl LI spot.
A still from GNC's intended Super Bowl LI spot.

Millions tuned in to the Super Bowl to watch the New England Patriots battle the Atlanta Falcons on Sunday, but the fight brewing off the field between GNC and Fox is just getting started.

GNC, the vitamin and supplement retailer, is preparing to pursue legal action against Fox Broadcasting, claiming that it suffered "significant economic and reputational damages, lost opportunities, and consequential damages" because the network rejected the brand's first-ever Super Bowl ad after initially clearing it.

Experts say the move is unprecedented in the industry and could have a lasting impact on Super Bowls to come.

According to the letter of intent to sue that GNC sent to Fox, the network sold the chain a 30-second spot during the game and "induced GNC to spend millions" on producing and developing the ad. The National Football League made Fox nix the spot days before the Super Bowl because GNC sells some products containing two substances that are banned by the NFL, although neither product appears in the commercial, GNC said.

Fox sold 30-second slots in the Super Bowl for an estimated $5 million, more than a quarter of what Kantar Media said GNC spent on measured media in the U.S. in all of 2015. But the cost was far higher for GNC because the struggling company had centered its long-planned brand relaunch around its half-minute of ad time in the Super Bowl.

"They can't do much that would offset the loss of sales and attention they would have gotten for the Super Bowl," said Larry Chiagouris, a marketing professor at Pace University's Lubin School of Business.

But Ronald Urbach, chairman of law firm Davis & Gilbert, believes GNC is going to have a hard time presenting a successful case. "The networks historically have reserved the right to withdraw their approval at any time," he said. One example would be a network deciding to pull an ad that's already running on-air due to viewer complaints.

Regardless of the outcome, Mr. Urbach said GNC will get back the money it spent on media. Whether the cost of litigation is worth it is a different story. And while GNC could try to fight for speculative damages, arguing that it lost out on a specific sales increase by not running its spot in the game, Mr. Urbach said that's "pretty much impossible to prove."

Ads have been rejected before, of course, but typically such news comes early on in the process, not less than a week before the game.

The debacle could mean a ramped- up timeline next year, as other brands strive to avoid GNC's fate. Marketers will most likely demand approvals early on from NBC, the network airing 2018's game.

"It's added another step to the process," said Mr. Chiagouris. "Unless you're in a coma, everyone will be aware of this and prepared for next year."

For 82-year-old GNC, the Super Bowl spot represented a Hail Mary pass to revive sinking sales. The 4,400-unit chain, which has seen its stock price plummet more than 50% in the last year, recently reported a third-quarter same-store sales decline of 8.5%. Revenue dropped 8% to $628 million.

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