General Motors, which drove high-powered, multiyear, strategic network TV mega-buys to new heights last year by signing a three-year deal with NBC, wants to recast that deal, possibly costing the network as much as $50 million in advertising commitments over the next two years.
As network TV`s biggest spender, GM`s desire to renegotiate its NBC deal reflects that the economics of both network TV and its staunchest supporter, the automobile industry, have changed dramatically over the last 12 months.
”Of course, we`re going back to the table with them,” said a senior-level advertising executive familiar with GM`s buying strategy. ”There are price increases built into the deal that we`re evaluating now to see whether we should pay those kind of increases this year and next,” said the executive.
GM last spring committed to spend as much as $750 million over three years to secure favored status with NBC, then dominant among the Big 3 networks and the one with the undisputed privilege of setting the price structure for network TV time.
GM`s sports deals include a $400 million, seven-year commitment to CBS for NCAA basketball; a $140 million, four-year deal with CBS for major league baseball; a $46 million, four-year deal with NBC for NBA basketball; and multiyear deals with all the networks for pro football. These appear to be immune from renegotiation-at least for now. That`s because competition among carmakers for high-profile positions in big ticket sports events has remained strong, so GM is not likely to let go of its beachheads in sports.
Since the much-publicized three-year NBC deal was crafted and announced last spring, GM has become ever more mired in an industry-wide sales slump that has forced billion-dollar cutbacks affecting virtually every area of the automaker`s operation, as well as those of its domestic competitors.
