One of the most talked about deals in recent times – Dentsu India’s Rs 500 crore under writing contract with SET India – has been under scrutiny of late. The deal was tabled at a meeting that took place on September 12, 2006, between Srinivasan Swamy, Presidet, Advertising Agencies Association of India (AAAI) and Indian Broadcast Foundation’s (IBF) G Krishnan, who formed a Joint Working Committee (JWC), and Dentsu India’s Sandeep Goyal and SET India’s CEO, Kunal Dasgupta.
The agenda of the meeting was to take a closer look at the deal and to observe if the IBF-AAAI agreement, meant to check practices like ‘agency rates’, was in any way violated. The germination of the point was a media report that stated that Dentsu India had blocked a significant amount of ad inventories on the ICC Champions Trophy and ICC World Cup 2007, for a special rate, and had in return signed an underwriting contract of Rs 500 crore with SET. The contract would imply that if SET India earns anything lower than the mentioned sum of Rs 500 crore from these matches, Dentsu would make good the remainder.
The deal raised considerable industry issues between leaders of media agencies and even channels, with the industry saying that this was a violation of the IBF-AAAI agreement and that a deal like this would encourage ‘agency rates’. This had prompted the formation of the JWC to look into the contract and to verify if such a violation had taken place.
Speaking on the outcome of the meeting, Swamy said, “We have spoken to both parties concerned and they said that there was no contract as had been projected by the media. This is a client-specific contract between SET and Dentsu. Even if includes bulk buying, it is only for only Dentsu clients.” He asserted that even the reported figure of Rs 500 crore was incorrect and that on the basis of these factors, there was no breach of the IBF-AAAI agreement.
The matter, as far as the industry’s issues over the contract is concerned, has been resolved with the parties involved denying the specifics of deal that were the cause of concern.
Is the industry still upset? One wouldn’t really know, but at least it is unlikely that anyone would be talking about it.
Dentsu inks Rs 500-cr deal with SET India for Champions Trophy and ICC World Cup 2007