Some publishers are chafing under restrictions imposed by the US Olympic Committee and the International Olympic Committee blocking athletes from appearing in any ad campaign not affiliated with an Olympic sponsor during a blackout period.
The controversial edict, known as Rule 40, defines the “Games Period” for the London Olympics from July 18 until three days after the closing ceremony on Aug. 15.
One publisher said that he was forced to pull a big ad with Olympic swimmer Ryan Lochte, who yesterday was confirmed as entering 11 events at the US Olympic trials in Omaha, Neb., next week while reigning champion Michael Phelps has entered only seven.
Phelps, of course, is the most sought-after endorser. But his ads for Subway sandwich shops won’t make it into TV or print during the Games Period because McDonald’s is an Olympics Rings sponsor. Phelps’ ads for cereal maker Kellogg, which is an Olympic sponsor, will not be a problem.
Lochte and female swimming sensation Dara Torres have hooked up with Nissan, but since BMW is a Rings sponsor, none of Nissan’s ads can make it into print, TV or other media either during the exclusivity period.
One publishing executive complained he lost a $168,000 ad campaign from Nissan because of the blackout.
He also noted that even spectators could face repercussions if they try to wear athletic wear to events that is not tied to an Olympic sponsor.
“It just seems like a crackdown on freedom of expression that goes way beyond even what they had in Beijing four years ago,” said the executive.
He said an athlete could appear on the cover of a magazine that is published during the Games Period but would be banned from appearing in any ad in the same magazine for up to three or four months.
“That’s insane,” said the executive. “You’d think they’d come up with a better way to figure out what has a negative impact on the Olympics.”
The US Olympic Committee said that Rule 40 “helps prevent ambush marketing.”
But the publishing executive complained it was “overreach” designed to stifle competition from marketers who did not fork over money for Olympic sponsorship deals. “It goes beyond what anyone could sanely expect,” he said.
Another publisher said that marketers have been plotting ways around the blackout for months. “It’s a dance,” he said. “Marketers have to be real savvy about how they work through it.”
The publishing executive noted that once the games end, non-Olympic marketers with endorsement deals with athletes will start rolling out the new creative ads.
Reality bites
Reality Weekly is apparently not selling enough copies to justify its space on the newsstand, so publisher American Media Inc. plans to scrap the weekly print edition and convert it into a tablet-only publication.
“The tablet will be ready sometime in July or August,” said AMI CEO David Pecker.
He said he originally hoped to sell at least 200,000 copies of Reality Weekly a week but that he was selling only about 100,000. It launched in January and never developed much traction with readers.
Pecker said he will offer a free app and sell 30-second trailers to advertisers. “I’ll only have to guarantee advertisers 25,000 downloads,” he said.
The publication used freelancers and the staff of OK! to produce the edition. “It wasn’t losing money, but it wasn’t making money,” Pecker said.
He said he doesn’t plan layoffs or pay cuts at OK! as a result of the conversion.
Griffin in
Little noticed in the deal for Freedom Communications to sell the Orange County Register and six other newspapers to Aaron Kushner’s 2100 Trust was the involvement of one-time Time Inc. CEO Jack Griffin, a veteran of Meredith Corp.
“I’m a minority investor and I’m on the board, but I’m not part of the management team,” Griffin told Media Ink.
He got a lot of experience with newspapers when he served as CEO of Parade Publications, before moving on to head Meredith magazines and then making his ill-fated jump to Time Inc.
Industry stats show the newspaper ad market has dropped by roughly half, from $50 billion in 2005 to around $25 billion by 2011.
“Even though they are not the businesses that they once were, they can still be good solid businesses,” said Griffin, who made the investment through his Empirical Media Advisors. “Metropolitan newspapers managed well with a strong digital philosophy and a reader base can be successful.”
Terms of the last peel-off of Freedom were not disclosed. Freedom wiped out $450 million in debt when it emerged from bankruptcy in 2010 and was acquired by investors Angelo Gordon, Alden Global Capital and Luxor Capital Group.
In April, the investors sold off eight TV stations to Sinclair Media Group for $385 million. The seven papers are the final piece to be sold off.
Griffin said a lot of newspaper chains piled on too much debt with deals at the height of the market, and they can’t expect any help from a rebounding ad market for print.
“Today, you have to turn attention to getting revenue from the reader in print and digital. Advertising is the subsidiary,” he said.
Digital edge
The Economist Group said it has hit a record operating profit of $105.3 million, up 6 percent from a year earlier, on a 4-percent gain in total revenue to $566 million.
Paul Rossi, managing director for the US, said just under half of the revenue for the London-based company is now derived from the US. He said print and digital have a combined circulation of 1.6 million globally. Of that, 123,000 are digital-only subscriptions.
The mag’s digital and print editions are priced the same — $130 a year. “You pay to receive the Economist, and we don’t care what channel you read it on,” Rossi said.
He said the digital edition is available on the iPad, Android devices and Kindle.
He said total circulation of Economist publications rose 6 percent while digital circulation more than doubled.