GARM Meets the House of Representatives, Ellison Meets Paramount, Plus Agency Growth Data

Madison and Wall: Saturday Summary for July 13, 2024

This week individuals including GroupM CEO Christian Juhl and Unilever President Herrish Patel took the stand at a U.S. House of Representatives Judiciary Committee hearing entitled “Collusion in the Global Alliance for Responsible Media” (GARM).  Putting the misguided focus of the hearing aside, the committee’s key assertion hinged upon the flawed notion that the world’s largest advertisers, as represented by GARM, comprise 90% of the advertising investments on major media platforms. 

We explored (and offered more accurate estimates of) related market share figures in our note.

The other big news of the week we covered was the announcement of a long-awaited transaction between Skydance (whose shareholders include the Ellison family and investment fund Redbird Capital Partners) and the parent company of Paramount.   

Completion is still a ways-off, as the buying parties expect closing to occur in the third quarter of next year. Of course, this presumes that no other parties offer a more compelling bid and that regulators approve the transaction.    

At an industry level, there were several important topics raised on the investor call which we analyzed, such as the importance of sustaining content budgets for streaming services, whether or not there is a “floor” for linear TV, the appropriateness of the “arms dealer” strategy for studios and the nature of content bundles.

This week we also published our quarterly study of the 30 largest independent agencies.  Based upon our ongoing analysis of the sector, which struggled in 2023 after a robust 2022, we estimate that this group of companies showed incremental gains in revenue growth on a like-for-like, pro forma basis during the second quarter of 2024.   Read-throughs are positive, if consistent with our prior expectations, for the broader agency industry.  We’ll get more color on the agency sector during the week ahead when Publicis and Omnicom report their second quarter results.