Would you sell stake in your company in exchange for advertising inventory? After Bennett, Coleman & Co. Ltd (BCCL), publishers of the Times of India and Economic Times, and JV partners of the TV Channel Times Now, other media groups including HT Media, Dainik Bhaskar, NDTV and Dainik Jagran are setting up a Private Treaties division. Business Standard reports that Dainik Bhaskar has closed three deals. They’ve also hired Arvind Mittal from UTI head its treaties division. Meanwhile, NDTV set up its division six months ago, Jagran Prakashan is preparing a proposal for the board’s approval, while HT Media is reportedly setting up its team, though CEO Rajiv Verma has declined to comment. Network18 also signs shares-for-advertising deals under different group companies.

We’ve heard that BCCL has, over the past three years, done close to 175 private treaty deals, though the website lists only 120. Some familiar names there: Affle India, IOL Broadband, World Phone, You Broadband, Media Video, Percept Pictures, Holiday IQ, Travelguru, Travelmasti, SatNav, Sobha Builders (IT arm - SRIT), Spice Limited and Videocon. The list, surprisingly, doesn’t include group companies Times Internet Limited and ENIL (which runs Radio Mirchi), which Business Standard mentions.

More in the extended text.

Now taking up equity in companies in exchange for advertising inventory is fine, as long as editorial coverage remains independent of marketing and investment. BCCL has been criticized for formalizing the sale of editorial space—Mid-Day had, four years ago, published rates (cached page) for BCCL group company Medianet. What does the company get for a private treaty deal from the Times Group? From their website: Advertising Support, Branding Support and Corporate image development. BS adds that BCCL helps bump up valuations for future fundraising as well. Ravi Dhariwal, CEO (Publishing)for BCCL, rubbishes criticism, but I wonder if he considers this editorial space, or marketing space. Note that there are no disclaimers from BCCL either, when covering companies that they’ve invested in. The money appears to be good, which is what is attracting other media companies into the private treaty business. A former BCCL exec has told BS that profits from Private Treaties amounted to Rs. 500 crores last year. NDTV, for its part, claims that their deals have a clause that no editorial support will be offered to clients.

So would you sell stake in your company in exchange for advertising inventory? And for editorial inventory? Why or why not? Some responses to this question from our readers, when BCCL had picked up stake in Holiday IQ.

Update: Editorial coverage appears to be a part of the deal. Abhi, in the comments, points us towards a Sucheta Dalal article which quotes the following from an email (dated Novemer 29 2007) from The Economic Times editor: “At ET, we are carving out a separate team to look into the needs of Private Treaty clients. Every large centre will have a senior editorial person to interface with Treaty clients. In turn, the senior edit person will be responsible, along with the existing team, for edit delivery. This team will have regional champions along with one or two reporters for help—but more importantly, they will liaise with REs (Resident Editors) and help in integrating the content into the different sections of the paper. In this way, we will be able to incorporate PT into the editorial mainstream, rather than it looking like a series of press releases appearing in vanilla form in the paper.” Read the entire article here.

Disclaimer: I have an inconsequential number of shares of Network18