Circuit City Hears Pitches From 4

$50 Mil.-Plus Account to Introduce Divx, a New Home Movie Device
NEW YORK–Circuit City Stores is conducting a search for a shop to introduce a new technology that could revolutionize the home video rental market.
Sources pegged spending on the new account at upwards of $50 million. One source said the budget could climb as high as $100 million.
Digital Video Express, or Divx, puts movies on digital discs that have a built in pay-per-view system. Consumers would check out a Divx movie at a video rental store for about $5. A two-day free viewing period begins only when the disc is first played. After that, the disc will not play again unless the customer pays for another two-day period. The Divx player has a built-in modem that contacts the video store, which unscrambles the disc for more viewing. With Divx, viewers ostensibly get better quality images on demand, unlike video rentals or pay-per-view TV.
Four agencies are scheduled to make final presentations to Circuit City today.
New York consultant Steve Liebmann of S. Liebmann & Associates, said the four shops are: Bozell Worldwide, Kirshenbaum Bond & Partners and Angotti, Thomas, Hedge, all in New York; and Arnold Communications in Boston.
Those four were selected following an evaluation involving various other shops, Liebmann said.
In a letter dated Oct. 16 to Circuit City chairman and chief executive officer Richard L. Sharp, Liebmann said the shops “will each make two-hour presentations to you and your Divx Team” at Circuit City’s headquarters in Richmond, Va.
The letter lists the agencies batting order, leading off at 7 a.m. with Bozell’s team, led by managing partner Warren Kornblum. Bozell will be followed by Arnold and its president Peter Hanley, then Kirshenbaum and co-chairman Jon Bond. The presentations wrap up with Angotti’s group, led by president Barrie Hedge. Agency executives referred calls to the client.
Divx has been scorned by critics, ranging from video store owners and electronics manufacturers to environmentalists and privacy advocates. According to industry reports, Circuit City invested $30 million over the last three years developing Divx, which is a partnership between Circuit City and a Hollywood law firm.
Circuit City’s total media spending last year was $390 million, according to Competitive Media Reporting. DeVito/Verdi here handles some creative duties for the company.