Media agency holding company CEOs are openly acknowledging the importance of arbitrage-based principal trading to their business models – and it’s spreading rapidly out of digital display into TV, audio, digital out of home, connected TV and beyond. Former UM Global Chief Media Officer Joshua Lowcock, who left the IPG-owned media agency network last year to head up media at US group Quad, is bleak on the distorting market effects of holding companies buying media for themselves and on-selling to advertiser clients with handsome mark-ups – often in ‘bundled’ products which blend a small quota of quality inventory with low value tonnage. “Both agencies and clients have built themselves a prison that they can't get out of,” says Lowcock, adding that holdcos are hiding “boatloads of cash” within the “myriad complexity” of their structures – and that rank and file staffers don’t even know they are doing it. He thinks a client-driven “ugly” reckoning is coming that will pull down the principal media house of cards – and has the five questions procurement, marketing, finance, legal and compliance should be asking. But evidence so far suggests that day may be some way off. Ex-GroupM exec Dave Gaines, now CEO at Media by Mother, says retail media is making the situation worse – but also that media owners complaining of getting squeezed are likewise reluctant to apply margin-sapping sales resource to direct client deals. Either way, few owners will complain publicly for fear of retribution, i.e. being cut out of group spend, per Nick Manning, non-executive chairman of Media Marketing Compliance and adviser to peak US advertiser body the ANA. Manning sees principal media’s rise leading holdcos to becoming just the same as the walled gardens whose “black box” business models they are trying to emulate, a "zero sum game". But for those that care, here are the fixes.