CLOSE-UP: GLOBAL BRIEF; Publicis happy to go it alone

What are the implications of the Publicis/True North spat? Holly Moore reports

What are the implications of the Publicis/True North spat? Holly Moore

reports



‘How do you take apart an omelette?’ financial observers asked as they

discussed the cloudy future of Publicis-FCB and the squabbles between

its owners, Publicis SA and True North Communications. Given the

profitability of the union in Europe, polygamy may be the best remedy.



After Publicis SA revoked its seven-year-old global alliance agreement

with True North on 1 March (Campaign, last week), True North issued a

statement saying it would continue settlement discussions and that it

would be business as usual for Publicis-FCB clients, although the rules

governing the venture had been suspended. While this may seem like PR

double-talk, it does appear necessary given the complicated intertwined

financial interests of both companies.



True North holds 49 per cent of the Publicis-FCB joint venture, while

Publicis Communications owns the controlling 51 per cent. Publicis

Communications itself is an entity 79.2 per cent held by Publicis SA,

the French holding company, and 20.8 per cent held by True North. In

turn, Publicis Communications owns about 20 per cent of True North’s

stock. Maurice Levy, the chairman of Publicis SA, Publicis

Communications and the Publicis-FCB joint venture, is on the True North

board as a director and personally owns almost dollars 1 million worth

of True North stock. Both companies agree these financial underpinnings

ensure the two will have to work together, albeit under new

circumstances.



Though this battle has scared off some clients and kept True North and

Publicis from benefiting from the move towards global consolidation, the

two agencies continue to play vital roles for each other in each

agency’s sphere of influence, making a split even more difficult. For

True North, Publicis-FCB services the European portion of its newly

acquired dollars 350 million SC Johnson account, while True North’s FCB

agencies service the Publicis clients, Nestle, Lanc™me and L’Oreal in

Asia.



Ultimately, it’s a battle over territorial rights. As Levy said to

Campaign last week: ‘If we want to expand our network globally,

particularly in the US, we can do it on our own.’



Given that 40 per cent of True North’s profits come from the European

alliance, the company may have no choice but to give Publicis its

freedom.



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