CLOSE-UP: LIVE ISSUE/REDWOOD-PREMIER MERGER - PMP and Redwood's fusion is potentially a minefield, Matthew Cowen suggests

If ever a story demanded a company line, it's Omnicom's pooling of

its two contract publishers, Premier Media Partners and Redwood

(Campaign, last week).



After the revelations of last week, there are plenty of questions as to

what form the company's publishing will now take. Yet at the start of

the week, all parties involved in the move were remaining tight-lipped,

leaving the media to draw what conclusions they could about future

plans.



The reasons for the silence are clear. The fusion of Premier and Redwood

is charged with politics and pre-existing ego clashes. It is perfectly

understandable that Omnicom should want to tie down the details of the

deal before releasing an official statement, but it needs to be firm

about what, exactly, it is aiming to achieve.



The most immediately sensitive issue is the handling of Premier's

co-founder and chief executive, Craig Waller. At the time of writing,

Waller had told PMP staff that he didn't believe there would be a place

for him in the new set-up, but had not officially stepped down. The loss

of Premier's independence will be a major personal blow, especially as

control is ultimately being ceded to Redwood's chief, Mike Potter, with

whom Waller has personal rivalry.



The two operations will not be technically merged: Omnicom sources

describe the move as a partnership, rather than a merger, with economies

of scale dictating the sharing of production and research facilities, as

well as personnel. But it seems clear that ultimate managerial control

of PMP will now rest with Redwood.



This is where Omnicom must be clear from the start. How much control

will Potter exert over PMP? Waller's former kingdom seems set to become

a second-string publishing house, ready to handle conflicting business

for Redwood. Yet for this to work, clients must be convinced that it is

genuinely autonomous. On the other hand, PMP arguably needs Redwood's

managerial influence.



The performances of the two companies have contrasted sharply in the

past few years. While Redwood has maintained a dynamic new-business

performance, PMP has seen its own account list narrow alarmingly. In

recent months, its viability has rested largely on the key British

Airways business.



PMP sacrificed its margins when it narrowly held on to the BA account

last November, under challenge from Redwood. The profitability of the

account became dependent on the advertising revenue PMP could bring in.

After the events in New York this month, the revenue, and the viability

of PMP, could no longer be counted on.



At the same time, the commercial deal hammered out by BA during the

pitch should ensure its interest in keeping High Life going. Unlike

Virgin Atlantic, BA makes a profit from its in-flight title, and is

therefore unlikely to suspend it as its rival has Hot Air.



High Life should ensure the future of key figures at PMP, such as Mark

Jones, who is likely to retain his role as editor of the title.



Waller's deputy, Claire Broadbent, is due for maternity leave, but it

seems likely she will stay with the company. If PMP is to operate as an

autonomous conflict shop, Potter needs a credible manager to head it -

and either Jones or Broadbent could fit the role.



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