At the start of November, MediaVest London’s chief executive, Jim
Marshall, spent two days ensconced in an office at Leo Burnett’s Sloane
Avenue headquarters. Having convinced Burnetts’ media chiefs that a
merger of the two operations could really work, it was time to reassure
the troops.
The meetings were the culmination of months of painful negotiations
between the two companies. By mid-November, both parties were agreed:
combining MediaVest with Burnetts’ media department would create a
pounds 485 million powerbase in the UK media market, offering clients a
better-resourced media service and providing a strong platform for the
expansion of a new international media network, StarVest.
StarVest was to launch in the UK on 1 February 1999 and would, at a
stroke, snaffle the number two slot in the media league table from Carat
and nip at the heels of the market-leading Zenith.
But by the start of last week, ripples of discord were starting to
spread from across the pond. Finance chiefs putting the finishing
touches to corporate structures hit walls, emergency calls from New York
and Chicago urged talks to be put on hold and by Tuesday evening the
word from the US was official: the merger was off.
A joint statement from Burnetts’ chairman, Rick Fizdale, and Roy
Bostock, the chairman of MediaVest’s parent, MacManus, laid the blame on
irreparable differences of opinion. With typical American courtesy, the
two chiefs told their employees, rivals, clients and the world: ’While
we have a great deal of respect for one another, we had enough
fundamental differences of opinion on how to run such a massive
operation that we’ve both chosen not to move forward.’
US insiders suggest arguments raged over who would run the merged
network and how it would operate. Irwin Gottlieb, the outspoken
president of MacManus’s US TV buying operation, TeleVest, was touted as
the chief of the new company, though this would not have been a
universally popular appointment.
Problems arose over quite how independent departments such as TV buying
or sponsorship would be from the core of the new agency.
The statement continues: ’MacManus and Leo Burnett each have the talent,
systems, resources and scale to give clients a real competitive
advantage in media.’
In truth, both agencies’ media products are powerful and well regarded
in the US. But on a wider stage, Burnetts’ media might is patchy, while
MediaVest is limping along with a few key offices and a poor network
proposition. Unfortunately, it is those Burnetts and MediaVest offices
outside the US that perhaps recognise the urgent need for a strong
international network more than those still sitting pretty in the
US.
In the UK, the collapse of the deal leaves MediaVest winded. Not only
has precious time been wasted and business lost but competitive edges
are also gradually being worn away as rivals increasingly boast strong
international networks and clients align more and more media business on
international lines. Marshall suggests that simply growing organically
may not be enough in some markets and deals - whether local or
international - will have to be looked at in the future.
Bostock takes issue with suggestions that the agency’s media strategy is
now left floundering. ’Burnetts came to us, we didn’t seek them out,’ he
explains. ’A merger is not necessary in order for us to form a very
large media operation. We’re incredibly strong in the US. We’re
disappointed this deal didn’t come off, but we went in with our eyes
open and now we will simply carry on where we left off. We will be up
there among the handful of large global media players.’
Bostock says that before the Burnetts talks, his agency had already
formed a MacManus Media Task Force which had made significant progress
in identifying how best to form a full-service global media company. An
internal memo promises that these plans will now be reactivated and
Bostock has set a new date - 1 January 1999 - for the launch of the
network, which will be headed by Gottlieb. Whether the TeleVest brand
will co-exist alongside a MediaVest US media operation has yet, he
admits, to be decided.
Yet Bostock acknowledges that there is still room for a deal with
another media network. ’This hasn’t put us off,’ he says. ’But we’re not
far enough along the road to say who would be a potential partner.’
Grey’s MediaCom and Carat are the likely options.
Burnetts won’t be rushed into an alliance. Jeff Fergus, Burnetts’
European group president, says the agency is having a good media run on
both sides of the Atlantic; wins include Diageo and Sara Lee in the US
and pounds 170 million of P&G business in the UK. But he admits the
sands are shifting. ’We are aware our competitors are merging and
getting stronger,’ he says.
The agency will now undoubtedly look at expanding its StarCom media
brand into new territories. In the UK, Burnetts’ media department,
jointly headed by David Connolly, seems ready for change and if it’s not
to be a merger, the launch of a standalone media operation under the
StarCom name has not been ruled out.
Whatever strategies the agencies pursue, it’s unlikely that either could
make it to the top alone.
Perspective, p15.
