LIVE ISSUE/THE FCB-BOZELL MERGER: More questions than answers in True North deal - Last week’s marriage was inevitable but it isn’t made in heaven, John Tylee says

The cat was out of the bag well before True North’s faxed invitation to journalists around the world last Thursday morning to join a telephone conference call for a ’significant announcement’.

The cat was out of the bag well before True North’s faxed

invitation to journalists around the world last Thursday morning to join

a telephone conference call for a ’significant announcement’.

For some weeks the question has been not if the group would merge its

FCB and Bozell networks, but when.

The strategy of separateness to which True North’s former chairman,

Bruce Mason, had clung since the group’s $440 million acquisition of

Bozell two years ago, has survived only four months under his successor,

David Bell.

Indeed, the marriage is a tacit acknowledgment that Maurice Levy, the

Publicis chief who unsuccessfully challenged the initial purchase of

Bozell by True North - his erstwhile international ally - in the US

courts, may have had a point when he argued that separate networks would

not solve the group’s lack of global reach.

’It’s a smart move,’ comments Levy, whose company remains True North’s

largest individual shareholder (Publicis is holding on to the shares

until they reach a decent price). ’True North couldn’t achieve anything

with separate networks. Now it looks more like a seamless


And a more effective one? ’As a shareholder I feel sure this will

improve True North’s standing with the stock market. But as a competitor

I feel it still has a long way to go.’

Levy reflects a widespread view that bringing the two networks together

to form FCB Worldwide, giving it number one status in the US and the

world’s fifth largest network, is not the final chapter in the True

North story.

With anticipated savings of almost $25 million from the merger, the

prospect of an improving share price and rising revenues, few doubt True

North will shortly turn predator with Grey, Bates and Saatchi & Saatchi

as its primary targets en route to joining Omnicom, WPP and Interpublic

in the Champions’ League.

Some believe such a move is inevitable if only for True North to justify

its existence. ’If not, why bother having a holding company?’ a former

FCB senior regional manager asks. Bell is certainly keeping the door


’We won’t comment on speculation and rumours,’ he says. ’But I won’t

rule out anything.’

For the time being, though, he has enough to do just bedding down this

merger. For a start, there’s the cathartic period when jobs will have to

be shed. Don Seeley, True North’s chief financial officer, will not say

how many but insists they will come from administration and general

management rather than front-of-house departments such as client

services, new business or creative.

Then there’s the tricky task of melding together a network rife with

inner tension. While the Bozell name is being retained in the US, mainly

to resolve a number of domestic client clashes, particularly Bozell’s

Bank of America and FCB’s Chase Manhattan Bank, Bozell staffers must

come to terms with its disappearance from the international scene.

Moreover, the top jobs have gone to FCB men. Brendan Ryan, currently

FCB’s worldwide chairman, becomes chief executive of the combined agency

while Harry Reid, the London-based international president, oversees the

non-US operations.

It may mark the start of a gradual diminishing of the Bozell


Small wonder that the reactions of FCB and Bozell senior staffers from

all over the world taking part in a telephone briefing immediately after

last Wednesday’s True North board meeting in New York were starkly


Even within FCB cohesiveness is hampered by the agency’s split centres

of gravity caused by Ryan’s decision, as worldwide chairman, to decamp

from FCB’s Chicago heartland to New York. The result has been to

separate FCB’s flagship agency from its spiritual home and its biggest

global client, SC Johnson, the domestic cleaning products manufacturer.

’Ryan wanted to pull everything into New York but True North wouldn’t

have it,’ a former senior staffer says.

At the same time, observers point to FCB’s schizophrenic attitude to

planning where Ryan’s scepticism is at odds with the enthusiasm of

managers in the Chicago and San Francisco offices.

But even all this is dwarfed by a fundamental conundrum. Despite all the

investment being poured into building a global network - Europe will be

a heavy focus of attention with up to nine acquisitions in the pipeline,

Reid promises - there is little credible international business with

which to fuel it. Kimberly-Clark, Tambrands and Levi Strauss, all

potential global clients, have been lost recently and replaced with

mainly US domestic accounts.

To make matters worse, millions of pounds worth of FCB car business in

Europe will have to be sacrificed in order to keep the Daimler-Chrysler

account safe at Bozell. And, even after the merger, Germany and Spain

will be the only European markets where FCB worldwide has top ten


Overriding all that, however, is the need to resolve the group’s messy

media offerings which, many believe, is the real driving force behind

the marriage. A series of meetings have taken place in the US - where

the two networks’ media arrangements have never been properly

co-ordinated by their holding company - about how the discipline should

be organised on a global basis.

In Europe the issue has become increasingly pressing. FCB has only a

limited working relationship with Optimedia, its one-time joint venture

with Publicis, and FCB accounts have been drifting into BJK&E, owned

jointly by Bozell and CIA, in which WPP has a stake.

The boldest solution might be a bid for Zenith together with one, or

both, of its parents - Bates and Saatchis. As Ryan says of today’s

consolidating business world: ’Being big isn’t an end in itself - but it

sure helps.’

Leader, p25.