MEDIA SPOTLIGHT: Will Aegis regret letting its French chiefs walk out?

The departures of Kemoun and Rebbouh caused a stir in France.

There was some astonishingly fevered speculation about the future of Aegis in Paris at the end of last week. It spread to New York too.

But on this side of the Channel (and the Atlantic), nothing. Hardly a ripple. The Aegis share price hardly fluctuated.

Okay, Bruno Kemoun and Eryck Rebbouh, the Paris-based joint chief executives of Aegis Media Europe, had departed abruptly. So what? Few people outside of Aegis really know who these two middle-aged French blokes really are or why they might be important. Because to be important in media you've got to have a bit of previous in London, haven't you - because London is, after all, the capital of the media world, isn't it?

Perhaps. But the London market might be about to learn a very painful history lesson. There are still many people who believe that communications specialists - formerly known as media independents - were invented in the 70s by the likes of Chris Ingram. They weren't. This business has a far older provenance.

It's actually a French story and it is one that can be traced back to the activities of two brothers, Gilbert and Francis Gross, who in 1966 built their media broking company, Carat, into one of the most important French advertising businesses after Publicis and Havas.

The Gross brothers (and Gilbert especially) controlled the French media market for decades. Almost as legendary was Gilbert's "black book", which was not just one of the best contact books in European business (and politics, come to that), but an intricate and intimate record of all the media deals done on behalf of those contacts.

Gilbert Gross might have been legendary but even he realised that he was not immortal and with his brother ailing (Francis died several years ago) he began to realise that he should act to secure the Carat succession.

So he picked on two promising lieutenants who already had family connections - Kemoun and Rebbouh - and they were duly anointed and initiated into the secrets of the black book.

The other part of securing the Carat future involved finding a way to build a global network while remaining independent. Thus the deal in the late 80s that saw the WCRS holding company buy Carat and then sell the WCRS advertising agency. It didn't take long for people to believe that Aegis, as the WCRS holding company was to become, was a true- blue Anglo-Saxon outfit, especially as it began ploughing resource into expansion in the US.

What was generally forgotten was that, embedded almost as an act of faith at the heart of the company, was the belief that Kemoun and Rebbouh were there to vouchsafe the future of the Gross brothers' Carat vision. Losing their services could be seen as an act of carelessness on the part of the Aegis Group chief executive, Doug Flynn. The Carat International chief executive, Jerry Buhlman, is their replacement.

In truth, this has been an accident waiting to happen for three or four years. The incendiary issue is said to be Kemoun's and Rebbouh's increasing frustration that profits from the French market (France delivers 30 per cent of Aegis profits) were contributing to diversification of the Aegis business.

There's been an expensive attempt to crack the US media buying market, for instance. Carat invested heavily to attract the best talent going and, despite winning significant chunks of business, margins on this business are said to be tight.

Flynn has also been branching out into research - the acquisition, for instance, of companies that it folded into its Synovate research division - with variable results. The value of Kemoun and Rebbouh's Aegis shares dropped and things almost came to a head last year around the time that Aegis parted company with Ray Kelly, then the chief executive for the Carat markets within the Anglo-Saxon ambit.

An Aegis spokesman dismissed all this as wild speculation last week.

There was no disagreement as to strategic direction, he says. The same strategy had been in place for years now and it had never been seen as a problem before so why should it be a problem now? And the company's diversification into research has been (and continues to be) instrumental in Carat's reinvention of the communications agency business - moving it from a commodity, price-fixated process to a service that delivered added value to clients.

Other sources say that Flynn is phlegmatic about the whole episode - as well he might be given the reaction (or lack of) on the London Stock Exchange. Some observers wonder if he realises what he's done.

It is hard to appreciate the intensity of the emotional response in Paris.

Over there, this doesn't play as a tale of arcane machinations at the top of a public limited company - it's all about the betrayal of a French vision. There's talk of moving heaven and earth to revive that vision. Rumours have spread that Gilbert Gross is on the march again, backed by the French business community and his billions in Swiss bank accounts.

One of the stories doing the rounds was that one of the biggest issues between Kemoun/Rebbouh and Flynn was a possible sale to WPP. Some observers cast doubt on this - even with its shares trading at just under 100p, Aegis doesn't represent good value to the likes of WPP. Just a few months ago, senior Omnicom executives also told journalists that an Aegis move was now "off the radar".

On the other hand, both Omnicom and WPP would back Kemoun Rebbouh Communications, should it ever open its doors. Another potential suitor is Publicis - the creative agency favoured by one of Carat's biggest clients, Renault.

There is a one-year non-competition restrictive covenant now in play - but actually, that might just prolong Aegis' agonies even if, under the current circumstances, it were enforceable in France. Only one thing is certain - all of Carat's French-run clients will be in play. The clock is ticking.