Advertisements
 

Publicis Groupe and Omnicom disclose $35bn merger

July 27, 2013

Maurice LevyAs merger rumours go, they didn’t come much better. Omnipub. Or more probably Publicom. But let’s come back to that later.

The idea that the world’s number two marketing services group, Omnicom, is about to combine with the number three, Publicis Groupe, and topple WPP from its premier spot (by market capitalisation) eventually proved too much for Bloomberg News. Yesterday, after the New York Stock Exchange had closed, it went ahead and published on the basis of a single source, probably but not certainly a disaffected investment banker.

Hats off to Bloomberg: it got it right. The new entity is to be called Publicis Omnicom Groupe. Fuller details will be announced in Paris tomorrow. But Omnicom chief executive John Wren and Publicis CEO are expected to be joint CEOs of the combined companies. At least, for the time being…

Commentators have rightly fastened upon the many impediments to Wren and Lévy pulling off this $35bn marriage in advertising heaven. They range from anti-trust legislation, to rampant nationalism (Publicis is a French chauvinistic icon, and seen as a bulwark against Le Defi Americain), to apparently unbridgeable divergence in the two companies’ strategies, not to mention the little matter of crippling client conflict.

So that’s it then? It can’t possibly work? Well, no. I can’t speak for the thicket of legal obstacles likely to be thrown in the way of the touted merger, but most of the other objections can be turned on their head, sometimes to advantage.

Let’s take strategy as an example. Lévy is relatively weak in the USA, but has emphasised emerging markets and put his money where his mouth is – sometimes too much of it – with expensive digital acquisitions such as Digitas, Razorfish, Rosetta, Big Fuel and LBi. Wren is archetypally American – over 50% of his business comes from the States; he has shied away from digital acquisitions, which he regards as over-priced, and some (including shareholders) would argue that his conservatism, or complacency, has cost Omnicom dear in the Far East. So different strategies, yes; but incompatible ones, no.

Nor is client conflict the neurotic impediment to mergers in the advertising business it once was. Some clients – McDonald’s, Mars and Procter & Gamble for instance – are held in common by the two groups. The real deal-breaker – if there is one – is likely to be Coca-Cola (PG) and PepsiCo (Omnicom). Then again, maybe Wren knows something about the state of the PepsiCo business we don’t.

Next, might a merger not help to address some chronic succession problems in both organisations? Readers of this news site will be very familiar with those at Publicis. Jean-Yves Naouri, once 71-year-old Lévy’s favoured protégé, seems to have fallen by the wayside. While Arthur Sadoun – the capable, ambitious managing director of the elite Publicis Worldwide network – was probably too young and too little known outside France to assume the global mantle. An added piece in this jigsaw is Elisabeth Badinter, the daughter of Publicis founder Marcel Bleustein-Blanchet, who has been a member of PG’s supervisory board since 1987 and its chairman since 1996.

Badinter will, according to the Wall Street Journal, co-chair the new Publicis/Omnicom entity with Bruce Crawford. But she is expected to retire at the end of 2015. Which would be a convenient moment for Lévy to metamorphose into an emeritus role. It might also be a convenient moment for Badinter to bow out and cash in an enormous cheque. She is a 9.1% share holder in Publicis Groupe.

John WrenTurning to Omnicom, the problems of its senior management are less well ventilated. But two things are certain: its directors are not getting any younger and there hasn’t been much mobility lately. The average age of the board is over 70 (my thanks to Bob Willott for this pop-up statistic), making 61-year-old Wren look a comparative spring-chicken. Omnicom remains a well-run company, but there is an unmistakable air of geriatric stasis hanging over it. It has lost some big, perennial, brands in the recent past: Gillette and Chevrolet. Another signature account – Anheuser-Busch – has been cut to ribbons by the cost-conscious Boys from Brazil (InBev). By contrast Publicis – for all its chief’s distinguished grey hair – is viewed as dynamic; a perception reflected not only in PG’s recent stellar results but its consistently superior stock market rating.

A “nil premium” merger (which is what Bloomberg has suggested this is) implies a combination of equals. In reality, although Omnicom is the larger company, Publicis will end up in the driving seat: we’re talking Publicom rather than OmniPub. The signs are already there: in the name, Publicis leading; and in the venue for the announcement tomorrow, Paris.

The important detail to look out for will be who becomes chief financial officer. My money is on Jean-Michel Etienne rather than Randy Weisenburger. It’s not only the French who have to be appeased, it’s also the investment community.

Bloomberg seeded one of the most galvanising “silly season” rumours in years. The only thing is, it turned out to be true.

Advertisements

Lancing the boil of celebrity culture

October 18, 2012

For years he wove a cynical circle of deceit around the community, perpetrating the most heinous misdeeds while masquerading as a benefactor of mankind.

Of course, there were a few whispers. Doubters who thought the myth he had wrapped around himself was too good to be true. Alleged victims of his corruption who knew for certain he was a Wrong ‘Un (or so they claimed).

But who were these people? The spiteful and envious, endeavouring to poison the reputation of a noble celebrity with unfounded gossip. Or worse, Society’s sad losers maliciously fabricating tales of victimisation for their own financial gain. And why should we take any notice of them when their intended target was such a fine, upstanding, pillar of the community?

Jimmy Savile – for now, still a still a Knight of the Realm and Knight Commander of the Star, by order of the Holy See; Lance Armstrong – for now, still 7-times winner of the Tour de France: what’s the difference? They were gigantic frauds and they’ve had a good laugh at the expense of us all. But now it’s all over. Jimmy remains an untouchable – in a technical sense, at any rate, since he is beyond the grave. Lance is a little less fortunate. His life-expectancy, in view of the cancer challenge and toxic artificial stimulants religiously ingested over the years, must be severely foreshortened. Alas, not so foreshortened that he can escape the hand of Justice clamping his shoulder and calling him to account; or the incessant righteous ‘told-you-so’ opprobrium that will now rain down on his already mired reputation.

Because that’s the thing about reputations. Once trashed, there’s no rehabilitation, no going back. The evil that men do lives after them, the good is oft interred with their  bones.

Who, a few months on, will want to remember that Savile, the child molester and serial pervert, was also a doer of good deeds whose work for charity raised an estimated £40m?

Who now will wish to recall that Armstrong’s reputation and sporting prowess, however achieved, was indispensable to the success of the Livestrong, the cancer charity he founded 15 years ago?

Last year $35.8 million went through the charity’s books, 82 per cent of which was passed on directly to research programmes.

Yes, they were both self-serving hypocrites, in the sense they pretended to a piety they richly did not deserve. But weren’t we all complicit in that hypocrisy as well? Not just institutions like the BBC, Stoke Mandeville Hospital, or sponsors such as Nike, Oakley and Anheuser-Busch – who clearly had a vested interest in nay-saying whenever allegations of inappropriate conduct surfaced; but the rest of us too, who were gullible enough to believe that our idols really don’t have feet of clay? After all, who’s looking at the feet when the object of veneration is walking on water?

So, if Armstrong’s sponsors are heading for the exit as fast as their own feet of clay will carry them, and Savile’s charity is now studiously engaged in an act of collective amnesia over its founder’s name, can we really blame them? They are just as obsessed with, and as gullible about, celebrity culture as the rest of us.


%d bloggers like this: