OPINION: News Analysis - Question marks raised by WSW/BSMG merger

The union of BSMG and Weber Shandwick Worldwide, which creates the

largest PR consultancy in the world, takes effect next month. Turbulent

times lie ahead, says Gidon Freeman.



A £350m fee giant in the PR world is created next month as

Interpublic merges two of its existing three PR networks. Despite

promises by those tasked with running it, the future pathway of the firm

is strewn with pitfalls.



The structure of the new entity - its name remains Weber Shandwick

Worldwide - is easily explained. An office of the CEO has been created

with joint incumbents Colin Byrne, formerly CEO of public affairs, and

David Brain, the youthful CEO of BSMG's UK operation.



Half a dozen practice areas have been formed by folding various

divisions into their stronger counterparts at the other mergee. Each

will have its own CEO, who will report to either Brain or Byrne.



No role has been found in the new organisation for Tim Sutton. BSMG's

European chairman for the past three years has overseen a vigorous

acquisition strategy that doubled the agency's fees in that time. Sutton

will serve as interim chairman overseeing the integration, before bowing

out early in 2002.



The merger follows turbulence for both firms. Last year Shandwick

International was effectively subject to a reverse takeover by the much

smaller Weber Group tech PR firm, described as 'unsettling' by senior

agency figures.



The 25-year-old Shandwick's UK arm saw both founder Lord Chadlington and

protege Michael Murphy move on.



The UK chief executive drafted in to steady things, Railtrack's Philip

Dewhurst, was squeezed out after just a year amid intimations of bad

blood with US managers and suggestions of interference in the running of

the now Interpublic-owned firm.



Matters were no better at BSMG. UK CEO Nan Williams' departure in

January followed a buying spree that saw the firm pay double figure

millions for lobbyist GJW, having barely seen off the earnout terms of

previous PA buy, Laura Sandys Associates, most of whose staff had by

then left. This spell also saw financial PR shop Square Mile

Communications and other small consumer firms join up.



A much-rumoured bust up between Williams and her own New York bosses

soon left BSMG vulnerable to IPG's margin protection efforts as soon as

its plan to takeover BSMG parent True North went public.



One issue in the new company is the division of top jobs. The joint CEOs

are notionally equal but, at 44, Byrne has a five year age advantage and

a much longer-established industry pedigree. Despite protesting that

they are happy to work together, the industry has seen several examples

of joint CEO-ships that crashed into the icebergs of egotism.



'We're used to collaborative working,' says the famously bullish Byrne.

Brain adds: 'I am relieved it's a dual role because the company is

bigger than anything the UK industry has seen before and we are fairly

young.'



This could be an expression of real anxiety at the responsibility of

running the largest multi-practice, multi-venue PR team in the

world.



Or one could ascribe their apparent humility to a game of shadow boxing

among two wily players, and predict with confidence that 12 months from

now, they won't both be doing the same jobs. Time will tell.



From differing backgrounds - Byrne a New Labour smoothie to consumer

marketer Brain - each will have some practice areas under them. Byrne

will oversee PA, financial, corporate PR and the regions. Brain gets

visual communication, tech, healthcare and consumer.



Oddly, the joint CEOs plan to hire externally for the top consumer job.

It seems there is no one in the 500-strong firm able to lead that

practice. And yet the numbers are themselves revealing: WSW had 350

staff before the deal, BSMG had 200. The combined firm - in new premises

from next summer - will have between 450 and 500.



On the face of it, this is a ten per cent cull. 'It is not because of

the merger,' Byrne explains, blaming the economic climate instead. But

the logic of deals tends to be in synergies, and in a people business,

that means job losses.



A question mark hangs over public affairs. BSMG's GJW buy is mid-earnout

so its principals - old school lobbyists Andrew Gifford, Wilf Weeks and

Nigel Clarke - are incentivised to stay. But how they fit with Byrne's

new-style PA work is anyone's guess.



Sutton denied rumours that Gifford and Weeks had tried to pull off

another buy-back of the firm they founded 20 years ago. But he remained

reticent on who will lead the PA team.



One option is to promote Byrne's able deputy from WSW, Jon McLeod.

Another scenario sees Gifford pip McLeod to the post. With such powerful

personalities involved, it looks likely to get bloody.



The leadership of financial PR is also uncertain, since Tessa Curtis -

who absorbed it into broadcast when Charles Lankester left two months

ago - has taken on the corporate remit in the new dispensation.



Whether Square Mile founders Tim Jackaman and Susan Ellis get this job

is less important to the CEOs than whether WSW can buck the trend of

global agencies in financial PR; always failing against local

operators.



'When financial goes together we have fees of £8m but that doesn't

automatically make us a head-on competitor to Brunswick,' Sutton

says.



WSW managers admit there is no guarantee the firm will stay the world's

largest for long. But they appear genuine in the claim 'bigness is not

an end in itself, it is just a way to create the best'.



The most telling comment comes from Brain, when asked for the agency's

future plans: 'Our first task is to integrate the firms without dropping

anything.' It's some job.



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