Havas shake-up to affect PR firms as DAG scrapped

French marketing services firm Havas Advertising is scrapping its

Diversified Agencies Group (DAG) amid a group-wide restructure, which is

set to affect management line-ups in a host of UK PR brands.



DAG houses most of the conglomerate's PR assets, including PR and public

affairs consultancy The Grayling Group, headed by UK CEO Nigel Kennedy,

City PR firms Hudson Sandler and The Maitland Consultancy.



The move comes just a week after Havas posted disastrous half-year

results.



Havas has recently been making cuts to try and shed 1,200 people from

its headcount. The group posted a £4.4m loss for the first half of

2001, compared with a £28m profit for the same period in 2000.



Three DAG PR firms in the US - Abernathy MacGregor Group, Magnet

Communications, and recently acquired healthcare PR firm Noonan Russo -

will also be affected.



Havas DAG North America chairman and chief executive Patrick Lemarchand

is understood to be leaving as a result of the overhaul.



The Euro RSCG PR network - including Euro RSCG Corporate Communications

and US-based Middleberg Euro RSCG - is not affected.



Havas vice-president of communications Simon Gillham said the reshuffle

would see all DAG brands integrated into the remaining three divisions:

Euro RSCG, Arnold Worldwide, and Media Planning Group.



Alain de Pouzilhac, Havas chairman and chief executive, informed agency

heads of the decision a few days before last week's announcement of poor

interims.



Gillham said: 'We are changing where the PR firms will be in the

organisation. We will announce where they're going next month.'



DAG's demise has thrown into question the future of chairman and CEO

Jean-Michel Carlo. Many reporting lines that led to Carlo will now go

straight to de Pouzilhac.



Gillham denied speculation that Carlo was leaving, insisted Carlo was

helping de Pouzilhac with the re-organisation, and said the two would

decide whether Carlo's next assignment would be 'inside or outside the

company'.



De Pouzilhac said he may create a new, small group of high-profit,

specialist agencies, which would likely include US investor relations

powerhouse Abernathy.



According to Gillham, the changes are not purely designed to cut costs,

but he said 'there may be some divestment'. De Pouzilhac has already

warned that those agencies that are not high-performance may be sold or

closed.



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