Burnetts deal with DMB&B falls apart

The planned merger of Leo Burnett’s media interests with those of

the DMB&B holding company, MacManus, under a new global media brand has

collapsed at the 11th hour amid a clash of personalities and

disagreement over the structure of the new company.

A formal announcement confirming the merger was expected next week, but

talks broke down late on Tuesday evening and both parties decided to

call off negotiations.

The failure of the merger at such a late stage, after a number of joint

media pitches around the world and the involvement of key clients in the

plans for the new company, is seen as acutely embarrassing for both

parties.

An official statement issued this week blamed the deal’s collapse on

irreparable differences of opinion. According to Rick Fizdale, the

chairman and chief executive of Burnetts, the problems centred on the

structure of the merged operations in the US.

Fizdale said: ’While we have a great deal of respect for the people at

MacManus, we had enough fundamental differences of opinion on how best

to run such a massive operation, especially in the US, that we’ve both

chosen not to move forward.’

The idea had been to pool MacManus’s MediaVest and TeleVest brands with

Burnetts’ media operations to form a global media company called

StarVest (Campaign, 6 March). There had been a good fit between the two

companies - both roster media agencies for Procter & Gamble

internationally - and a merger would have helped lever greater

efficiencies and provided a stronger network for global clients such as

P&G and McDonald’s.

While a merger would not have propelled the combined agencies into the

top three of global media operations, it would have made them more

competitive on the international media stage; and both are being

increasingly marginalised as competitors such as WPP, Omnicom and

Interpublic Group flex their global media muscle.

The momentum for the merger had originally come from the US, where both

agencies are headquartered. The UK media companies were encouraged to

take a lead in providing a blueprint for the merged company.

MediaVest and Burnetts’ media in the UK have been working closely

together, co-operating on the pitch for P&G’s pounds 200 million media

business and setting a 1 February 1999 date for the launch of the UK

agency.

Both parties are said to be extremely disappointed that the merger has

now been called off by their US parents.

But a Burnetts UK media independent under the StarCom brand - the name

used by its US media operation - has not been ruled out. With pounds 170

million of UK P&G business under its belt, Burnetts’ media is now in a

stronger position to launch as a standalone operation.

However, the breakdown of talks leaves MacManus’s media strategy in

tatters.

Since launching the MediaVest brand in 1997, the company has failed to

develop a coherent European network.

Meanwhile, the UK agency has this week lost the pounds 9 million KFC

media business, which reviewed as it would have clashed with Burnetts’

McDonald’s media account.

By pitching jointly with Burnetts, MediaVest also lost out in the P&G

review - emerging with only the pounds 2 million radio business. But

Bernard Balderston, P&G’s media manager, said the collapse of the merger

plans would not affect P&G’s media accounts.

According to MediaVest’s UK chief executive, Jim Marshall, a UK merger

would have brought real benefits.

’We knew we could make it work successfully in the UK and the fact that

it is not happening is very disappointing. It’s ironic that the deal

fell down in the US, since that’s where it all started,’ he said.

This article was first published on Campaign