media blog

It is tempting to tune out of the interminable saga of Vincent Bollore’s pursuit of Aegis. After all, he has just made his fifth tilt at the board at this week’s AGM, and a pretty limp affair it was too, with the smooth Frenchman deciding at the last minute not to show up and none of his deputies willing to speak on his behalf.

This might be the very moment that the story begins to get interesting, however. In an interview with the FT last month and again in a piece in this week’s Advertising Age, he and accolytes such as David Jones of Euro RSCG have been dropping not-so-subtle hints that he may have even bigger ambitions in the advertising business.

The Ad Age piece has its weaknesses (it talks about Bollore’s Aegis ambitions only in terms of a possible full takeover and does not really examine the very real creeping control concerns about his attempts to get board representation) but nicely highlights two important points.

First is the self-interest behind Sir Martin Sorrell’s own teasing interventions in the Aegis saga. WPP would be first in line to buy Aegis’ Synovate business should Bollore gain control – although this picture may be complicated by WPP’s separate pursuit of TNS, a larger rival in market research.

Second it brings out the nervousness at Interpublic about the chance that Bollore may shift his focus to a far, far bigger agency. The quote Michael Roth, IPG chairman and CEO, gave to Ad Age is worth reprinting:

“I agreed to see him at his request and purely as a personal courtesy,” he wrote in an e-mail. “We talked about the industry overall and some of the challenges he is facing with Aegis. IPG is totally focused on continuing to build on our improved performance and delivering against our 2008 targets. We won’t be distracted — nor are we concerned — by these types of far-fetched insinuations.”

If Bollore was right in telling the FT last month that he had EUR1bn-EUR2bn capacity for acquisitions, then a run at Interpublic, at a market cap of $4.6bn is indeed far-fetched. What, then, could be behind such “insinuations”? Given Interpublic’s troubled recent history, and the chances of a nasty advertising industry slowdown in 2009, Bollore may be calculating that it would be vulnerable to a break-up strategy. His own group could help things along by building up a stake, but that could alert other investors and force the price up. Bollore Group alone could not buy IPG. Could it be that he is hoping that Sir Martin might just be tempted to lend a hand?

A recent note by Citigroup’s advertising analysts (The Agency Provocateur, March 26) may pose another theory:

We view M&A as a by-product of slowing revenue growth and peaking margins in the agency sector. In light of this, and recent euro strength, we analyse the strategic/financial rationale of a combination of Havas/Aegis and Publicis/Interpublic. While much speculated, the Havas/Aegis combo makes limited sense – a deal would be dilutive and wouldn’t add much to the standalone story. Publicis/IPG, meanwhile, looks much more compelling.

There is not much love lost between Publicis’ Maurice Levy and the Bollore-chaired Havas. Hinting at an interest in IPG may be a cute way of causing trouble for Havas’ French rival.

Bertelsmann may be Europe’s largest media company, but with no outside investors or share price to worry about, its quarterly results rarely merit much attention. Today’s numbers are no exception – CFO Thomas Rabe had only this pithily upbeat message to add to figures showing a decent 9.6 per cent rise in operating profits:

“We have started the year well in an environment fraught with economic uncertainty. Bertelsmann confirms its full-year forecast for 2008.”

There are few divisional details for outsiders to get their teeth into, although RTL this week reported 8.7 per cent earnings growth. The statement says nothing about performance at Random House, the publishing house where Peter Olson is expected to be on the move imminently.

One detail does stand out, however. The 3.9 per cent decline in revenues in the quarter was due not only to “declines in sales of physical recordings” – no surprise, given the state of the recorded music industry to which its Sony BMG joint venture has the misfortune to be 100 per cent exposed – “and revenues at Direct Group in North America.”

Morgan Stanley has been appointed to sell the US book, DVD and music club business (incidentally now under Mr Olson’s control) after heavy writedowns of ill-advised acquisitions made since 2005. This may not make the bank’s task any easier, but according to a New York Times report, Ripplewood and a management team have both shown interest. The reputed EUR250m price, however, is a fraction of the EUR900m revenues Direct Group reported from the US last year.