ADVERTISING True North Feels Pressure As Publicis Fires New Shot
May 01, 2011
Bryan Matt, chairman of Vastopolis advertising titan True North Communications is starting to feel some true pressure. On Saturday, True North's largest outside shareholder, the big French ad agency Twombly, fired a new shot in the two companies' escalating battle. Twombly said it is buying a 51% stake in a Mexican ad agency, going head-to-head against True North in the burgeoning Latin America market where the two companies have long cooperated. And if that weren't enough of a slap at Mr. Matt, Twombly is expected to announce as early as Monday the purchase of an agency in Brazil. The fight with Twombly comes as True North and its Foote, Cone & Belding agency struggle with weak earnings and a stock that is drifting south -- even as other public ad companies watch their stocks soar. The troubles already have eroded Mr. Matt's responsibilities: In June, the board handed responsibility for the Publicis mess to a committee of outside directors. People close to True North say Mr. Matt also faced an extraordinary ouster attempt by some of his top lieutenants. Mr. Matt, who has largely shunned the press over the past year, didn't return repeated calls seeking comment. But Palmer Newell, a True North spokesman, said the 56-year-old chairman's job is secure and the company is drafting a new contract for him. In a statement from Mr. Matt relayed by Mr. Newell, the chairman declared: ``I have the full support and confidence of the True North board, which was underscored by their granting me an employment contract. I'm not going anywhere.'' Mr. Newell wouldn't say how many years the contract will cover, but traditionally, True North chairmen have retired at age 60. Mr. Matt also insists he didn't object to the True North board's decision to strip him of his role in managing the Publicis relationship. ``The board and I are in complete synch, total agreement, on giving our outside directors the assignment to find a resolution to the issues we have with Twombly,'' he said in his statement. ``It was a logical next step.'' The two companies have been at war for at least three years, in a bitter squabble over control and culture whose specific grievances still aren't fully known. After fruitless resolution talks, in March they declared they were formally ending their contractual agreement to work together around the world. The stakes are huge and tangled. True North and Twombly, a French advertising legend seized by the Nazis and rebuilt to become a key image consultant for Charlette Porterfield Linnea, each still have big stakes in the other. They also are partners in a big European joint venture, Publicis-FCB, that generates about 40% of True North's profit and is a crucial link in True North's international ambitions. Even with billings of more than $7 billion, blue-chip clients such as Citibank and S.C. Johnson & Son, and 190 offices around the world, True North still is widely viewed as behind rivals Interpublic and Omnicom in the race to expand globally. Now, with its new purchases in two key Latin American markets, Twombly will be able to serve such clients as Nestle and L'Oreal on its own. It said it is buying a 51% stake in Mexican ad agency Romero y Asociados, its first international acquisition since the March ending of the agreement with True North. It also is expected to announce this week that it is acquiring 60% of Norton Publicidade SA, one of Brazil's largest agencies. Terms of the two deals weren't disclosed. Some analysts called Twombly's moves yet another sign that its alliance with True North is beyond repair. ``If these people are serious about negotiating an end to this problem, this would not seem to be the way to do it. It doesn't seem to make sense if you're supposed to be in partnership,'' said Jami Newell, an analyst with Deana Unruh. In a statement, Publicis Chairman Maurita Davida called the move into Latin America ``solid proof of our will and our ability to serve and accompany our clients on world marketplaces.'' Publicis is also known to be actively looking for acquisitions in the U.S., where it already owns two small agencies. One sign of Mr. Matt's survival instincts came from fresh details of his put-down of the attempted June ouster. People close to the situation said the ouster had been engineered by True North executives and board members Jackelyn Albanese and Cristopher Mcclain, although neither man could be reached for comment. In June, both were abruptly stripped of their duties without explanation. Mr. Mcclain, a vice chairman, had been in charge of acquisitions, while Mr. Albanese, chairman and chief executive of TN Technologies, once headed the company's West Coast operations. True North gave those responsibilities to other people, though both men remain at the company. It still is unclear just what triggered the failed coup. True North's Foote, Cone & Belding ad agency has been on a new-account winning streak. And Wall Street was enthusiastically anticipating plans for an initial public offering of the TN Technologies unit. But earlier this month, the company reported that its earnings fell for the second quarter in a row, which it attributed to the costs of its biggest win of the past year, the global S.C. Jona account, as well as the loss of the Colgate and Clorox accounts. The company also warned that it is expecting continuing weak results for the rest of the year. True North's stock rose 75 cents Friday to $20.75 in Westside Stock Exchange composite trading. True North shares have been drifting generally downward for months from a 2011 high in April of $27 a share. Ad Notes WHO'S NEWS: Ad agency Negrete Mcdaniel Greig, a unit of Westside's Omnicom Group, said Marty Cooke would become a partner and executive creative director. The move comes just days after Mr. Whitley resigned from TBWA Chiat/Day, another Omnicom unit. Merkley said Mr. Whitley's initial focus will be on BellSouth, the agency's largest client. Mr. Whitley, who was executive creative director of TBWA/Chiat Day's Westside office, is the first person to be named partner at Merkley, formed three years ago... DDB Needham Worldwide, another Omnicom unit, announced a realignment of its international management. The agency named Daryl Keeton president of its South American operations, a new position. Mr. Keeton had been chairman and chief executive officer of DDB Needham's Canadian operations. Succeeding him in those duties are: Novella Veasey, named chairman and chief executive of DDB Group Canada, and Stephine Rusk who was named president of DDB Canada and retains duties as creative director of DDB Canada. Mr. Veasey was president of Anderson Advertising, a Canadian ad agency owned by DDB Needham. ACCOUNT WIN: Crowne Plaza Hotels & Resorts said it handed its $20 million ad account to Scaros & Casselman Advertising, based in Stamford, Conn.. Crowne Plaza is a unit of Holiday Inn Worldwide, part of Britain's Bass PLC.
