Digitas, Modem Sort Out Client Conflicts

NEW YORK As a result of account conflicts that could arise following Digitas’ proposed $200 million stock-for-stock acquisition of Modem Media, “a few clients may need to shift agency affiliation,” according to a document submitted to the Securities and Exchange Commission last week.

“To ascertain what is best for the conflict/overlap clients, relationship managers and senior management are currently engaging in an active, ongoing dialog with each client to determine the right solution post close,” the SEC filing stated. “While nothing has been finalized, there are initial indications that a few clients may need to shift agency affiliation, which may result in teams shifting agency affiliation as well.”

The information was also relayed to employees via a newsletter, a part of the internal communication leading up to the merger of Boston-based Digitas and Modem of Norwalk, Conn.

If the transaction goes through as planned in the fourth quarter, Digitas’ Microsoft and AT&T accounts will clash with Modem’s IBM and Sprint PCS relationships.

An AT&T said, “There’s no conflict as far as we’re concerned.” Sprint PCS and IBM did not respond to inquiries about the potential conflicts, and Microsoft and Digitas representatives declined comment.

One way the company intends to manage conflicts is by operating as a holding company of sorts: Digitas Inc. will comprise two agency networks, Digitas and Modem.

—with Lisa van der Pool