NET BET: FCB, Publicis Eye Global Expansion By Michael McCarthy with Jim Kir

Foote, Cone & Belding is still looking for a second agency network but it may have a decidedly French twist to it.

Stymied in its pursuit of possible targets like Chiat/Day because of deal-breaking conflicts, FCB and its European partner, Publicis, are talking about expanding their partnership to other parts of the globe, sources said. A source also said Publicis is considering going after a big U.S.-based acquisition and itself becoming FCB’s so-called second network.
These sources said the likely jumping-off point for any expansion of the FCB/Publicis alliance would be New York, where Publicis operates a tiny outpost, billing less than $50 million, with no ties to FCB/Leber Katz Partners, which bills over $500 million. Asia is another area where the alliance could be expanded given FCB’s ambitious expansion plans in that region.
Both agencies are currently studying the different, complicated maneuvers needed to expand the alliance, including acquisitions in the U.S. market. Whether FCB or Publicis would control the second network is still unclear; in Europe, the Publicis/FCB alliance – ranked as the second-largest European agency network with $3.7 billion in billings – is 51%-owned by Publicis and reports to the French agency.
Maurice Levy, chairman of Publicis/FCB and president of Publicis, told ADWEEK last week that his advertising agency and FCB are both ‘thinking of more ways’ to build on the European relationship. ‘We have had many discussions on how to broaden, strengthen and develop our alliance. These are subjects that we cover at each of our meetings,’ he said. ‘But we don’t have a specific project at the present time which could lead to an expansion of the alliance.’
Levy added the alliance is ‘working well’ and given the fit between the two organizations, expansion is a strong possibility. ‘FCB and Publicis are two great names that could both expand internationally.’
Given the complicated partnership between the two agencies (FCB owns 26% of Publicis while the French own 20% of FCB; executives from both firms sit on each other’s boards at the parent company), sources said that Publicis is considering acquisitions in the U.S. and other markets outside of its European core.
Levy noted the agency has been approached several times (and that prices have gone down for both agencies and real estate) but no deals were imminent. ‘In the short-term nothing is happening unless there is a tremendous opportunity,’ he said.
Levy’s counterpart, FCB chief Bruce Mason, did not return phone calls late last week. He has said internally that an expansion of the Publicis brand is one of several options for building a ‘second network’ to match those of bigger foes.
Top sources at FCB said, however, that the Publicis hand is getting stronger as the other options weaken. FCB has reportedly dismissed the idea of building a second network from the ground up as too expensive. Option No. 2 – the much-rumored deal with Chiat/Day or another shop – becomes more of a longshot all the time despite FCB’s purchase of Mojo’s Australian network from Chiat.
The two agencies each have Japanese car clients – Mazda for FCB and Nissan for C/D – which probably could not co-exist in one network reporting to Mason, said sources, and neither agency wants to push the issue to a conclusion. Publicis, on the other hand, could be expanded in the U.S. by merging an acquired agency with the small New York office.
‘One of the alternatives being looked at is to separate the two brand names,’ said a source. ‘(Mason) wants to model the deal like Interpublic: two separate agencies reporting into a single holding company.’
FRENCH TO THE RESCUE
PUBLICIS FCB COMMUNICATION
Headquarters: Champs Elysees, Paris
Billings: $3.7 Billion
Major Clients: Perrier, L’Oreal, Philips, Nestle, Colgate-Palomolive
Copyright Adweek L.P. (1993)