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Havas Changes May Be No Change at All

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NEW YORK Even as Havas released disappointing results last week, dragged down in part by costs related to the ouster of its former chief executive, the Paris holding company installed another CEO, its second in nine months.

On Friday, Havas' board approved the appointment of Fernando Rodés Vila as the company's chief executive, as expected. Rodés, the 46-year-old head of Havas' MPG media operations, succeeds Philippe Wahl, a banker whom Havas investor and chairman Vincent Bolloré appointed last summer after he failed to lure TBWA Worldwide CEO Jean-Marie Dru to the job.

Havas reported a 26 percent drop in operating income in 2005 to $152.1 million, below analysts' expectations, while diluted earnings per share fell 16 percent to 17 cents. Higher costs and a nearly 30 percent drop in new business wins hurt the company's performance, although net income—helped by lower income taxes and financing costs—rose nearly 8 percent to $70.1 million.

Included in those costs are an $11.9 million severance payout to former Havas CEO Alain de Pouzilhac as well as a $13.1 million charge to cover litigation related to actions taken by other execs who left after Bolloré bought 25.4 percent of the company and ousted de Pouzilhac in July. Havas had earlier reported that 2005 revenue dropped 2 percent to $1.7 billion.

In an interview with Le Figaro last Monday, Bolloré reversed previous denials about Rodés' potential appointment and hinted he would bring him in as Havas' CEO. The company buried the news in its earnings press release, and Bolloré, Rodés and Wahl either were unavailable for comment or didn't return calls. Sources said Rodés—who divides his time between London and Barcelona, Spain—would not relocate to Paris and will retain his duties at MPG for the immediate future.

"Fernando is very good news, but it's not going to be a big change," said one source. "Vincent Bolloré has been in charge [at Havas], and he's still in charge."

Sources said Bolloré cannot be the CEO of two publicly held companies in France but has nonetheless become very involved at the parent of Euro RSCG Worldwide and Arnold. In the Le Figaro interview, Bolloré acknowledged he has an office at Havas headquarters and confirmed what sources have said is a growing involvement with French clients: He said he was active in efforts to retain the Orange account at Euro RSCG, which subsequently left. Sources said he participates in Havas' executive meetings with operating heads, held every two weeks.

Rodés' new role is seen as further evidence of Bolloré's belief in media as a driving force in Havas' future growth, and he may also play a pivotal role in the potential acquisition or future business dealings with London-based media group Aegis, in which Bolloré owns 25.5 percent. But with his investment-banking experience, he was also seen as the only suitable internal candidate for the job. Questions remain, however, about Rodés' Eurocentric focus on business, particularly in Spain.

In a translation of his published remarks, however, Bolloré said this change also serves to "tighten the leadership team by entrusting the leadership of the company to its operational leaders, a team made up mostly of forty-somethings who work well together."

Some observers dispute that easy working relationship and question Rodés' ability to manage a group of autonomous executives who are protective of their control of client relationships. They also wonder how difficult it will be for Rodés, as an outsider, to break into France's clubby business world of marketers and agencies.

Still, those executives are said to have thrown their support behind Bolloré's removal of Wahl, the former CEO of Caisse d'Epargne. With no prior industry experience, he is said to have clashed with his independent-minded operating heads, particularly those in France who felt he was too intrusive. "Havas functions in directly the opposite way of WPP," said a source. "At WPP, the holding company is king; at Havas, the operating units are king."

Mercedes Erra, chairman of Euro RSCG France, and Stephane Fouks, its CEO, did not return calls.

The Rodés family is the third-largest investor in Havas and cast a key vote in support of Bolloré's coup to win control of the company. Rodés' father, Leopoldo Rodés Castane, is a non-executive director on Havas' board and has been a Bolloré ally.

"This is a positive move," said a source. "You have people now who have a lot more invested in this company—de Pouzilhac was always fighting for his job."

While Bolloré is a well-connected, successful businessman in France, his high profile is also associated with episodes as a corporate raider, a reputation that cuts both ways with Havas clients, observers said. While the depth of his long-term commitment is still unclear, Bolloré told Le Figaro: "Today the group manages $8.31 billion of investments. We have invested $593.9 million in Aegis and $516.7 million in Havas. The Bolloré group will remain diversified, at least until Feb. 17, 2022, the planned date of my retirement. The group will then be 200 years old. My goal is to make it possible for the seventh Bolloré generation—that of my children—to keep a love for the company. And it is true my children are strongly interested in media and communications."