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Irreconcilable Differences

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Fallon walked away from the negotiating table with Gateway in part over the company's intention to handle at least some of its $250 million account in-house, sources said last week.

Agency officials wanted to head off what they saw as a potentially "bad relationship" before it began and ended talks with the computer maker last week. The scope of Fallon's role with the company had been a major part of talks that began two weeks ago, insiders said.

Gateway officials declined to comment on Fallon or the future of its ad account, which sources said is expected to move in-house. The San Diego computer maker this week is expected to break a TV spot that was created in-house and directed by documentary filmmaker Henry Corra, sources said.

The company is also thought to be talking to at least two agencies for its media account, sources said. Universal McCann is the incumbent, while Initiative Media North America has handled the business in the past. A formal RFP has or will be sent to agencies shortly, sources said.

Gateway first ap proached shops, including Fallon, about a project late last year. Fallon was not initially interested, but the scope of the review changed earlier this year, and the agency became involved, sources said.

The shop's New York and Minneapolis offices had been expected to pick up Gateway's account following a review that included Arnold in Boston, Siltanen/Keehn in El Segundo, Calif., and DiMassimo Brand Advertising in New York. It is believed that Gateway has not reconnected with those agencies, leading many to believe the account is headed in-house.

Fallon officials de clined to clarify why they couldn't reach a deal with Gateway. "We couldn't come to an agreement on terms, and we wish them the best," said Fallon Minneapolis president and executive creative director David Lubars.

Gateway officially parted ways with McCann-Erickson in New York two weeks ago, though it had been contacting other shops since November.