Two major McDonald's regional advertising agencies, Fahlgren and Moroch & Associates, are in merger negotiations.
Tom Moroch, chief executive officer of Dallas-based Moroch & Associates, confirmed that merger discussions are under way but declined to elaborate. Smoot Fahlgren, chairman of Dublin, Ohio-based Fahlgren, also confirmed talks between the two, but cautioned that "nothing definitive" has resulted from their discussions.
However, sources said the two shops are close to an agreement on combining their operations. Between them the agencies handle McDonald's operator co-ops encompassing more than 3,000 stores, nearly one-quarter of the chain's U.S. system. Together, they could offer more local media buying efficiency to McDonald's operators. That could prove important given national McDonald's agency DDB Needham Chicago's recent pitch to the corporation suggesting it add local media buying to the national media buying chores it now handles.
Both agencies have informed McDonald's officials of their discussions, according to sources. The chain, which has sought in the past to reduce the number of regional agencies it works with, is not expected to discourage a possible union of the shops.
A merger could benefit the two agencies on other fronts besides McDonald's. Both also share local marketing and promotions work for film companies including Miramax, New Line Cinema and Twentieth Century-Fox. A merger would strengthen the scope of their presence in that category as well.
Fahlgren registered billings of $170 million in 1997. In addition to its Dublin, Ohio, headquarters, it has offices in Atlanta, Cincinnati and New York, as well as Toledo, Ohio, Norfolk, Va., Parkersburg, W.Va., Fort Lauderdale and Tampa, Fla., and Charlotte, N.C. Clients include Comerica, Owens-Corning and NAPA Auto Parts.
Moroch posted $56 million in billings in 1997. It operates 10 service offices in addition to its Dallas base to handle regional work for Oldsmobile and Midas International. Its newest offices are small outposts in Chicago and Los Angeles.