CIA Looks to Enter U.S. Via VSM

Acquisition Could Start Battle For Media Player With WPP’s Sorrell
NEW YORK–CIA Group, Europe’s second-largest media specialist, is in talks to acquire VSM Media, sources said. The deal, which one analyst estimated would not exceed $5 million, would give the London company its first entry into the U.S. market and expand its global network.
An announcement is expected in September, following CIA’s semi-annual financial report.
“It wouldn’t surprise me,” said Lorna Tilbian, a media analyst with London-based Panmure Gordon & Co. “The U.S. is an incredibly attractive ad market, and they’ve been wanting to get over there for a while.”
Coming two years after Carat’s entry into the United States, the deal is emblematic of the battle for global supremacy and consolidation in the media industry. But it could also turn into a royal battle for CIA by WPP chief executive Martin Sorrell, who has increased his stake in the agency to 14 percent to become its second-largest shareholder.
CIA’s arrival is not expected to immediately alter the balance of power in the U.S., Tilbian said. The top players are Western International Media (which claims $4 billion in billings), Young & Rubicam’s The Media Edge ($3 billion) and Carat ($1.2 billion).
The acquisition would come at a difficult time for CIA (which is known as CIA Medianetwork in Europe). Last month it lost British Telecom’s estimated $180 million TV buying account.
CIA founder and managing director Chris Ingram is also under pressure to prevent WPP’s Sorrell from buying more of its shares.
Sources have speculated that Sorrell is plotting to control CIA and use it as a vehicle to house the merged media departments of J. Walter Thompson and Ogilvy & Mather. Both Ogilvy and JWT have resisted attempts to merge their U.S. operations.
Sorrell could not be reached for comment at press time.
VSM has been one of the most courted independent media companies in the U.S. market. The
10-year-old shop has built a reputation for being strong in print and spot planning, and execution. It bills about $220 million from clients such as Barnes & Noble and Rƒmy Amerique.
With just under $2 billion in billings, CIA’s major international clients include Kraft, Unilever and Sony. A March report from Panmure’s Tilbian listed its top markets as Italy, Scandinavia and Germany. A move into the U.S. market has also been expected.
Ingram and Sassos, who sources said already have a good rapport, could not be reached.