Havas: New Talks for MPG on $500 Mil. VW Media Account

NEW YORK Havas confirmed its Media Planning Group is making additional presentations to Volkswagen in an effort to retain the estimated $500 million North American portion of the automaker’s $1.4 billion media account.

A VW representative had said nearly a month ago that all presentations in the process had been concluded, and sources said MPG’s new round of talks represents a “second chance” for the agency to retain the business, granted after Havas executives implored VW for another opportunity to prove it should keep the business.

Another VW roster agency, Grey Global Group’s MediaCom, which handles the business in most other parts of the world, was favored following an earlier round of presentations, sources said [Adweek Online, Oct. 6].

It is unclear if MediaCom is also having additional meetings with VW. MPG and MediaCom are the only shops participating in the competition.

VW procurement executives are looking for cost efficiencies and a decision in the media review was believed to be imminent.

In a conference call today following the release of Paris-based Havas’ third-quarter earnings, Ed Eskandarian, the CEO of Havas’ Arnold unit, which handles creative duties on VW, responded to an inquiry: “The process is still underway with continuous meetings between MPG and VW on a number of fronts. There was a major one last week. MPG is answering the issues that were underlying the review.”

A MediaCom representative was not immediately available. A VW rep in Wolfsburg, Germany, had no current information on the status of the review.

Separately, Havas said its third-quarter revenue rose slightly more than 2 percent on an organic basis to about $435 million compared to the year-ago period. Havas described that performance as a positive sign because in each of the first two quarters of 2004, organic growth had been less than 1 percent.

For the first nine months, Havas said revenue rose about 1 percent in organic terms to $1.4 billion compared to the first three quarters of 2003.

On a constant currency basis, however, revenue actually declined 6 percent for the first nine months, and on an unadjusted basis, the decline was 10 percent.

On the conference call, an upbeat Havas CEO Alain de Pouzilhac, joined by CFO Jacques Hérail, said there have been no discussions with WPP, Publicis, IPG or Omnicom about a possible Havas sale in the face of increasing takeover speculation after French corporate raider Vincent Bolloré increased his Havas stake to 20 percent.

Bolloré has said he has no current intention of making a play to gain control of Havas [Adweek Online, Oct. 27].

De Pouzilhac said he has met with Bolloré four times concerning his corporate governance requests and his intent for Havas. De Pouzilhac did not elaborate on that intent. He also said that Belgian investor Albert Frere, who recently acquired less than 5 percent of Havas, is not working in conjunction with Bolloré.

While emphasizing that Havas’ clients have voiced their support of current management, de Pouzilhac acknowledged that he is “prudent” about fourth-quarter results, given the publicity about the future ownership of Havas and the fact that industry rivals are seeking to take advantage of that uncertainty.

Havas was especially bullish on its new-business performance in 2004, claiming a net gain of $324 million during the first nine months. Key Q3 additions included Advair, Claritin, Delta Faucet, Nicotinell, Rare Hospitality and new assignments from Fidelity Investments.

However, the company still faces two major challenges: Intel reviewing its $300 million global ad account (handled by Euro RSCG and MPG) and VW’s media review.

This story updates an item posted earlier today with Havas’ confirmation of more talks with VW.