12619: Wren’s Wonky Wages.

Business Insider reported Omnicom Group CEO John Wren “earned” a 33 percent salary bump in 2014 despite failing to consummate the merger with Publicis Groupe. Hey, why not? Wren also failed to justify his Pioneer of Diversity title.

Omnicom CEO John Wren earned a 33% pay rise to $24 million in the year of its failed merger with Publicis

By Lara O’Reilly

John Wren, the CEO of the second largest advertising agency holding group in the world, Omnicom, received $24 million in compensation in 2014 — the same year as his company’s failed $35 billion merger attempt with France-based Publicis Groupe.

Wren’s total compensation was up 33% on 2013, according to the company’s latest SEC filings.

Wren’s base salary was $1 million, but 95% of his compensation is tied into performance. He also receives other personal benefits such including $82,751 for personal use of aircraft, an auto allowance of $9,120, a medical allowance of $4,000, and a “years of service award” of $5,000.

While Wren’s take-home might seem high, it is less than half of that of WPP CEO Sir Martin Sorrell’s pay package. He is set to receive $53 million in share awards this year, on top of his $1.6 million salary. In 2013, Publicis Groupe’s Maurice Lévy earned $6.3 million in total compensation (the company’s annual report for 2014 is not yet out.)

Lévy admitted last year that Publicis was the more interested partner in the proposed merger with Omnicom, which may explain why Omnicom — and Wren’s pay — were relatively unaffected by the merger’s collapse.

Omnicom posted a 5% lift in revenue to $15.3 billion, and a 11.4% rise in net profit to $1.1 billion in the 12 months to December 31.

Publicis Groupe suffered a torrid first nine months of the year but managed to pull it back in the fourth quarter, reporting a 4.3% lift in revenue for the full-year to €7.23 billion ($7.8 billion,) and a 4.7% rise in headline profit to €829 million ($890 million).

12506: Ominous Omnicom.

Adweek reported on 2014 net income gains for Omnicom, ultimately displaying how the advertising industry has devolved under the rule of holding companies. This excerpt makes the point:

At a global macroeconomic level, Omnicom chief John Wren largely attributed the strong organic growth to recent declines in oil and commodity prices which are boosting consumer spending. North America, he noted, has been the biggest beneficiary of that trend.

On the downside, Wren underscored the divergence in Central Bank actions across the globe where they have been lowering borrowing costs to try to kick-start growth in their economies. The result has been the decline in currencies versus the dollar in all of the operating regions for the U.S.-based company, which derives 46 percent of its revenue outside the states. That shift in exchange rates resulted in a 3 percent reduction in fourth-quarter revenue and will continue to hit Omnicom’s reported results. Wren estimated a foreign exchange impact of 5.5 percent in the current quarter and estimated a possible 5 percent hit for the entire year.

Net income in Q4 jumped nearly 10 percent to $329.5 million. Results in the period include $13.3 million of pre-tax charges reflecting professional fees related to the company’s proposed merger with Publicis Groupe. (That deal was terminated last May.) In the 2013 fourth quarter, Omnicom’s net income declined 2 percent after results were impacted by professional fees related to the Publicis merger.

Remember when advertising leaders were focused on the work? No more. Wren’s discussion of oil and commodity prices, Central Bank actions and pre-tax charges tied to the failed marriage with Publicis Groupe seem to indicate the actual strategic and creative efforts of advertising agencies have little impact on the overall business. Billable hours trump big ideas. Of course, everything trumps diversity.

Wren should change his honorary title of Pioneer of Diversity to Pioneer of Diversion—or Prisoner of Profitability.

12356: Looks Lovely Like Lévy.

Campaign spotlighted Publicis Worldwide CEO Arthur Sadoun, one of the White men pegged as a possible heir apparent—although clearly not hair apparent—to Publicis Groupe Chairman-CEO Maurice Lévy. The story repeatedly states that the 43-year-old Sadoun is essentially a younger clone of the nearly 73-year-old Lévy. Is that a good thing? Of course, the narcissistic Lévy must be giddy over the prospect of replacing himself with a fresher prototype… er, protégé. But isn’t the succession scenario similar to Kim Jong-un following Kim Jong-il? It’s such a clear confirmation of the good ol’ boys network ruling the industry—which is especially prevalent in France, when one considers the nepotistic nonsense at Havas. When the proposed Publicis-Omnicom merger fizzled, Omnicom Group CEO John Wren insisted the breakup resulted from corporate cultural differences as opposed to national cultural differences. Hey, if Wren could speak with a French accent, the deal would have cleanly consummated over croissants.

12264: Omnicom’s Digital Dumbness.

Advertising Age reported on Omnicom’s maneuvers involving digital agencies, with the holding company taking full ownership of Critical Mass and allowing EVB to buy back its independence. Omnicom is clearly handling its digital acquisitions differently than Publicis Groupe, taking a slow and steady—albeit clumsy—approach versus overspending to grab every digital shithouse that comes within sniffing distance of Maurice Lévy. Then again, the two holding companies do have a commonality; specifically, both are completely clueless about digital and how to properly integrate it into their respective corporate cesspools. The proposed Publicis Omnicom Groupe was intended to be unique, an original enterprise that would compete with powerhouses like Google. Unfortunately, the leaders at the holding companies barely understand how to use Google.

Omnicom Takes Ownership of Critical Mass While EVB Goes Indie

Latter Shop Relocates to Oakland, Calif. from San Francisco

By Alexandra Bruell, Maureen Morrison

Omnicom is taking full ownership of digital agency Critical Mass as its digital creative shop EVB buys back its independence.

“Omnicom is pleased to increase our majority stake in Critical Mass,” said an Omnicom spokeswoman. “Critical Mass is a highly successful global digital marketing agency with a strong management team led by Dianne Wilkins, a digital veteran. They are an important asset to our portfolio of agencies and work with many of our top clients around the world.”

“I can confirm that EVB is no longer a part of the group,” she added.

The changes come less than a year after the failure of Omnicom’s attempted merger with Publicis, which has a more-aggressive digital M&A strategy. A few weeks ago, Publicis agreed to acquire Sapient Corp for $3.7 billion. Omnicom has remained fairly quiet.

But Omnicom has never been known for acquiring large digital agencies, instead preferring small acquisitions and investments. It’s staying the course for now as evident in its latest move to relinquish one digital shop and take full ownership of another.

“In terms of Omnicom’s M&A approach—it is growing through a combination of strategic acquisitions as well as focused organic investments in our agencies,” said a spokeswoman. “Meeting our clients’ needs by service offering and geographic location is the first test for all our acquisitions, followed by cultural fit and price.”

EVB

Omnicom bought a majority stake in San Francisco-based EVB in 2006. The holding company now owns a 60% stake, up from 51% in 2012. The agency was founded in 2000 by CEO Daniel Stein and Exec Creative Director Jason Zada. Mr. Zada in August 2008 left the agency to focus on directing, producing and writing. In March 2014, the Omnicom shop tapped Shane Ginsberg from sibling Organic and named him president. EVB most recently announced plans to move to Oakland, Calif., from San Francisco.

EVB declined to comment.

Critical Mass

Omnicom invested in a majority of Calgary-based Critical Mass in 1999 and as of 2014 owned 54% of the company. Unlike Omnicom’s other digital agencies which are part of larger creative agency networks—Organic lives within BBDO and Tribal is part of DDB, for example—Critical Mass operates independently.

“We had been running with split ownership that prevented us form being emotionally completely within Omnicom,” said Ms. Wilkins. “We didn’t necedssarly have all the same tools to grow and branch out that some of the competitive sets backed completely by their holding companies have.” She said there’s not yet an “articulated strategy” mapping out how the shop will take advantage of a parent that’s completely invested, but the goal will be to expand the shop by geography, services and capabilities.”

Ms. Wilkins is currently based in Calgary, Canada, but has plans to move to New York next month. The shop’s New York office is also moving from midtown east to 200 Varick Street by the end of January.

Critical Mass was founded in 1995 as a promotional CD-ROM developer and a year later entered web development, designing Mercedes-Benz USA’s corporate website. Now it has more than 700 people and eight full-service offices, operating across North America, Europe, Latin America and Asia. This past January, the shop tapped Huge’s Conor Brady as chief creative officer and Chris Hayes as chief marketer, and over the past couple years it has made investments in Latin America and the U.K.

12153: Mo Lévy Says, No Mo To Say.

Advertising Age reported Publicis Groupe Chairman-CEO Maurice Lévy is “fed up” with discussing the botched Publicis Groupe-Omnicom merger—before proceeding to continue yapping about the biggest failure of his career.

“I’m fed up mentioning the merger,” whined Lévy. “I decided not to mention it. There has been far too much attention on the merger. I was personally—and my team—far too much focused on this.”

When pressed why Omnicom Group was doing fine since the non-merger while Publicis Groupe was struggling, Lévy snapped, “It is something that has been extremely important for us. We believed in the merger and we thought it would happen, so we worked very hard for it. I will not comment on Omnicom.” Then Lévy proceeded to comment on Omnicom by arguing, “Clearly they have been less distracted. Probably they didn’t believe very much in the merger. Maybe they were believing much more in a takeover, and that probably has been the real difference. Period.”

Expect follow-up merger commentary from Lévy shortly. He’ll likely want to rebut and/or add to his own remarks.

12061: Dentsu Rejects IPG & Havas.

MediaPost reported even boring holding company Dentsu isn’t interested in acquiring IPG or Havas. Hey, if Publicis Omnicom Groupe couldn’t work, why would anyone think a Dentsu-IPG or Dentsu-Havas merger might be a good idea? Buying mcgarrybowen was bad enough. If anything, Dentsu ought to stage a hostile takeover of Della Femina Advertising—but only to spank Jerry Della Femina for the title of his 1970 memoir.

Dentsu Won’t Buy Interpublic or Havas

By Steve McClellan

Count Dentsu out as an acquirer of the Interpublic Group or Havas Group, at least for the foreseeable future.

Speaking at a Goldman Sachs investor conference in New York Thursday, Tim Andree, EVP at Japan-based Dentsu, said the holding company was not interested in purchasing either holding at this time.

Dentsu acquired Aegis group in 2013 for about $5 billion, which is the largest acquisition made by the company to date.

IPG has been the subject of takeover rumors for years—speculation that intensified earlier this year when the proposed merger of Publicis Groupe and Omnicom collapsed.

A short time later, activist investor Elliott Management bought up 6.7% of IPG stock and has since indicated that it considers a sale of IPG to be a viable option. Analysts have also identified Publicis Groupe, in the wake of its failed merger with Omnicom to be a potential acquirer of IPG.

Speaking at the same conference, IPG CEO Michael Roth commented that “it’s a small universe. This is not a new thing,” referring to rumors about the company being in play. He also said the company has—and would consider—offers that would boost shareholder value.

Both Andree and Roth said their respective companies would continue to make smaller acquisitions. Roth indicated that the company was on track to spend between $150 million to $200 million on smaller acquisitions this year.

Earlier this year, IPG, through its Lowe and Partners agency, acquired digital shop Profero. That deal came shortly after another IPG shop, FCB, purchased Inferno.

12036: Delayed WTF 29—Lévy’s Lunacy.

MultiCultClassics is often occupied with real work. As a result, a handful of events occur without the expected blog commentary. This limited series—Delayed WTF—seeks to make belated amends for the absence of malice.

The news that Publicis acquired digital agency Nurun for $125 million inspired a quick examination of an interview with Publicis CEO Maurice Lévy that Campaign published in July.

Still smarting from the proposed marriage gone awry with Omnicom, Lévy remarked, “I have some good memories and some bad memories, and I’m moving ahead now and building the future. We are all moving into the future. We are fierce competitors. Everyone wants to kill the other one. We will do our best to win market share and develop something new, strong, different.”

There are a few red flags flapping in lovelorn Lévy’s words. For roughly a year, Lévy and Omnicom CEO John Wren boasted that Publicis Omnicom Groupe would represent a totally fresh enterprise designed to compete with entities such as Google versus other advertising holding companies. Additionally, despite failing to consummate the relationship, Lévy continues to express a desire to “develop something new, strong, different.” After a monumental break-up, it’s usually a good idea to reflect and regroup—and avoid making any major decisions too quickly. Yet upon aborting the engagement, Lévy is acting like a stereotypical spurned fiancé. That is, he goes right out and proceeds to hook up with the same types of partners he was bedding before falling in love with Wren. It’s as if Lévy is regressing through a series of rebound girlfriends. There’s absolutely nothing new, strong or different about what he’s doing. It’s all just desperate and pathetic.

The Campaign interview added, “Lévy is looking for a ‘diplomatic’ solution for Publicis’ future—he has asked all the chief executives and their teams to come up with ideas for ‘how the future should be’.” Now he wants to be the benevolent diplomat? After initially playing dictator, informing his troops that he and Wren were merging, Lévy suddenly wants everyone to gaze into their personal Magic 8-Ball® and tell him how things should be? As if any of the CEOs might actually have a clue for the future.

Lévy also proclaimed, “We have today the largest digital penetration of any agency in the world and we will be even more digital in the future. We will be much more an Internet company than an advertising group. That’s clear. The way we will be organising our agencies and the investment we will be making is not something that we have discussed, and it will not necessarily lead to any change in our organisation. It may, but it may also not.” Huh? That sounds like a spurned fiancé who’s spent too much time drowning his sorrows at the local tavern. Wonder how the Publicis advertising agencies—who have always enjoyed the greatest power and authority in the network—feel about the notion of becoming “much more an Internet company than an advertising group.”

Regarding the Nurun purchase, Lévy gushed, “The acquisition of Nurun is another step forward in strengthening our world-class digital operations. Nurun’s expertise, based on a combination of design and new technologies, will not only bring widely-recognized talent and capabilities to our clients, but also strengthen Publicis Groupe’s digital global presence.” Um, has anyone scanned the Nurun website lately? Check out a case study too. The place is as far away from an advertising agency as possible, and it’s not even similar to the shitty digital agencies Publicis brags about (e.g., Razorfish or Digitas). Herein lies an inherent problem with the buying binges that Lévy and his fellow holding company CEOs have conducted over the years. There is simply no evidence of smooth merging and collaboration between companies within the networks. Indeed, digital remains a “below-the-line” discipline across the board. Advertising agencies and digital agencies operate from different business models—and the two are rarely teaming up in a unified fashion. Need proof? Review Team Sprint or compare the Cheerios work done by Saatchi versus the dreck from Digitas. The grand concept of integration is a damned delusion.

There is a Japanese proverb that states, “Vision without action is a daydream. Action without vision is a nightmare.” Lévy is a jilted dinosaur doing too much daydreaming and executing too many nightmarish deals.

11927: Lévy Is Laughable.

Campaign published an interview excerpt featuring Publicis Groupe CEO Maurice Lévy complaining about WPP Overlord Martin Sorrell’s comments on the failed merger between Publicis and Omnicom. “The only thing that is disappointing me is that I have not seen a hint of British humour in what [Sorrell] has said,” whined Lévy. “I was expecting something witty, something funny—and the only thing he has been able to do is bashing, which was so easy. I thought he would resist to go the easy train.” It’s tough to take Lévy’s humour critique too seriously. After all, the French consider Jerry Lewis to be a comedic genius.

Sorrell taunt not ‘witty’, Lévy says

By Maisie McCabe

Maurice Lévy, the chairman and chief executive of Publicis Groupe, has told Campaign he was disappointed that Sir Martin Sorrell’s comments about the failed merger with Omnicom were not “witty”.

Last week, Sorrell, the chief executive of WPP, said he found it “bizarre” that Lévy had not chosen a chief financial officer before the deal was announced and warned his rivals not to “climb the backstairs of the Carlton in Cannes”.

Lévy admitted he and John Wren, the president and chief executive of Omnicom, gave Sorrell “the opportunity to laugh” at them but added: “The only thing that is disappointing me is that I have not seen a hint of British humour in what he has said.”

Lévy continued: “I was expecting something witty, something funny – and the only thing he has been able to do is bashing, which was so easy. I thought he would resist to go the easy train.”

After finalising details at Cannes in June 2013, Omnicom and Publicis confirmed the merger the following month. The deal fell through in May after costing more than $100 million.

11905: Four Stooges On Cannes.

Campaign let the four stooges in charge of the major holding companies—Publicis Groupe, Omnicom Group, IPG and WPP—share their thoughts on Cannes. Maurice Lévy whined over the failed merger between Publicis Groupe and Omnicom Group, while John Wren made zero mention of the event. Michael Roth opened with a thinly veiled reference to the non-marriage, segueing to brag about his company’s focus on doing award-winning work. Gee, it seems like only yesterday when Howard Draft admitted that 80 percent of his agency’s output sucked, arguably quite an underestimation. Sir Martin Sorrell offered the best commentary:

This year’s event will, no doubt, be the biggest yet and I have some sympathy for those who worry if it has become a little too corpulent. How long, they wonder, before it collapses under its own weight?

Where I part company from the detractors, though, is the point at which they begin to pine for the “glory days” of advertising.

Ask them to describe those days and they will wax heroic with tales of creative derring-do and epic lunches. But listen closely and, all too often, what you hear them describe is essentially an exclusive club: Euro-centric, male and mono-medium.

Today’s Cannes may be big and brash, but it’s also emphatically open, diverse, international and multidisciplinary (extending even to areas such as healthcare communications and data). In other words, it’s a reflection of our modern industry and society.

Um, somebody tell Sir Marty that women comprise 27 percent of this year’s Cannes judges. And minorities are even more underrepresented at the gala. Indeed, Cannes 2014 is an accurate reflection of our modern industry—which continues to not reflect our society at all.

11857: Le Divorce.

11854: Lévy’s Unequaled Cluelessness.

Adweek reported Publicis Groupe CEO Maurice Lévy believes a lack of “equality” with Omnicom Group fueled the decision to nix the proposed merger. Lévy said, “One of the principals was that there will be equality in the management team. This has not been the case in the proposal of Omnicom and I was going back and forth to try to convince them that we should have equality. And it was impossible to get that equality.” Sorry, but an Old White Guy who runs a global corporation thoroughly lacking in diversity should not whine about equality. It takes cultural cluelessness to new heights of obscenity.

Publicis Says Inequality Doomed the Company's Union With Omnicom

Maurice Lévy cites difficulties in a planned merger of equals

By Andrew McMains

Omnicom Group thinks that cultural differences doomed plans for Omnicom and Publicis Groupe to merge, but Publicis Groupe believes inequality was the culprit.

In an interview with CNBC today, Publicis Groupe CEO Maurice Lévy said he went into the deal with the goal of being an equal partner with Omnicom but came out with the realization that it couldn't be done.

“One of the principals was that there will be equality in the management team,” Lévy said. “This has not been the case in the proposal of Omnicom and I was going back and forth to try to convince them that we should have equality. And it was impossible to get that equality.”

In retrospect, the CEO acknowledged that a garden variety acquisition—as in one company taking over another—is much easier than the so-called “merger of equals” that Publicis and Omnicom had sought.

“An acquisition—you are the master, you make your decision, people are acquired and they have nothing to say,” Lévy said. “A merger of equals—you have to share, to discuss almost every single decision. It’s more complicated.”

The CEO also spoke up for his company’s business model, which is built around the concept of shared services and platforms across all units. He suggested that the model is essential to delivering high margins, and would have been diluted under a combined Publicis Omnicom Group.

When asked how he feels about the merger collapsing, Lévy insisted that he was fine and felt supported. Still, he added, “It is disappointing to see that it’s not happening. And I’m feeling very disappointed for my team, who worked very hard.

“I’m not bitter. This is not my style,” he added. “I’m looking in the future. I'm looking forward and I’m focusing on the future. I think that Publicis has a bright future.”

11853: Wren’s Cultural Cluelessness.

Adweek reported Omnicom Group CEO John Wren admitted “cultural differences” with Publicis Groupe fueled the decision to nix the proposed merger. Wren said, “The cultural differences—and I want to emphasize these were differences of corporate, not national, culture—made it difficult to make decisions and by that I mean major operating decisions.” Well, of course the problems were rooted in corporate versus national culture. After all, both companies are predominately comprised of Old White Guys. Hell, it could be argued that cultural similarities likely led to the breakup. Too many White male egos can create combustible corporate conditions. Indeed, if the cultural differences were national—or heaven forbid, racial and ethnic—then surely Pioneer of Diversity John Wren could have handled things. Or is the failed union just another dramatization of the cultural cluelessness so prevalent in corporations like Omnicom Group and Publicis Groupe?

Omnicom Says Cultural Differences With Publicis Were Significant

John Wren acknowledges the complexities of combining big players

By Andrew McMains

Omnicom Group CEO John Wren acknowledged this morning that the corporate differences between his company and Publicis Groupe were greater than he expected, as he explained to industry analysts why the two companies won’t merge after all.

“We knew that there would be differences in the corporate cultures of Omnicom and Publicis. That is to be expected any time strong management teams are coming together,” Wren said. “But I know now that we had underestimated the depth of these differences. The cultural differences—and I want to emphasize these were differences of corporate, not national, culture—made it difficult to make decisions and by that I mean major operating decisions.

“And while each issue could have been solved, it was taking too much time,” Wren added. “And that certainly did not bode well for running what would be a very large multinational company.”

Among those decisions, according to sources, was who would be CFO of the combined operation. Each company felt its current finance chief should get the nod. Interestingly, Omnicom CFO Randy Weisenburger spoke nearly as much as Wren during this morning’s conference call with analysts, staffers and reporters, suggesting his strong hand in helping to lead the company.

Weisenburger emphasized that Omnicom would go back to business as usual, with a focus on “people, product, profit.” More specifically, the company will resume its stock buyback program and consider acquisitions that are strategic and accretive. The CFO acknowledged that both practices had subsided since Omnicom and Publicis unveiled plans for its megamerger last July. Accordingly, Weisenburger plans to ask Omnicom’s board to accelerate the buyback program. “We certainly have some catching up to do,” he added.

As for acquisitions, Wren and Weisenburger showed no appetite for another large-scale deal. But again, if an acquisition helps the company strategically, Omnicom, which historically has never been a serial acquirer, would consider it.

Collectively, Omnicom and Publicis would have employed more than 130,000 staffers and generated $24 billion of annual revenue. Also, as one company, Publicis Omnicom Group would have had a market capitalization of about $35 billion.

Not surprisingly, Wren and Weisenburger said employees and major clients had reacted positively to the decision to quit the merger. Wren went further, however, to say that no clients or executives left as a result of the engagement, as if to respond directly to counterclaims by WPP Group CEO Martin Sorrell.

In a brief moment of levity during the hour-long call, Wren summed up Omnicom’s reasons for walking away from the deal: “If I had to summarize in a tweet, it would be, ‘Corporate culture, complexity and time.’ And I would still have a hundred characters left.” Later, Wren, reading from prepared remarks, added: “In closing, I have a hundred characters left. I would tweet, ‘Omnicom strong, innovative, energized and ready for the future.’”

11851: Maurice & John Call It Off.

Adweek and Advertising Age reported the proposed merger between Publicis Groupe and Omnicom has fizzled out. Guess this frees up Pioneer of Diversity John Wren to focus on bringing inclusion and racial harmony to the industry. Yippee!

Publicis and Omnicom Call Quits on Merger

Widely expected in recent weeks

By Noreen O’Leary

What were they thinking in the first place?

Now that Publicis Groupe and Omnicom have called off their $35 billion merger, the differences between the two companies as they attempted to combine their operations seem more glaring than any common vision of “equals” they trumpeted back in July. After the flourish in Paris of signing off on a doomed transaction, the relationship between Publicis CEO Maurice Levy and Omnicom counterpart John Wren quickly soured amid a power struggle for control and consensus upon management structure.

In recent months, it was a question of not if, but when, the two companies would call off the deal. Publicly, the merger has taken farcical turns. While Publicis’s Levy was telling analysts there were no tax issues beyond the usual French oversight, Omnicom’s Wren was advising investors that U.K. tax residency problems could be a dealbreaker for the Netherlands headquartered Publicis Omnicom Group.

Then on April 29, Le Monde, France’s newspaper of record, published an incendiary article calling the transaction a Publicis takeover of its much larger American counterpart, in all but name. Many observers believed both companies would pull the plug in mid-June after the Chinese regulatory approvals did not come through, as widely expected would be the case, and would provide a face-saving out for the proposed merger.

The official explanation put out by Omnicom about ending the transaction is that "in view of difficulties in completing the transaction within a reasonable timeframe the parties have released each other from all obligations with respect to the proposed transaction…" As such there will not be a $500 million termination fee incurred by either company.

In an internal email, Wren further explained the merger's collapse to Omnicom staffers:

“When we first communicated with you about the proposed merger last July we knew that the transaction was complex, with multiple regulatory and tax approvals to be secured before we could execute it. At the time we thought it would take a little over six months.

Over the past nine months it has become increasingly apparent, to both parties, that it is not clear how long it would take to resolve the open issues.

As you know a good concept is worth nothing unless it can be brilliantly executed in a timely way.

Both parties have now decided that it is in the best interest, therefore, of you, our people, our clients, and our shareholders to terminate the proposed merger.

Over the last year there has been a great amount of work done on the deal by a small group of Omnicom executives and a much larger group of advisors.”

To be sure that much larger group of advisors was at work: As of the end of 2013, Omnicom said it spent $41.4 million in pre-taxes charges related to the deal and another $7 million in the first quarter. (Publicis spent $52 million on merger-related expenses last year but has not yet detailed expenditures this year.)

Now it remains to see what the industry’s most high-profile, expensive failed transaction will do to the reputations of the companies’ two chief executives in the twilight of their careers who are considering their own legacies.

11848: Publicis Omnicom Pricey Failure.

Advertising Age reported Publicis Groupe and Omnicom will have to deal with a $500 million termination fee if they fail to consummate the merger. Should the deal evaporate, each holding company ought to be required to also spend $500 million on diversity initiatives. Surely Pioneer of Diversity John Wren would endorse such a proposal.

Putting the Odds on a Publicom Collapse

Companies Got Into This Together, and Would Have to Get Out of It Together

By Alexandra Bruell

Tax hang-ups, regulatory delays and behind-the-scenes struggles have industry executives and analysts increasingly banking on a collapse in the planned merger of ad giants Omnicom Group and Publicis Groupe. “There is evidently a realistic chance that the merger with Publicis will not be completed, whether due to external factors or management preferences,” Pivotal Research Group analyst Brian Wieser said in a research note to investors late last month.

Progress seems stalled enough that Albert Fried analyst Rich Tullo lowered the chances of completion to 40% from 66% in a research note last week first reported by The Wall Street Journal. An Omnicom spokeswoman declined to comment; a Publicis spokeswoman in Paris did not respond to a request for comment Friday afternoon in New York.

But don’t expect either side to storm away on its own—even if one CEO starts to feel like he’s losing battles, like the fight to install his favorite as chief financial officer. The $500 million termination fee disclosed in a filing last summer and lately resurfaced in pessimistic press reports means that any unilaterally quitting party has to pay that sum.

Such terms are meant to keep both sides on track and interlopers out, according to David Grinberg, partner and chairman of the mergers-and-acquisitions group at law firm Manatt, Phelps & Phillips. If rival WPP Group got Omnicom to take an offer and abandon Publicis, for example, Omnicom would have to pay Publicis the termination fee. But absent a better offer, neither Publicis CEO Maurice Levy nor Omnicom CEO John Wren will try to sell shareholders on eating the cost of solo withdrawal.

So if the merger fails, it will be by mutual agreement. “If a buyer comes in, they now have to overbid and pay a fee,” Mr. Grinberg said “But if it falls apart for internal reasons, it’s much rarer to have a fee because they’ll look for reasons not to.”

In the meantime, costs continue to pile up. Omnicom has already sunk more than $48 million of pre-tax expenses into merger preparations, according to filings. And investors seem to be gravitating toward their rivals. Share prices have grown at all four top agency holding companies since the merger was announced, but they rose nearly 10% at WPP and Interpublic, compared with roughly 3% growth for Omnicom and Publicis.

“Time is not necessarily a friend,” Mr. Grinberg added. “If the deal drags on, people get deal fatigue and start to psychologically become negative on a deal.”

11839: Trouble In Paradise.

Adweek and Advertising Age reported the proposed Publicis-Omnicom merger is facing obstacles. Looks like the honeymoon is over before the marriage was consummated. But that’s what happens when a relationship is based on money, lies and ego. And it doesn’t help that it’s a union between two Old White Guys.

Are Omnicom and Publicis Laying Grounds for a Divorce?

Suddenly, merger obstacles are looming large

By Noreen O’Leary

By raising tax domicile issues related to its megamerger with Publicis Groupe, Omnicom Group has drawn a line in the sand. And in doing so, the American company has only fanned speculation of mounting marriage troubles, with CEO John Wren stressing to investors that there is no “Plan B” should the combined company fail to establish U.K. tax residency and incorporation in the Netherlands.

Wren’s statements to industry analysts last week represented the latest volley between him and Publicis CEO Maurice Lévy, who have been caught up in a game of verbal ping-pong. The remarks put pressure on Lévy in stalled management structure negotiations, sources said, even as Omnicom’s chief sets up investor expectations for a possible dissolution of the deal, which could carry a $500 million termination fee.

“Omnicom looks like it is trying to create a condition to get out of the merger. It’s almost like they’re looking for ideas to create plausible doubt,” said Brian Wieser, a senior analyst at Pivotal Research Group.

If Wren views the tax domicile designation as a deal breaker, Lévy as recently as April 17—in a conference call with industry analysts—focused only on French tax authorities, calling the situation a “normal process.” (In a press release last week, Publicis rushed out a statement acknowledging the more complicated tax issues.)

The backdrop to the tax issue, however, may be more telling. Sources said that Wren and Lévy have been butting heads since late last year over merger decisions. Also, integration meetings have been less frequent recently while holding company execs focus on the tax and Chinese regulatory hurdles.

One indication of the management stalemate is the companies’ inability, after nine months, to file a required S-4 SEC document, identifying company officers and corporate organization. Typically those filings are made within a few months of a merger announcement.

In public, Publicis is quick to refer to the deal as a “merger of equals.” And while the structure of Publicis Omnicom Group is 50/50, ultimately Wren becomes CEO. Nevertheless, Lévy, bristling at perceived lame-duck status, is already suggesting he may stay on for an additional two years, according to sources. New York-based Omnicom CFO Randy Weisenburger, meanwhile, has been widely favored to be named CFO. To some, it feels like déjà vu. When Publicis’ joint venture with what was then True North’s FCB in the 1990s collapsed, blame was laid on a power struggle for control between Lévy and his American counterparts.

Not withstanding the tax and regulatory hurdles, the companies may have another opening for walking away. Publicis, in its 2013 annual report, which came out two weeks ago, said that among the reasons either company could terminate the deal is if it isn’t possible to complete it before July 27, 2014. Publicis, in the same report, indicated that the deadline can be extended to Jan. 27, 2015, although it didn’t specify if that had happened. Publicis didn’t respond to inquiries, and Omnicom declined to comment.

For now, the merger delay has put on hold Omnicom’s stock buyback program, which the company is eager to resume, and reportedly is slowing the highly acquisitive Publicis’ deal making.

The current chilly public posturing between the two companies contrasts starkly with the chummy unveiling last summer of their plan to create the world’s largest marketing communications company, at $23 billion in revenue. Observers also noted how unusual it was for Omnicom general counsel Mike O’Brien to be on the call where Wren raised the tax hurdle. One source echoed a growing sentiment around tax residency: “It’s feeling a little bit like a beard.” The source added, “I think they’re just laying pipe in case they have to blow it up.”

11701: Sprinting Away From Team Sprint.

MediaPost reported Sprint is launching a review of its entire agency roster, which likely means the official demise of Team Sprint—and thankfully, the James Earl Jones and Malcolm McDowell team. Wonder how the impending Publicis Omnicom Groupe merger would have affected matters, given that AT&T is firmly tied to Omnicom’s BBDO. Of course, the assholes behind the inane hook-up will probably walk away scot-free while scores of adpeople lose their jobs.

Sprint Launching Comprehensive Agency Review

By Steve McClellan

Telecom company Sprint is preparing to conduct a comprehensive review of its agency roster, according to the CEO of its parent company, Softbank. The review is expected to cover creative, media and digital.

The company spends close to $1 billion on ads annually.

The review comes about six months after Sprint was acquired by Softbank for nearly $22 billion. Shortly after that, Sprint CMO Bill Malloy indicated that he would leave the company in the spring of this year.

It was just over two years ago that Malloy — who had then recently joined the company — fired lead agency Goodby Silverstein & Partners, the Omnicom shop, without a review and put in place an entity called Team Sprint that was led by Publicis Groupe’s Digitas (now DigitasLBi). Sibling shop Leo Burnett was tapped for creative duties and media shifted from WPP’s Mindshare to Publicis Groupe as well.

But according to the Chairman and CEO of Sprint parent Softbank, Masayoshi Son, Team Sprint hasn’t been getting the job done. He said last week that “Sprint spends a large amount of money on advertising every year, but its effects have been almost negligible.”

Son’s comments came in a guest column for the Nikkei Asian Review. “I directed the Sprint executives to terminate all existing contracts with the company's advertising agencies. We will shortly start from scratch on advertising, with new agents also making proposals.”

The article was more broadly focused on lessons in business leadership that Son had learned over the years. He said he had erred previously in allowing the U.S. management of some acquired companies too much leeway to run companies as they saw fit.

“Just like Vodafone in Japan, Sprint has gotten used to being a loser,” Son wrote. “It is perpetually stuck in third or fourth place in the U.S. telecommunications market. Some say the poor quality of its networks explains its position. This kind of excuse keeps Sprint from breaking the vicious cycle in which it is caught. There is a need for a change in mindset.”

That point of view could also potentially affect the agency roster at competitor T-Mobile. Softbank has approached T-Mobile about a possible $20 billion acquisition. Publicis & Riney is T-Mobile’s creative agency.

A DigitasLBi rep didn’t immediately respond to a query about the review. A Sprint rep indicated that the company has not begun a review “at this time.” He declined to elaborate or comment on Son’s remarks.

This story has been updated to include input from a Sprint rep.

11679: Contrasting Crap At Adweek.

Adweek published two pieces—with nearly side-by-side placement—that demonstrate how fucked up the advertising industry remains in regards to diversity.

Hire 3 Women to Disrupt White-Male Hegemony presented the latest nonsense from former BBH Chair Cindy Gallop, including a recommendation that every agency insert at least three women into top spots in the creative department, management team and board of directors. One person left a comment wondering why Gallop wasn’t also concerned about cultural diversity versus just gender diversity, and the woman insisted her grand vision applied universally. Whatever. Like the majority of male and female ad honchos, Gallop failed to spark progressive change when she held a power position. Her words now appear to be nothing more than self-promotional bullshit that will be less than 3% effective.

Meanwhile, The Power Players in the Publicis-Omnicom Merger spotlighted the folks who will benefit the most from the upcoming marriage between holding companies. The picture accompanying Noreen O’Leary’s piece tells the true tale, literally illustrating that White men continue to run the show.

11669: MultiCultClassics Year In Review.

To kick off 2013, Marcus Graham Project Executive Director and Co-Founder Lincoln Stephens told everyone How to Solve Adland’s Diversity Problem. Twelve months later, there’s little evidence that anyone followed—or even read—the straightforward advice. In January, Translation Founder and CEO Steve Stoute was named Executive of the Year by Advertising Age. In June, Stoute’s shop was unceremoniously dumped by Bud Light via an act of cronyism that could be called Buddy Light. Michael Houston elevated to Chief Executive of Grey North America, becoming one of the few Blacks to land in the executive suites of White agencies without also being a recording artist like Alicia Keys, John Legend and honorary Clio recipient Will.i.am. The Richards Group—those wonderful folks who gave you talking vaginas—applied their cultural cluelessness to Dodge RAM and made farming look as exclusive as Madison Avenue. Speaking of exclusivity, Adweek’s Young Influentials of media, marketing, technology and consumer brands featured a single Black person who has never worked in media, marketing, technology or consumer branding. Of course, Donald Glover is a writer, actor, rapper, comedian and producer, which means he’ll probably become a brand ambassador in 2014. OgilvyCULTURE staged a Cross-Cultural Roundtable without a round table or cross-cultural participation (i.e., there were no Whites present). Laurence Boschetto’s declaration that by 2014 Draftfcb would be an agency that no longer used the term “diversity and inclusion” remains a dream deferred, as the visionary was discharged of his duties. The Anti-Defamation League asked us to Imagine a World Without Hate through a commercial imagined and executed by an agency whose leadership is virtually devoid of people of color. Mark LaNeve is still an asshole. The race discrimination lawsuit against IPG ended after the jury deliberated in 11 minutes—roughly the same amount of time IPG has dedicated to diversity since launching in 1960. White women whining increased a few decibels thanks to the ADC’s patronizing 50/50 initiative, alleged shock over the lack of female Cannes jurors and a lame letter containing womanly wisdom that included, “Don’t be a dick.” However, Goodby Silverstein & Partners Co-Founder Rich Silverstein engineered an elaborate search for an executive assistant, reeling in at least 4,500 applications before selecting a White woman. “Vive la Nepotism!” seems to be the motto of Paris-based holding company Havas. Cheerios served up a biracial bambino and Bee-Boys. Annie the Chicken Queen emulated Mary J. Blige by singing about fried chicken. Omnicom Overlord John Wren was inexplicably saluted as a Pioneer of Diversity. True advertising pioneer Bill Sharp passed away in July. The Publicis Groupe-Omnicom merger was unveiled with fanfare, festivities, figuring and fun. In contrast, the Cross Cultural Marketing and Communications Association started with an apathetic shrug. Where are all the Black people who thought it would be cool to have Cornel West preach at the annual (W)here Are All The Black People? Advertising Week allowed folks to feign interest in diversity for nearly one week. Blog Action Day allowed MultiCultClassics to view the industry’s dearth of diversity as a human rights issue. Total Market appears to be Total Bullshit. And finally, total bullshit is what New York City Comptroller John Liu has repeatedly received from Omnicom and Pioneer of Diversity John Wren.

11630: Infinite Infiniti Options.

Adweek reported the Nissan Infiniti brand is up for review. Incumbent agency TBWA\Chiat\Day is defending the account, which has been serviced by the shop for roughly 15 years. Guess Nissan United wasn’t enough to keep the automaker happy. Look for holding company Omnicom to throw Goodby Silverstein & Partners, Juniper Park and Fathom Communications into the pitch. Why, if Omnicom also taps Publicis Groupe, the Corporate Cultural Collusion possibilities for Infiniti are infinite.

Infiniti Launches Global Creative Review

Incumbent TBWA is defending

By Andrew McMains

Nissan is reviewing global creative responsibilities for its luxury Infiniti brand, an Infiniti representative has confirmed.

Worldwide media spending on the brand was not immediately available. In the U.S. alone last year, however, Infiniti spent nearly $230 million in media. That figure represented a substantial uptick from 2011, when spending totaled $125 million, according to Nielsen.

TBWA has been Infiniti’s lead global agency since the late 1990s. The Omnicom Group shop, whose largest global client is Nissan, is defending. The agency had no immediate comment.

The review is in its early stages and includes regional responsibilities, such as in the U.S., according to the rep.

“Infiniti has worked with our current advertising agency for 15 years,” the rep added. “We feel it’s prudent to review this relationship on a regular basis to ensure the best possible service and performance levels. To this extent, we are currently reviewing our options, and have asked several agencies, including our current agency, to present their capabilities.”

The review coincides with a separate search for an agency to handle a new global assignment to lead social media efforts. That search is also at a preliminary stage.

As another Infiniti rep explained, “Social Media is an integral part of the company’s interaction with consumers, media and other stakeholders. It is global by nature and so, we have an opportunity from taking a global view at this part of the business.”

Both reviews will extend into the first quarter of next year, if not longer.

The searches come three months after Michael Bartsch was named to replace Ben Poore as vp of Infiniti Americas—the top post in the region. Before that, Bartsch was chief operating officer at Porsche Cars North America. He started his new job in September.

11600: C’MON WHITE MAN! Episode 34.

(MultiCultClassics credits ESPN’s C’MON MAN! for sparking this semi-regular blog series.)

The refusal of Omnicom and Publicis Groupe to reveal their hiring trends per the repeated requests of New York City Comptroller John Liu is disturbing—especially the way that Omnicom President and CEO John Wren has responded.

When Liu made another inquiry last April, the official Omnicom reply included the following:

“We do not believe that disclosing [the EEOC information] will meaningfully further the goal of workplace diversity. To the contrary, this information, which is susceptible to misinterpretation, could be manipulated by those with interests adverse to Omnicom’s and harm the company.”

Omnicom Chief Diversity Officer Tiffany R. Warren also spoke with Advertising Age and parroted her bosses’ position, adding that the company would “release a national report outlining some of its results in the diversity space” later in the year. Regarding the report, Ad Age wrote the following:

“[Our report] is a national project, not local to New York City,” [Warren] said. It will “talk about how internal and external outreach has been” in addition to quantitative achievements regarding the agencies’ efforts in “bringing in and hiring, and also retaining diverse employees, as well as women.”

Okey-doke. Technically, the year is not yet over, so Omnicom still has about a month to unveil the report. But in case the company seeks to delay sharing the truth—particularly in light of the impending Omnicom-Publicis Groupe merger—any criticism must fall squarely on the shoulders of Wren. He can’t ignore Liu as he ignored Bob Garfield’s 2008 open letter accusing Omnicom of displaying homophobia.

After all, Wren launched a Diversity Development Advisory Committee in 2007. He has approved millions of dollars toward scholarships and diversity programs. Wren hired Warren as the holding company’s Chief Diversity Officer. And he was named a Pioneer of Diversity by the AAF.

Given the man’s unprecedented diversity achievements, how could it possibly harm Omnicom to comply with Liu’s call to action?

C’MON WHITE MAN!