After Closing Leo Burnett Athens, Publicis Deals With Broadcasters Owed Money

TV Company Antenna Considering Legal Action Against Burnett's Paris-Based Parent

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Greek broadcaster Antenna said it is considering legal action against Publicis Groupe , which it claims closed Leo Burnett in Athens rather than pay money owed local TV channels. Publicis denies the allegation and says it did its best to come to terms with creditors but, in the end, was forced to declare bankruptcy for Leo Burnett's Athens agency.

Leo Burnett got into financial difficulties last summer when it was caught up in the economic troubles of a privately owned Greek TV channel, Alter. The agency went into pre-bankruptcy in July 2011.

Leo Burnett Athens' clients included Greece's biggest advertiser Procter & Gamble, Samsung, Kellogg's, Philip Morris and Ferrero.

A Publicis Groupe spokesperson said that four Greek broadcasters (Alpha TV, Star TV, Sky TV and Mega TV) have accepted its offer to pay 60% of the amount owed and that only Antenna refuses to compromise.

Antenna claims that Leo Burnett offered it only 30 cents on the dollar. "We believe the implications of this are so significant that it requires some action," a spokesperson for the broadcaster said. "The obvious next step is legal action, and I think it's such a significant case that it's a possibility. Publicis is a big group, but it shut down a local office and didn't deal with the issue."

Mathias Emmerich, senior VP-general secretary of Publicis Groupe , refused to discuss individual clients, but a Publicis spokeswoman claimed that about 30% of staff and clients have moved to the group's other agencies in Athens, Publicis and ZenithOptimedia. She said she did not have further details.

In an email, Mr. Emmerich defended Publicis's actions. "We have tried hard to avoid shutting down the agency," he wrote. "But in a country where many Greek clients defaulted, banks and factoring companies refused to let us access the money paid on our behalf to them ... [and] the unfortunate bankruptcy decision was the only feasible one from a financial and legal standpoint. The fact that most providers accepted our negotiated deal to reduce their exposure, and committed to continue to do business with us, is the best evidence of our good faith."

In the broadcaster's statement, Alexander Holland, Antenna Group's chief operating officer, said: "This is the first default of an international client in the media industry since the beginning of the financial crisis. It puts high pressure on the country's entire media sector when an important advertising agency fails to meet its obligations."

The Publicis Groupe spokesperson said, "Antenna is trying to make us look like the bad guys, but if we're so bad, why would the others sign an agreement with us?"

Group M estimates that Greek ad spending plummeted 18.4% last year and projects a 7.1% decline this year, to $1.87 billion.

Bloomberg News reported that , according to Mr. Emmerich, Alter TV's bankruptcy left ad agencies in Greece with $236 million of bad debt.

Leo Burnett's closure is the first shutdown of a major international agency in the troubled eurozone. But even in Germany, arguably the strongest market, McCann Erickson has shrunk to two offices from five in the past few months. The Interpublic Group agency closed its offices in Hamburg and Frankfurt after losing two big accounts -- Lufthansa and General Motors' Opel business. The Munich operation was merged into McCann's Berlin office.

A spokeswoman for McCann Europe Middle East and Africa said that the move was aimed at cost-cutting, as well as refocusing talent and resources in hubs. "We've all seen what's happening with the eurozone crisis in Western Europe," she said.

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