Negotiations between Mr. Fallon, chairman-CEO of Fallon McElligott, Minneapolis, and Mr. Berlin, chairman of FMB, were said to be proceeding smoothly until last week, when price became a sticking point. Fallon holds a controlling interest in 2-year-old FMB.
TALKS 'AMICABLE BUT NOT COMPLETE'
Mr. Berlin, whose contract with Fallon McElligott expires Sept. 30, confirmed he is in talks to take control of the agency. He described the discussions as "amicable but not yet complete." Mr. Berlin declined further comment, and Mr. Fallon did not return several phone calls.
Serious negotiations between Mr. Berlin and Fallon executives-including Mr. Fallon and FMB President Steve Sjoblad, who is also the second-largest shareholder in Fallon-began earlier this month.
FMB claims billings of an estimated $100 million from such clients as Coca-Cola Co., Conde Nast Publications and the National Basketball Association.
FMB hopes to keep most of its clients after the buyout. One executive familiar with the discussions said that to do that, FMB is likely to continue to turn to Fallon for such resources as media buying.
TIES TO CONDE NAST, NBA
Mr. Berlin has close ties to Conde Nast and the NBA, accounts he took with him from Berlin Cameron Doyle. Those accounts are expected to remain after the buyout. Other FMB clients include Ralston Purina Co., The Washington Post and BMW Motorcycles. The Coca-Cola brands at FMB are Sprite, Fresca and Georgia Coffee.
FMB is currently pitching against Suissa Miller, Los Angeles, to handle advertising for NBC's Olympic broadcasts, an eight-year $80 million account.
In addition to price, talent is said to be another sticking point. Both sides have been courting key staffers, and one executive said morale at the 45-person FMB has been hurt in recent weeks as word of the closed-door talks spread.
Mr. Sjoblad won't have trouble picking sides. He said last week he "would not be part of the buyback."
"I would stick around for a comfortable transition, then go back to Minneapolis," said Mr. Sjoblad, whose family remained in Minneapolis when he joined FMB in New York. "It was always my intent to spend time here, get this thing off the ground and return to Minneapolis."
One person close to Mr. Berlin said that although the executive is frustrated by the snags in negotiations, he remains excited about setting up his own agency, in part because conflicts with Fallon clients have prevented FMB from chasing some new business.