Carat, Interpublic also look to join acquisition parade
Paris-based Euro RSCG is in talks to acquire SFM Media, New York, the U.S.' largest independent media buying service.
Meanwhile, Carat International, London, is looking at Media Buying Services International, New York. And Interpublic Group of Cos., wanting to complement its 1994 purchase of Western International Media, is studying KSL Media, New York, and Focus Media, Los Angeles.
"What's going on here is that these holding companies are looking for other strings for their bows," said media management consultant Herb Zeltner. "The agencies themselves have unbundled media, so the clients now feel they can go off the plantation. So if a client says to its agency, `I want to look at an independent,' the agency can say, `Try this one, which also happens to be under our parent's umbrella.' "
TALKS IN SERIOUS STAGE
Executives familiar with talks between Euro RSCG and SFM, which claims billings of $850 million, said they have reached a serious stage and an offer could come in the next month.
The two parties first discussed a deal almost a year ago. Those talks didn't advance, but Euro RSCG's board recently created a committee--made up primarily of senior media executives from its U.S. agencies--to study a deal.
"It would be a terrific marriage," said SFM Chairman Walter Staab, who nonetheless denied any recent talks with Euro RSCG. "They'd bring us international credibility, and we'd bring to them great media expertise."
WHAT SPURRED HAVAS
Two recent deals heightened Havas' interest in SFM, say executives close to the deal.
In March, Euro RSCG acquired a majority stake in Dahlin Smith White, Salt Lake City, which had just moved its network TV buying to SFM from Western. SFM now gets half or more of its network buying business from Dahlin--whose biggest client is Intel Corp.--and Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, whose major clients include MCI Communications Corp. and Volvo Cars of North America.
Two weeks ago, Omnicom Group agreed to pay $8 million to $10 million for Creative Media, New York, one of the top 10 U.S. independents. Creative Media buys large quantities of spot TV for Messner Vetere's MCI account. But since Omnicom agencies have AT&T Corp. and BellSouth as clients, there's uncertainty about whether Creative Media and Messner Vetere can continue to work together, said Tom Messner, a partner at Messner Vetere.
Mr. Messner is not on the committee studying the SFM deal and said he knew nothing about the talks.
Euro RSCG is the No. 12 agency network in the world, with billings just under $5 billion. But it suffers from low visibility in the U.S. and has had limited success generating business from U.S. multinational advertisers.
$30 MIL PRICE TAG
SFM probably would ask for $25 million to $30 million, observers say, while Havas probably would be offering $15 million to $20 million initially.
Carat, one of the big media independents in Europe, is hungering to become a major player in the U.S. It has a New York office, but its strategy is to buy at least one service here, say executives close to the company, who noted that Media Buying Services International is a key target.
Matthew Bryant, Media Buying Services president, did not return calls; Carat declined comment.
Like Carat, Interpublic has been on the prowl for some time.
Michael Kassan, Western's chief operating officer, favors Focus Media, where he is close to management. Focus has lost two big retail accounts in the past year, Target Stores and Mervyn's; it still does syndication and cable buying for Sears, Roebuck & Co.
Interpublic also is studying a purchase of KSL Media, insiders say. KSL clients include Revlon, Chiquita Brands International and the New York Stock Exchange.
Copyright May 1996 Crain Communications Inc.