Omnicom's ups & downs

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Omnicom Group bravely ventured into interactive in 1997 with stakes in then-flashy shops such as Agency.com, New York ; Organic, San Francisco; and Razorfish, New York. It even restructured its i-shop holdings around the New York-based Communicade, a wholly owned subsidiary that functioned as a holding company for Omnicom's investments in 16 online agencies.

But by April 2001, Omnicom was making a hasty retreat, inking a deal with Pegasus Partners II, a private investment company, to exchange its equity in Communicade for a stake in Seneca Investments, New York, a new interactive services holding company formed by Pegasus. Seneca later acquired the remaining equity in both Agency.com and Organic, offering Agency.com shareholders $3.35 per share and Organic shareholders 33 cents per share. Razorfish remains an independent public company. At the time of the Seneca deal, Omnicom owned 38.6% of Agency.com, a 17.3% stake in Organic and 12.1% of Razorfish. Through Seneca it retains a preferred non-voting stake, according to documents filed with the Securities & Exchange Commission.

At Seneca's tender offer prices, the stake in Agency.com was worth $49.45 million and the Organic shares were worth $6 million, while the Razorfish stake was worth $19.16 million at the closing price of $1.61 on May 2, 2001, when Seneca and Omnicom closed the deal. Omnicom valued its stake in Seneca at $280 million as of Dec. 31, 2001.

Omnicom's overall interactive revenue edged up in 2001. Interactive composed 1.79% of its U.S. revenue in 2001, up slightly from 1.46% in 2000. At its biggest in-house unit, Revenue at DDB Worldwide's Tribal DDB, New York, was up 50.9% at $35.1 million. However, other in-house units didn't fare as well. BBDO Worldwide's Atmosphere, New York, reported revenue of $5.5 million, down 17.7% from 2000, and Martin-Williams (i), Minneapolis, had $6.5 million in revenue, down 8.5%.

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