Sony eyes $1 billion media play

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Sony Corp. is stepping up discussions with media agencies about consolidating its global media buying and planning at a single shop, putting more than $1 billion in work up for grabs.

According to executives close to the discussions, Sony is contemplating a review to consolidate media buying and planning for global business units, including Sony Pictures Entertainment. Sony's home market, Japan, would stay at Dentsu.

A previous groundbreaking review, General Motors Corp.'s $2.9 billion U.S. consolidation at Bcom3 Group's Starcom MediaVest in July 2000, involved media planning only. GM in 1994 consolidated buying at Interpublic Group of Cos.' media operations.

The Sony review could include both planning and buying and will attempt to integrate marketing plans of businesses that heretofore operated fairly independently.

"It will be very difficult to pull off," said an ad executive with knowledge of the discussions. "GM is used to this kind of consolidation, but Sony is a very different company."

According to agency insiders, Sony Chairman-CEO Nobuyuki Idei has recently heard pitches in Tokyo from Starcom MediaVest, WPP Group's MindShare and the Media Edge, and from Zenith Media, jointly owned by Publicis Groupe and Cordiant Communications Group.

Sony issued a brief to each shop asking a single question: "What are the benefits of global consolidation with your agency?"

The first steps toward media consolidation began earlier this year when Sony entertained proposals from WPP media entities (AA, Feb. 12). The process has moved steadily since then.

WAITING BY THE PHONE

According to executives, WPP Group Chief Executive Martin Sorrell and MindShare Chairman-CEO Irwin Gotlieb made a presentation recently. Starcom MediaVest CEO Jack Klues led his company's presentation to Mr. Idei two weeks ago. And Publicis Chairman-CEO Maurice Levy joined Zenith Chairman John Perriss to pitch the account that same week. Interpublic's Universal McCann is also involved in the discussions.

All four agencies expect to hear from the company by the second or third week of July, when Sony will indicate the next step in the process. One executive speculated the review could be protracted, and the company may end up "simply handing the account over to the agency they like the best."

Messrs. Gotlieb and Klues and Universal McCann executives had not returned phone calls at press time. Messrs. Sorrell, Levy and Perriss declined to comment.

Sony Corp. of America spokesman Howard Polskin said, "We are always looking for ways to make our businesses more efficient and cost-effective." Sony Electronics' U.S. marketing executives declined to comment. One executive familiar with the situation estimated the review's billings at $1 billion. Sony spent $1.48 billion on global media in 1999, including $590 million in the U.S. and $328 million in Japan, according to Advertising Age. Excluding Japan, that suggests $1.15 billion is up for grabs in the global review.

Sony spent $639.7 million on U.S. measured media in 2000, according to Taylor Nelson Sofres' CMR.

Currently, media buying and planning for Sony units are handled by a grab bag of agencies across the globe. Zenith recently won the $40 million Columbia TriStar movie account in the U.K.; sibling Saatchi & Saatchi handles consumer electronics creative in Europe.

Media Edge handles buying and planning for Sony Electronics in the U.S.; sibling Y&R Advertising works on creative.

Starcom handles media buying and planning for Sony in parts of Asia and Europe. Dentsu has a stake in Starcom parent Bcom3.

Omnicom Group media arm OMD services some of Sony's electronics business in Europe while sibling shop TBWA Worldwide fields creative on PlayStation in the U.S. and Europe.

It was not determined at press time if OMD is participating in the global review.

Sony Pictures Entertainment last month decided to keep its estimated $250 million U.S. media buying business at Universal McCann on a temporary basis (AA, June 18) after a review with several agencies. Sony is expected to toss the movie business into the overall media consolidation review.

The Sony media consolidation accelerated after similar moves by rivals. Philips Electronics recently bundled its $600 million global media buying and planning at Aegis Group's Carat; Matsushita Electric Industrial Corp. consolidated buying and planning at Dentsu; Samsung delivered its media business to Interpublic's FCB Worldwide, New York.

If Sony does pull off global media consolidation, it would be a major feat for the notoriously fractious company. Sony units have traditionally operated as highly autonomous and entrepreneurial entities, securing agency relationships, budgets and priorities with some direction from Tokyo headquarters. Under Mr. Idei, Sony has moved in fits and starts toward integration to remake itself into a networked home entertainment company.

LARGE PORTFOLIO

The $58.5 billion (sales) consumer electronics giant's portfolio includes Sony Electronics, Sony Computer Entertainment (marketer of the PlayStation videogame console) and Sony Broadband Entertainment, which includes Sony Music Entertainment and Sony Pictures Entertainment.

"Sony must consolidate," said an ad executive with knowledge of the review. "They are not even consolidated on a national level. They have to fall in line with a well-established global trend in order to create efficiencies and compete effectively. They really have no other choice."

Contributing: Tobi Elkin, Wayne Friedman and Laurel Wentz

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