Zenith Asia

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[Hong Kong] WPP Group's proposed acquisition of Cordiant Communications Group has created an awkward situation for ZenithOptimedia in Asia/Pacific, where it now has 29 offices in 13 countries.

In much of the world, Cordiant's Bates network controls a 25% stake in Zenith, but in Asia, it operates through franchises, a legacy from the days when Bates and Publicis Groupe's Saatchi & Saatchi were both owned by Cordiant.

Zenith is wholly owned by Bates in several markets including Hong Kong, Malaysia, Indochina, India, Australia and New Zealand, while Saatchi owns the business in markets such as China, Taiwan, Singapore, Thailand.

The franchise system "is such a complicated question; it will be interesting to see how the WPP deal rolls out," said an Asia-based agency director familiar with the situation. The "most likely option," said Jeffrey Yu, Bates' Asia president in Hong Kong, is for WPP Group Chief Executive Martin Sorrell to sell the franchises to Publicis Groupe.

But some senior Zenith executives worry privately that Mr. Sorrrell could use the franchises to receive a seat on Zenith's board, which would allow him access to confidential information about clients that compete with MindShare and Mediaedge:cia clients. A WPP spokesman said it was premature to comment on any aspect of the proposed WPP/Cordiant deal.

A senior MindShare executive in Asia dismissed that. "Even WPP media agencies don't share information internally," the executive said.

One executive said WPP already has strong media vehicles: "Why would Sorrell want a strategic interest in Zenith in Asia? I don't see any advantage in that."

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