$5.5 Million Dispute Now in London Court

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NEW YORK (AdAge.com) -- The publisher of OK magazine in the U.S. has gamely taken its share of hits since the title landed here last August, but has now taken a fight over ad pages with WPP Group to court.

Richard Desmond’s Northern & Shell North America has filed a $5.5 million lawsuit at the High Court in London alleging that the WPP didn’t meet a promise to deliver 15 ad pages from its clients to each issue of OK.

Rivals dispute newsstand sales
Competitors have studied vital signs at OK since its arrival, although a clear picture has been difficult to establish. OK says it sold an average of 250,000 newsstand copies during the second half of 2005, while rivals say OK sold closer to 150,000 copies an issue on the newsstand.

The title has just adopted a new logo, revamped its cover design, cut its cover price to $1.99 from $3.29 for 10 weeks and shrunk its oversize format slightly to better fit magazine displays here.

But a WPP spokesman in the U.K told European papers, where news of the suit first appeared, that no 15-page guarantee was ever made. WPP filed suit against Northern & Shell in New York court last week alleging nonpayment of bills.

A WPP spokesman in New York was unable to comment yesterday.

Insider: No guarantee
An insider at OK America told Advertising Age that there was in fact no 15-page guarantee. The dust-up began, the insider said, when WPP Chief Executive Martin Sorrell asked Mr. Desmond to shift his media business from one WPP agency to another in an attempt to free one of the agencies from a potential conflict. Mr. Desmond agreed to consolidate his media accounts at MediaCom, but took Mr. Sorrell up on his offer to return the favor somehow, according to this account.

“Desmond said, ‘Actually there is something,’” the insider said. “'We’re launching OK in the U.S. We need some advertising support because we’re launching at a very bad time of the year and haven’t been able to get on many requests for proposals. What we’d really like is 15 pages a week between the launch and Christmas.’”

Mr. Sorrell, according to this account, said he would get his people to help Mr. Desmond out -- but nothing more. No individual issue of OK between the launch and Christmas even cracked 15 ad pages, from WPP clients or others.

Ian Rosenblatt, senior partner at Rosenblatt, which is representing Northern & Shell in the suit, said Mr. Desmond would not have put his name and reputation on the line in a court case if he did not believe he had a case.

Spend more money
Northern & Shell North America approached the Mediacom division of WPP, prepared to spend $2 million to $3 million on media buying, but were advised by Mediacom that they needed to spend more, Mr. Rosenblatt said. “They were persuaded to spend more, which wound up being in excess of $8 million,” he said, because Irwin Gotlieb, chairman-CEO, the GroupM divison of WPP, expressly confirmed a commitment of 15 pages of advertising per issue. According to the claim filed in London, Mr. Desmond and Mr. Gotlieb shook hands on the deal and celebrated with champagne.

The claim alleges that a few weeks later, on July 30, Mr. Sorrell told Stan Myerson, a director at Northern & Shell North America, that he was surprised to hear that no WPP agency had delivered ad pages to OK yet. According to the claim, Mr. Sorrell said, “Leave it with me and I’ll sort it out.”

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