NEW YORK (AdAge.com) -- Aegis Group today announced positive results for 2002, reporting 3.4% organic growth in revenues, a swing back into profitability and plans to set up a second media-buying network.
The media buying and research group also confirmed it is evaluating the assets of NFO, the market research group Interpublic Group of Cos. has put up for sale.
$500 million price tag
"Should we acquire all or part of this business we do not anticipate the issue of new equity," Aegis CEO Doug Flynn said in a statement. U.K.-based United Business Media has also confirmed an interest in buying NFO, which is expected to be priced at about $500 million. Two other potential bidders, WPP Group and Taylor Nelson Sofres, dropped out earlier.
Aegis reported net income for 2002
Aegis is also more optimistic about the market this year than the advertising holding companies that have recently reported 2002 results. "Our planning for 2003 has been built around further gradual improvement," Mr. Flynn said.
The company also announced plans to group its non-Carat media-buying companies into a second network called Vizeum. The name derived from the word "vision." The network will be launched formally in the third quarter with European agencies including BBJ in the U.K., Horizon in Italy and HMS in Germany. The move reflects two major industry changes -- the growing trend for marketers to award their media accounts on an international basis and the consolidation of media buyers into a handful of global giants.
"Recently media industry consolidation has led to a market comprising relatively few large media agencies, and it is our belief that this has resulted in lack of choice for marketers," Mr. Flynn said. "Other than Carat, there are now no independent international media agencies."
Lorna Tilbian, an analyst at London-based Numis, rated Aegis "an excellent recovery play, with over 90% of media-buying revenues derived from commissions rather than fixed fees." Ms. Tilbian expressed concern, however, over Aegis taking on debt to buy NFO.
"We believe a debt-financed purchase of the whole business would be a stretch financially given the current uncertain environment," she said. "The acquisition of part ... of the business, perhaps through a joint bid, is much more feasible."