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WorldCom's unsolicited and unprecedented bid of more than $30 billion for MCI Communications last week places a premium on MCI's marketing value. But the price is right only as long as MCI executives remain at the company.

MCI's value is its marketing muscle, since WorldCom knows comparatively little about marketing. If the MCI management team doesn't go along with WorldCom's plans or if they decide to cash in their stock and move on, the long-term value of a merged company could be greatly diminished, analysts believe.

"MCI has built its company through marketing and they've been a master marketer," said Jeffrey Kagan, president of Kagan Telecom Associates, Atlanta. "WorldCom is an acquisition company, but they could get the marketing expertise from MCI. If the MCI executives cash out, the merger loses a lot of value."


He added, "The marketing is the whole ball of wax . . . If I were [WorldCom CEO] Bernie Ebbers, I wouldn't push it" by risking an exodus of marketing managers in the event of a hostile takeover.

The difference in the two companies when it comes to marketing is underscored by their respective ad budgets. MCI has a $475 million ad budget while acquirer WorldCom's is only $10 million. And $1 million of WorldCom's total is spent annually on Michael Jordan's salary as spokesman.

WorldCom is handled by Earle Palmer Brown, Bethesda, Md. MCI is handled by Messner Vetere Berger McNamee Schmetterer Euro RSCG, New York, which wouldn't comment on the proposed merger.


Jeb Brown, CEO of Earle Palmer Brown, said, "I'll be very curious to see if this does come to pass. I hope it does because I think WorldCom is a company on the move. That, of course, could be good for us."

In a press conference last week, Mr. Ebbers poked fun at MCI's large ad budget and said that would be one place where a combined company could save money. MCI would not officially comment but insiders were not pleased.

Further complicating the deal is the fact that British Telecommunications, which owns 20% of MCI, already has a $21 billion offer on the table for the remaining 80%.

In fact, until recently, the planned BT/MCI merger had been going along smoothly for almost a year. Then BT lowered the price it would pay for MCI stock after MCI announced that it was estimating higher than expected losses this calendar year-$800 million rather the anticipated $400 million.

Mr. Ebbers included BT in his offer, saying the three should work together.

The WorldCom deal could provide an easy out for BT, whose shareholders are rankled and still feel they would be paying too much money for MCI.

MCI stockholders are happy to be getting a better deal. One MCI insider said while employees were initially shocked, many bulked up on stock in anticipation of a successful BT partnership and were happy about the potential of a better price from WorldCom.

Mr. Ebbers has built his reputation and company through acquisitions. His biggest deal to date has been the buyout of MFS Communications for $12.5 billion last year. MFS was a local service provider for business customers and also owned Internet service provider UUNet. A deal with MCI could seal WorldCom's positioning as a one-stop shop for telecommunications services. As more competition floods the deregulated market, a complete package of services is the goal of most telcos.


WorldCom's most recent acquisition was the purchase of CompuServe, although Mr. Ebbers kept only the network and hardware and spun the customers off to America Online. He told analysts that he may try to spin off MCI's residential business as well.

"WorldCom needs to figure out what its trying to do. Do they want a global network where you own all the hardware or is the game plan to tap into local

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