Merger of interests threatens IP's hold on ad sales

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BRUSSELS -- IP, one of the biggest TV advertising sales houses in Europe, faces the loss of one of its main clients, CLT, following the merger of CLT with Bertelsmann's TV arm UFA earlier this week.

IP sells space for nearly all CLT's 19 TV channels and 23 radio stations around Europe. Its contract with the broadcaster lasts until 2000, but there is a review date written in to it which is scheduled for next year.

One of the central figures in the new CLT-UFA combine says he wants to take the selling process in house. "I would prefer moving the function within the company," says Didier Bellens, a member of the board of CLT-UFA and managing director of Group Bruxelles Lambert, majority shareholder of CLT holding company Audiofina. "I'd like us to have greater control over this important function." Bellens did not criticize IP's performance.

IP managing director in Belgium Alain Flausch says it would be a major task for CLT to take over advertising sales for its stations across Europe. "If they do take the advertising selling function in-house it would be a courageous move," says Flausch. "They'd have to take over some of the IP teams and tools, and in other countries they'd have to start from scratch which will be hugely expensive."

CLT last negotiated its contract with IP in 1993. At that time there was a vocal minority of board members from GBL that wanted to take the advertising selling function in-house. But an extension to the contract was agreed, albeit for a much shorter period than the previous 20 year deal.

IP handles over $4bn of advertising for CLT (now CLT-UFA) around Europe including both TV and radio sales. It is dependent on the broadcaster in France and Germany.

IP is majority owned by French media and advertising group Havas, which holds a minority stake in Audiofina. Havas' influence over CLT operations has diminished since the 50-50 joint venture with Bertelsmann was set up. "Havas won't be able to come to IP's rescue so easily now," comments one source close to IP.

Copyright January 1997, Crain Communications Inc.

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