As speculation rises over the finalisation of the Publicis and Omnicom merger, Sir Martin Sorrell has warned that the group still has “big hurdles to jump”.
Speaking at the annual Newsworks Shift conference on Thursday, the CEO of advertising group WPP said that Publicis Omnicom Group (POG) faces “significant structural issues” that although not impossible, will be difficult to overcome.
Last summer, Publicis and Omnicom confirmed that they would be merging to form a partnership of equals, which will be led by current chiefs John Wren and Maurice Levy as joint CEOs.
However, Sorrell – whose WPP Group reported pre-tax profits up 19% for 2013 – has said that POG has “real trouble,” and that he is not particularly worried about the merger.
“It is apparent in the last few weeks that there are significant structural issues [Wren and Levy] have to face in terms of the residence of their companies, the tax position of their companies and their ability to buy back stock,” Sorrell said, adding that POG – despite what it claims – is not a merger of equals.
“They talk about this being a merger of equals, which is technically impossible. From an accounting point of view, there has to be one company that takes over the other.”
The advertising mogul said that he calculated approximately $1.7 billion of billings that have fallen out of POG in the last week, as a result of POG not being in the Vodafone picture.
Vodafone has fallen into WPP globally, as it happens, along with M&S in the last couple of days, which would have sat in Zenith after the acquisition of Walker Media.
Sorrell added that there are also concerns being expressed by Chinese regulators regarding what will happen to the domestic advertising industry and the influence of foreign owners on domestic Chinese content.
Levy had referenced this at a recent Financial Times Digital Media Conference, suggesting that he had expected Chinese clearance by the New Year, but now it would be early May.
In response to a question from the floor yesterday by Asif (sic) Durrani, Sorrell said that he is not worried about WPP being number two agency group, after the POG merger.
He did answer two questions on the theme of the day, saying that “whatever the circulation figures say, newsbrands are still very influential,” but he added that so are other things now.
Sorrell also admitted to reading the quality/financial papers every day, although “much less” than he used to, and said that he has Bloomberg running all day and “goes to bed with either Paxman or Charlie Rose.”
