Chrysler to cost BBDO

06 May 2009

DETROIT: As Chrysler heads for Chapter 11 administration, Omnicom's BBDO Detroit has emerged as its second-largest unsecured creditor, waiting on $58.1m (€51.8m, £39.1m). Most of the money is believed to be owed to local TV stations as Chrysler switched from national buys to local spot advertising earlier this year. 

BBDO will need to apply to court to recoup any losses. The US government has created a special fund to support what are called critical vendors. If BBDO is successful, it would recover about a third of the money and claim for the rest during the time Chrysler is in bankruptcy.

Rival holding companies Interpublic and Publicis stand to lose much more if General Motors follows Chrysler into administration. Interpublic admitted last week that receivables, work in progress and committed media for GM amounted to about $150m at the end of February.

Chief executive Michael Roth said this is a “conservative assumption” although not a “worse case scenario.” Within Interpublic, McCann-Erickson handles GM's corporate account and Saab (which has been cut adrift by GM), Campbell-Ewald handles Chevrolet and Deutsch in Los Angeles handles Saturn, which GM is to sell or close.
At Publicis, which is owed at least $100m, the biggest worry is Starcom MediaVest which handles all of GM's US media planning and buying. Ratings agency Standard & Poors said in March that Publicis is “significantly exposed to GM through its media-buying arm. If GM files for Chapter 11, Publicis could face significant losses on its outstanding receivables from GM.”

Data sourced from AdAge; additional content by WARC staff.