GM reveals agency debts

02 June 2009

DETROIT: Starcom MediaVest, part of Publicis Groupe, and McCann Erickson, a unit of the Interpublic Group, are among the agencies that are still owed money by General Motors, the troubled US auto manufacturer, which has now filed for bankruptcy protection.

A filing made by GM showed Starcom MediaVest, which handles the company's US media brief, is currently owed $121 million (€85.2m; £73.5m).

This figure is related to advertising space booked in advance with various media outlets, but for which the auto company had not yet supplied the funds.

Under the terms of its contract with GM, Starcom has a limited liability, with media owners thus being required to claim for money owed for the bankruptcy court directly.

A further $25m of General Motors' outstanding debt is earmarked for Publicis Groupe for services provided to the automaker by Digitas and Leo Burnett.

Michael Roth, ceo of the Interpublic Group, has stated that GM's unpaid billings to the holding group amounted to $150m at the end of February, and the company has amended the terms of its debt agreements in the event "any bankruptcy or related event with respect to General Motors."

GM has now reported that it owes IPG a total of $15.9m, with McCann Erickson also holding an unsecured claim amounting to $4.6m, and Campbell-Ewald and Deutsch some further liabilities.

Figures from TNS show that General Motors was the third biggest advertiser in the US last year with an outlay of $2.23bn, up 11.3% year-on-year, and behind only Procter & Gamble and AT&T.

The "New GM" is expected to "launch" in the next 60 to 90 days, as an independent company, according to a statement issued by the Detroit-based firm.

It "will be built from only GM's best brands and operations" and "be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure" than previously, according to the overview of its planned activities.

General Motors will "sell substantially all of its global assets to the New GM", which has stated its aims as "putting customers first" and focusing on four core brands: Buick, Cadillac, Chevrolet and GMC.

Among the new vehicles that will be introduced in the next two years are the Chevy Volt, an electric car, and the Chevy Cruze, a new "compact car".

Fritz Henderson, GM's president/CEO, argued that the move was "a defining moment in the reinvention of GM as a leaner, more

Data sourced from AdAge/Brand Republic/Financial Times/company reports; additional content by WARC staff