Media Buying Firm Denies It’s Relocating

Western Initiative Media on Thursday denied that the giant media buying firm is moving key parts of its Los Angeles operations to New York, where Western’s parent company is located.

Speculation about a possible headquarters shift had been fueled by the consolidation of some back-office functions in New York and a trade industry report that several top Western executives had been reassigned to New York.

In a memo distributed Wednesday to 600 Los Angeles-based employees, Western Initiative Media executives said there are no plans to shift the company’s U.S. headquarters from Los Angeles. Western spokesman Mark Danes on Thursday said that a story in the Myers Report, a New York-based ad industry publication, “is not true. . . . It’s way off base.”

Western Initiative Media has been at the center of the ad industry rumor mill since late last month, when U.S. operations President Michael E. Kassan unexpectedly took a 30-day leave of absence. Western, in a prepared statement released earlier this week, said that Kassan’s absence “has no connection whatsoever to his or the company’s activities on behalf of its clients.”

Executives at Western and its parent company, Interpublic Group of Cos., have declined to comment on trade reports that Western’s financial records are being audited.

Western and Interpublic also declined to comment on a recent Advertising Age report that Kassan was suspended from practicing law in California after a 1995 conviction for grand theft by embezzlement. Kassan arrived at Western in 1996.

State bar records show that the conviction subsequently was reduced to a misdemeanor and expunged from his record. Public records also indicate that Kassan has fulfilled requirements mandated during his suspension and, if he passes a bar test scheduled for later this month, could resume practicing law as early as September.

Advertising industry executives say they’re uncertain what to make of Kassan’s unexpected leave. “You have to wonder if, after the 30 days is over, he’ll be coming back,” said one Los Angeles-based ad industry executive who has worked with Western.

Rumors about a possible headquarters shift to New York have surfaced infrequently since Western founder Dennis Holt agreed to sell the firm to Interpublic in 1994. Speculation intensified last fall when Interpublic combined what was then Los Angeles-based Western International Media with Initiative Media Worldwide of Paris, creating Western Initiative, a media buying company with $10 billion in worldwide billings.

At the time, Interpublic said that Holt would continue to operate the U.S. business from Los Angeles, but that some back-office functions would be combined in order to cut costs. Western recently said that about 30 accounting department jobs are being consolidated in New York.

Western, which places $5 billion worth of client ads in magazines and newspapers, as well as on television, radio and billboards, is one of the few major media buyers located outside New York. Joe Mandese, editor of the Myers Report, said there is increased pressure in the ad industry to operate the company from New York.

Mandese noted that Cheryl Idell, Western’s chief strategic officer, recently relocated to New York, and that, in June, Western named Michael Lotito, a 38-year-old advertising industry executive, as the firm’s New York-based chief operating officer for U.S. business. Mandese believes that “Interpublic has quietly been shifting Western’s headquarters from Los Angeles to New York.”

Advertising industry executives say it is highly unlikely that Holt, now chairman of Western’s U.S. operations, would leave Los Angeles. “Western has always been driven by Dennis Holt,” said a New York-based advertising industry executive. “He’s made Western what it is. He’s been something of an institution in the industry.”

Southern California’s advertising industry pays close attention to rumors about Western because of the firm’s broad reach. Its clients include Walt Disney Co. and, until recently, American Honda’s Acura division.

“The firm’s impact on advertising in Los Angeles has been dramatic and far-reaching,” said one advertising industry executive who, like others interviewed for this story, asked to remain anonymous. “It’s easily the single most powerful player we’ve got.”

Another advertising industry executive described Western as “the firm everyone loves to hate, whether you do business with them or not. They’re simply so powerful.”