Leo Burnett facing bankruptcy in Greece as media broking deal goes badly wrong

Media broking by agencies is frowned on in many parts of the world and you can see why if the fortunes of Publicis Groupe-owned Leo Burnett in Greece are any guide.

Leo Burnett in Athens has filed for Article 99 protection, the Greek equivalent of Chapter 11 in the US, after it bought a big chunk of airtime from Greek TV station Alter to sell on to its clients.

But Alter filed for bankruptcy in May and its creditors want Burnett to cough up to pay for the airtime Burnett clients clearly don’t want.

Top Leo Burnett Athens executives, chairman Peter Venetis, general manager Katerina Savva and financial director Gogo Skliva have all resigned as directors although they are reported to be still working for the company.

Owner Publicis Groupe has despatched vice president Mathias Emmerich, a former auditor, to Athens to try to sort out the mess. When asked whether Burnett would close in Greece Emmerich said, “I don’t know yet. We are trying to find ways to assess the situation and see what is the next step. It’s an unpredictable, complex situation and we are trying our best to understand what’s going on. I’ll be making repeated visits.”

He surely will, Alter is reckoned to owe about €500m.

Agencies and media agencies always take a risk on their clients (which they try to insure) as, in return for commission, they act as the principal when they buy media on behalf of a client.

But broking is much riskier, the agency agrees to buy the airtime itself in the belief that it can sell it on at a profit. At best the mighty Leo Burnett (and owner PG) will suffer monumental embarrassment.

At worst, should its application for bankruptcy protection be turned down, it will be faced with the loss of many millions of euros, possibly far more than the biggest recent bad debt to come to light, Aegis Group’s £37m write-off of money owned by Spanish industrial group Nueva Rumasa.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.