Desmond and WPP exchange writs in battle over US 'OK!'
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Your support makes all the difference.Sir Martin Sorrell, the chief executive of the advertising giant WPP, who is facing controversy over allegations of corruption at an Italian subsidiary, has a second high-profile legal battle on his hands.
WPP has exchanged writs with Northern & Shell, the media company run by Richard Desmond.
Mr Desmond, whose Northern & Shell Group includes Express Newspapers and OK! magazine, the weekly entertainment title, is suing a WPP company for $5.5m (£3m) after a dispute about the launch of OK! in the US last year.
In the run-up to the launch of an American version of OK!, Mr Desmond appointed Group M, which is owned by WPP, to buy advertising space for the magazine in the US media.
In a writ filed at the High Court in London on Friday, Northern & Shell alleges that as part of the Group M deal, WPP guaranteed that its own clients would place at least 15 pages of advertising in every issue of the weekly magazine. In fact, in the six months after last August's launch, the weekly spend by WPP clients averaged less than the equivalent of one page of advertising. Northern & Shell's legal claim alleges that WPP has therefore reneged on the deal and that the publishing group is entitled to compensation.
Yesterday a spokesman for WPP dismissed Mr Desmond's claims of promised levels of advertising. "No such guarantees were ever given," he said.
WPP said it was no coincidence that Mr Desmond's decision to take legal action against the company had come just one day after the advertising group had filed its own $10m claim against Northern & Shell in the US after it failed to pay for the media-buying services Group M had provided. "On Thursday, Group M filed a legal action against Richard Desmond for non-payment of bills," the spokesman said.
The case will provide Sir Martin with another legal headache at a difficult moment for WPP.
The company has asked Kroll, the corporate detective agency, to investigate the business of Vittorio Benatti, the brother of Marco Benatti, whom Sir Martin fired from an executive position at WPP's Italian operation in January. WPP has since become embroiled in a public feud with its former country manager. Mr Benatti insists that he has been wrongly accused of a conflict of interest over a holding in a company bought by WPP.
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