*Lack of Broker Support Could Doom ALC-Direct Media Merger
Brighton, addressing attendees at the Acxiom/Direct Media 24th Annual Business Mailers Co-op here, said yesterday that Direct Media's employees would define the shape of the company as its parent, Acxiom Corp. Conway, AR, attempts to restructure it.
"I promise you that our intention is to listen to our brokers and our managers and to find a structure that serves them best so that they can serve you best," he said in his welcoming remarks to more than 400 of Direct Media's business-to-business customers. "If that happens to be merging with another list company, like American List Counsel, so be it. If that doesn't make sense for our people, then we're going to work with them so that they help us to find the right structure."
Some people within Direct Media, who asked not to be identified, said that an acquisition by ALC already was doomed because of the likelihood of defections by Direct Media brokers, who are not bound by non-compete contracts. Brokers and managers who left the company could easily take their customers with them.
"This is not like selling a manufacturing plant or a building," Brighton said in a separate interview yesterday. "It's the people who make this company."
Donn Rappaport, president and CEO of ALC, recently presented a plan for combining ALC and Direct Media to a group of 40 Direct Media managers and brokers. Their feedback to Acxiom was both positive and negative, Brighton said.
Some sources speculated that ALC could still acquire part of Direct Media -possibly the consumer list business - and that the business-list division could be acquired by the management of the company. ALC's original offer for Direct Media totaled $75 million, sources said.
Brighton acknowledged that selling part of Direct Media was a possibility, although he said Acxiom was still attempting to fully gauge the response of Direct Media's brokers and managers to the ALC proposal.
"We're waiting for them to communicate back to somebody," Brighton said. "We are currently not discussing any other alternatives."
The non-binding letter of intent for ALC to acquire Direct Media will expire at the end of July, sources said, and Acxiom has agreed to not to discuss the sale with other parties until that letter either expires or is voided by ALC.
One of the potential problems with an acquisition by ALC was that Rappaport could attempt to take the company public. Direct Media has been suffering under the growth pressures of being owned by a public parent, and might be better off being privately owned in today's mature list environment, suggested some people within Direct Media and some of its customers, who also asked not to be identified.