GLOBAL- Bcom3 has launched Starcom MediaVest Group (SMG) to hold the Leo and MacManus groups' media assets. SMG now ranks among the top three media services holding groups, with global billings of US$16.5 billion.

The media discipline is playing a more prominent role in the advertising process amid growing complexity and fragmentation of media, according to Mr Kevin Malloy, executive VP of SMG international and chief executive of MediaVest North America.

While both media owners and agencies are merging horizontally to enhance their operations, a media agency's size and clout are the keys to competing in an increasingly consolidated landscape. But merely having the size is insufficient; Mr Malloy said it was more important for an agency to have resources and competitive packages.

Three to four media operations will ultimately dominate the global advertising scene, and Mr Malloy said: "We're sure to be well at the top of the placing." "We have the industry's most powerful media assets in Starcom and MediaVest, and when you factor in our alliance with Dentsu, the impact of our combined scale puts us at the top of the global marketplace," said Mr Bob Brennan, SMG's chief operating officer. Asked if SMG would ally with its majority shareholder Dentsu, Mr Malloy said the decision would be up to Bcom3's board level decision-makers in Japan. "How we will operate with Dentsu is restricted to discussions in Japan," said Mr Malloy, who added that it was still in the early days of negotiations. With bundling leading to bigger media budgets, Mr Malloy nevertheless said he didn't forecast a downward spiral in media rates, as costs are determined by the marketplace. In fact, media fragmentation has caused further consolidation among media owners, as many media conglomerates now tend to sell their subsidiary properties all at once. Starcom and MediaVest will merge under the holding umbrella of SMG, and the combined entities will operate under the Starcom brand. However, Starcom and MediaVest will continue to operate independently in North America and the UK, where SMG decided to keep both established entities separate. Starcom and MediaVest are two established, enormous brands in those two markets, where they are conscious of conflicting client issues as well. In Brazil and Puerto Rico, the respective media operations of Leo Burnett and D'Arcy Masius Benton & Bowles will not unbundle from the full agency services, due to the countries' legal restrictions. SMG's existing consortia agreements in markets such as Taiwan, Italy, Belgium, Germany and The Netherlands will continue to operate. Starcom will maintain its partnership with New Wave in Taiwan, while the group will evaluate its consortia deals in other markets. SMG has new plans for the region, and is open to further acquisition to strengthen its services as well. Booming interactive media have forced media agencies to dedicate special services to the 'Net, and Mr Malloy said SMG was looking at developing its Internet services around the world. Since the launch of Bcom3, the three entities - Dentsu, the Leo and MacManus groups - have formed several media ventures. In Korea, a three-way media venture, PDS (involving Phoenix Communications, Dentsu and Starcom) was set up to handle Procter & Gamble's media business. Last year, Starcom and MediaVest formed Quest to pitch for the P&G AOR account and subsequently won the business in China. With these ventures driven by clients' needs, Mr Malloy said the group may use the same strategy again, depending on client and market situation.