SEC Comment Letter for OMNICOM GROUP INC. (OMC) (CIK 0000029989) (OMC) — Jun 13, 2017
OMNICOM GROUP INC. (OMC) (CIK 0000029989)
Date: June 13, 2017 · CIK: 0000029989 · Accession: 0000000000-17-020635
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-10551
Letter
Mail Stop 3720 June 12, 201 7 Philip J. Angelastro Chief Financial Officer Omnicom Group, Inc. 437 Madison Avenue New York, NY 10022
Re: Omnicom Group, Inc. Form 10 -K for Fiscal Year Ended December 31, 2016 Filed February 9, 2017 Response Dated April 28, 2017 File No. 001-10551
Dear Mr. Angelastro :
We have reviewed your April 28, 2017 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing th e requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
7. Segment Reporting, page F -17
1. We note y ou identify your Networks by name on your website. Please provide us the names of each of the five numbered Network s in your response and their respective geographic jurisdictions/ organiza tions as applicable.
2. Given that each Network (or major agency within each Network ) appears to have its respective brand distinction and primary discipline, tell us how this differentiation and respective offering matter to a client in its Network (agency) selection decision.
3. We note in your response to comment 4 that Network s 1 and 2 were legacy from formation while Network s 3, 4 and 5 evolved over time. In this regard, please tell us :
Philip J. Angelastro Omnicom Group, Inc. June 12, 2017 Page 2
a. how agencies get assigned to a particular Network;
b. how much advertising revenue is earned by Network s 1, 2, 3 and 5 ;
c. how much revenue from CRM, PR and Specialty services are earned by each Network; and
d. under what circumstances, how often , and to what extent has your CODM moved a client relationship from one Network to another or to another agency within a Network . Explain to us how this impacts your reporting .
4. You also provided us your aggregation considerations based on Network similarities in terms of their economics, products and services, and distri bution methods . In those respects, we have the following comments .
a. Tell us more in detail the underlying factors and the nature of Network 1’s customers/ contracts to explain why its margin is consistently different from the other Networks.
b. Since ad vertising is the primary discipline of Network s 1, 2 3 and 5, please provide additional details regarding why they appear to be economically dissimilar.
c. Given that the work for a particular client can come from 4 or 5 Network s, tell us how revenue and exp ense associated with a client (contract) is allocated to each of the Network s.
d. Given that you report services and their respective revenues across four disciplines, tell us how you concluded that the services provided under each of these disciplines are similar (for example, explain how you concluded that advertising is similar to CRM).
5. With respect to Network 4:
a. Tell us, in more detail, about its types of services as compared with those of the other Network s which report advertising as their primary discipline.
b. Tell us how you considered Network 4’s practice areas in your aggregation analysis and how material they are in relation to Network 4’s total revenues .
c. Explain to us your specific plans in forming new practice areas within Network 4.
6. Given your notable “wins” of large media accounts, tell us under which reportable discipline are media agencies’ revenues included and how media services are similar (dissimilar) in material respects to that reportable discipline.
Philip J. Angelastro Omnicom Group, Inc. June 12, 2017 Page 3
You may contact Kathryn T. J acobson, Senior Staff Accountant at (202) 551 -3365 or Robert S. Lit tlepage, Accountant Branch Chief at (202) 551 -3361 or me at (202) 551 -3810 with any questions.
Sincerely,
/s/ Robert S. Littlepage, for
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Mail Stop 3720 June 12, 201 7 Philip J. Angelastro Chief Financial Officer Omnicom Group, Inc. 437 Madison Avenue New York, NY 10022 Re: Omnicom Group, Inc. Form 10 -K for Fiscal Year Ended December 31, 2016 Filed February 9, 2017 Response Dated April 28, 2017 File No. 001-10551 Dear Mr. Angelastro : We have reviewed your April 28, 2017 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing th e requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. 7. Segment Reporting, page F -17 1. We note y ou identify your Networks by name on your website. Please provide us the names of each of the five numbered Network s in your response and their respective geographic jurisdictions/ organiza tions as applicable. 2. Given that each Network (or major agency within each Network ) appears to have its respective brand distinction and primary discipline, tell us how this differentiation and respective offering matter to a client in its Network (agency) selection decision. 3. We note in your response to comment 4 that Network s 1 and 2 were legacy from formation while Network s 3, 4 and 5 evolved over time. In this regard, please tell us : Philip J. Angelastro Omnicom Group, Inc. June 12, 2017 Page 2 a. how agencies get assigned to a particular Network; b. how much advertising revenue is earned by Network s 1, 2, 3 and 5 ; c. how much revenue from CRM, PR and Specialty services are earned by each Network; and d. under what circumstances, how often , and to what extent has your CODM moved a client relationship from one Network to another or to another agency within a Network . Explain to us how this impacts your reporting . 4. You also provided us your aggregation considerations based on Network similarities in terms of their economics, products and services, and distri bution methods . In those respects, we have the following comments . a. Tell us more in detail the underlying factors and the nature of Network 1’s customers/ contracts to explain why its margin is consistently different from the other Networks. b. Since ad vertising is the primary discipline of Network s 1, 2 3 and 5, please provide additional details regarding why they appear to be economically dissimilar. c. Given that the work for a particular client can come from 4 or 5 Network s, tell us how revenue and exp ense associated with a client (contract) is allocated to each of the Network s. d. Given that you report services and their respective revenues across four disciplines, tell us how you concluded that the services provided under each of these disciplines are similar (for example, explain how you concluded that advertising is similar to CRM). 5. With respect to Network 4: a. Tell us, in more detail, about its types of services as compared with those of the other Network s which report advertising as their primary discipline. b. Tell us how you considered Network 4’s practice areas in your aggregation analysis and how material they are in relation to Network 4’s total revenues . c. Explain to us your specific plans in forming new practice areas within Network 4. 6. Given your notable “wins” of large media accounts, tell us under which reportable discipline are media agencies’ revenues included and how media services are similar (dissimilar) in material respects to that reportable discipline. Philip J. Angelastro Omnicom Group, Inc. June 12, 2017 Page 3 You may contact Kathryn T. J acobson, Senior Staff Accountant at (202) 551 -3365 or Robert S. Lit tlepage, Accountant Branch Chief at (202) 551 -3361 or me at (202) 551 -3810 with any questions. Sincerely, /s/ Robert S. Littlepage, for Carlos Pacho Senior Assistant Chief Accountant AD Office 11 – Telecommunications