Interpublic Group, the conglomerate holding company that owns the ad firm McCann Erickson, has emerged as a frontrunner to take a major stake in United Talent Agency, sources said over the weekend.

The news comes after months of quiet discussions that UTA has held with possible investors for a strategic alliance partner or a buyer – including the Gotham ad shop Young & Rubicam as well as the London-based WPP Group Plc holding company, run by ad man Martin Sorrell. UTA has apparently been eager to complete a deal by the end of the year, but sources said that is unlikely at this point.

Back into the company

If the deal goes through, UTA insiders said it would result in 20% of the sale price or joint venture capital being reinvested in the percentery for expansion, and the remaining 80% being divided among the partners in varying percentages.

UTA’s official reason for the move is its desire to develop a worldwide presence by hooking up with a major firm that can exploit its talent. But the company could benefit from an infusion of cash. Like other major talent agencies, it pays its top reps between $2 million and $3 million a year.

Insiders said UTA is doing fine financially, but its business has changed over the past year. “They’ve had to pay younger agents more to placate them,” one source said. “They have been trying to figure out a way to either go public or get bought out.”

UTA reps had no comment.

Sources noted Interpublic looked at UTA seven months ago and came very close to a deal with the talent agency. The talks were apparently driven by Interpublic’s wish to grow its television assets.

Interpublic owns All-American Television, which, in turn, owns Goodson/Todman, producer of syndicated programming and gameshows such as “The Price Is Right.” The first ad agency to go public, Interpublic also owns Western Intl. Media, the largest media agency in the country, which buys for the Walt Disney Co., among others.

If an ad agency buys a talent agency, it would find itself face to face with guild rules that basically state that no production company can own a talent agency. But how such rules may apply to a holding company that also owns an ad agency is unclear.

Y&R and WPP had also expressed interest in the mid-level percenter and were in discussions as late as last week. But both seem less likely with the rise of Interpublic’s interest.

WPP, which has billings of about $18.5 billion, had entered into discussions with UTA that sources said put the percentery’s price at more than $100 million. However, those conversations recently broke down.

Two weeks ago, Young & Rubicam was considered the leading contender, with the ad agency and UTA going so far as to discuss price. UTA partners flew to New York last weekend to discuss those plans with Y&R execs.

Still close

UTA partner Marty Bauer and Y&R exec Ted Bell were college roommates and are still close. But Y&R sources said the company’s interest has waned in recent days.

Involvement with UTA would have fed into Y&R’s overall strategy to get more involved in the entertainment industry. A while ago, Y&R met with NBC to look into the possibility of discussing a broad alliance involving its corporate clients and NBC’s programming, such as advertiser-sponsored shows.

“There really isn’t an interest in purchasing them here anymore,” one Y&R source said. “There is an interest in trying to do business with them.”

This all comes after UTA had hired the investment firm Schroder Wertheim to help explore various funding scenarios.

Young & Rubicam, sources said, had been interested in acquiring a talent agency so that it could use its roster of stars and directors to package commercials and attract major accounts.

UTA reps thesps Jim Carrey, Jean-Claude Van Damme, Sandra Bullock, Anthony Edwards, Janeane Garofalo and Andre Braugher. Other clients include scripters Judd Apatow and Joss Whedon, director-writer Lawrence Kasdan and “Law & Order” producer Dick Wolf.

If a purchase goes through, sources said, the new owner is expected to leave in place the UTA senior partners: Marty Bauer, Jim Berkus, Nick Stevens, Jeremy Zimmer, Gary Cosay and Peter Benedek. Other partners include J.J. Harris and David Schiff. UTA’s TV packages include “Married … With Children” and half of “Mad About You” with the William Morris Agency.

(Gary Levin and Anita M. Busch contributed to this report.)

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