To demerge or not to demerge, that is the question the Cordiant
group has purportedly pondered as it returns to financial equilibrium
after the sacking of Maurice Saatchi.
Cordiant is emphatic that there is no question of cutting loose one or
both of its global agency networks, Bates Worldwide and Saatchi and
Saatchi (Campaign, last week).
But senior managers in the network are looking for the decisiveness
Hamlet lacked if the financial health of the group and staff morale are
to be improved.
’You can only firefight for so long,’ one senior manager complains. ’I
see no sign of a recovery, only a complete lack of vision.’
Another former top agency network executive is equally alarmed. ’There’s
considerable despair at Cordiant within the group agencies,’ he
’They feel it’s impersonal and does nothing to stimulate new
Two years ago Mars took its revenge on the group for Maurice’s ousting
by ripping out more than pounds 270 million worth of business. Since
then, under its chief executive, Bob Seelert, the group’s fortunes have
lifted to the point where it has a solid financial base and almost no
Now the group must get its US agencies functioning as the true engine
rooms they ought to be. It’s the huge task facing Jennifer Laing, who
recently switched from running the Saatchis office in London to New York
and must attempt to become the first Brit since David Ogilvy to run a US
Also, Bates Dorland and its Saatchis sister shop in London both suffered
fallow new-business periods last year.
Although Cordiant says it is always looking for ways to ’maximise
shareholder value’, it insists that it has no intention of selling.
Indeed, such a sale would be expensive and difficult, while losing it a
vital source of revenue. In the long term, the Saatchis network alone
could never sustain Cordiant’s claim to be a leading global
communications group alongside Interpublic and Omnicom.
’To achieve a sensible level of profitability the group needs its two
networks,’ Lorna Tilbian, Panmure Gordon’s advertising analyst,
’In fact, the current trend is to have three.’
Industry watchers see Cordiant’s problems as twofold. One is the quality
of its senior management, which some observers believe needs to be
The other is what is seen as the conflicting messages sent to potential
clients by a group that owns one network whose name is synonymous with
classy advertising and another perceived as old and stodgy.
Seelert, however, sees the different networks not as a weakness but an
addition to the diversity of the group’s offering. ’Having such
multiplicity in the networks is probably good,’ he says.
Martin Sorrell, WPP’s chief executive, would certainly begin circling
should the ’for sale’ signs appear. Prevented by his Unilever client
from bidding for Saatchis, which has conflicting Procter and Gamble
business, he is thought to be interested in Bates, particularly because
of its strong operations in the UK, Germany and Australasia. But he
might have trouble convincing the heads of his existing networks, J.
Walter Thompson and Ogilvy and Mather, that the addition of Bates would
not act as a millstone.
Also, it’s debatable whether Bates, described as an alliance of fiefdoms
rather than a network, could survive a sale intact. ’It’s quite possible
that the heads of the best offices would take exception to it being sold
over their heads and would want to buy themselves out,’ an industry
Maurice Saatchi would be unlikely to join Sorrell at any auction,
despite the obvious attraction of returning in triumph to the scene of
Not only would the revelations that followed his sacking make raising
the necessary funds difficult, but he would risk alienating his M&C
Saatchi partners who have no wish to repeat their bitter experiences of
A buyout of Bates by its own management is not impossible, although
Seelert rules it out. The idea is not new and first surfaced when
Cordiant - in its previous incarnation as the Saatchi and Saatchi
group - hit financial problems in the early 90s.
Michael Bungey, the Bates Worldwide chairman, is believed to have
sounded out a number of banks at the time. But the plan fizzled out when
Robert Louis-Dreyfus, the then group chief executive, managed to pacify
the holders of the group’s Europreference shares with a share issue.
’Bungey wants to run Cordiant,’ a former associate says. ’If he can’t he
would like to sit on top of his own worldwide network.’
The complicating factor in any sale, however, would be Zenith, the
group’s media buying division, and its ’poison pill’.
Charlie Scott, Cordiant’s chairman, says: ’Under no circumstances is it
conceivable that we would abandon Zenith. It’s been the focus of our
strategy for Saatchis and Bates and I can’t envisage a situation that
would change that.’
Meanwhile, from his office in Golden Square, a few hundred yards from
where the seeds of his empire were sown 27 years ago, Maurice Saatchi is
doubtless reacting to recent reported events with wry amusement. As a
senior manager in a Cordiant subsidiary puts it: ’Breaking up the group
would be the final irony - and one that Maurice would enjoy.’
CLIENTS SERVED IN ONE OR MORE MARKET
Saatchi and Saatchi Advertising Worldwide
Alcatel, Alsthom, Allied Domecq, Bonduelle, Borden, Bristol Myers
Squibb, CPC, Cadbury Schweppes, Carlsberg, Danone, Groupe, Duracell, Du
Pont, Kodak, Electrolux, Essllor, G-Tech, Grand Metropolitan, Guess Inc,
LVMH, Matsushita, Nethod (Multichoice), Hewlett-Packard, Johnson and
Johnson, Lion, Nathan, LVMH, Novartis, PepsiCo, Pozuelo (Riviana Foods),
Procter and Gamble, Ralston Purina, Samsung, Sara Lee, Seiko, Shell,
Singapore Tourist Board, Sony, Tenneco (Monroe), Tetra Laval, Toyota,
Visa, Walt Disney, Weetabix
P&O European Ferries
Alberto Culver, Ansett, Avis, British American Tobacco, Campbell Soup,
Coca-Cola, Compaq, CPC, Cunard, DHL, DZT (German, Tourist,Association),
EDS, Estee Lauder, Ever-Ready, Gemstar, Goodman Fielder, Heineken,
Hitachi, Hong Kong Bank, Hong Kong Tourism, Jamont, Land Rover,
Mandardin Oriental, Mobil Oil, Nokia, P&O European Ferries, Regaine,
Roche-Nicholas, Shell, Spanish Tourism Board, Spillers, Tchibo, 3M,
Unicef, Warner-Lambert, Wendy’s
Source: Ad Age International.