Media Perspective: What's the outlook for Aegis as Flynn finds new pasture?

So, after weeks of speculation, it's been confirmed that Doug Flynn is leaving Aegis. Not for the warmth of Sydney and a job at the newspaper group Fairfax, but for another UK job, as the chief executive of the embattled hygiene and security company Rentokil Initial.

Flynn says he's always liked a challenge - and he will get one at his new company, with analysts already predicting he may have to break up the company to fend off predators. He'll be well paid though, pocketing up to £1.6 million a year in salary and bonuses.

The media and research group acted quickly to replace Flynn with Robert Lerwill, a former finance director of WPP and Cable & Wireless and a current non-executive director at Aegis.

But in what kind of state does Flynn leave Aegis? Aegis' last results statement, for the first six months of 2004, generated praise from salivating analysts after revealing operating profits up 17 per cent to £39.3 million.

Flynn's "buy and build" approach was to expand Aegis' market-research business (he created the separate research division Synovate) through acquisition, while attempting to grow the Aegis Media businesses Carat and Vizeum through new business. This seemed a solid enough approach given the buzz surrounding supposedly "high-end" research businesses and the effects of the ad recession on traditional media.

The flaw was that Flynn lost key personnel (namely the French pair of Bruno Kemoun and Eryck Rebbouh) who are said to have felt that Flynn's desire to focus on growing the research operations led to the neglect of Carat.

The creation of Vizeum as the second-string media network is based on sound thinking (a planning-based network that can also handle conflict) but it has yet to win a mega-pitch (though Heinz and Kia Motors were nice wins). Doubters say Vizeum is still too weak in many key markets and is well short of having a global offering. Carat did well enough in 2004, thanks mainly to its capture in the US of the Procter & Gamble planning business, but failed to win Unilever and General Motors in Europe.

Major doubts surrounding Flynn's reign relate to a perceived inability to retain a strong management team around him but the larger problem seems to be the inevitable uncertainty over Aegis' future. As the advertising groups fall one by one, Aegis is almost inevitably mentioned in dispatches as the next to be snapped up.

Groups, including Omnicom, have talked to Aegis in recent years, but the premium attached to the business was felt to be too high. But, as the chief executive of one of the smaller ad groups still standing, Lerwill may find himself organising a sale of the business within the next two years.