HHCL & Partners’ long-awaited merger with Sir Tim Bell’s publicly
listed Chime Communications promises to be one of the most intriguing
partnerships of recent years (Campaign, last week).
Financed by WPP, which takes a 29.9 per cent stake in the enlarged
Chime, the deal will make millionaires of the five founding partners -
Rupert Howell, Axel Chaldecott, Steve Henry, Adam Lury and Robin
Price.
But on top of that it dramatically broadens HHCL’s horizons. In one
swoop, the ten-year old agency gains a public relations sister (Lowe
Bell), an international network and public status, all without upsetting
its independence or that of its subsidiaries, the HHCL Brassiere and In
Real Life, or its joint venture, Michaelides & Bednash. Howell and
Price, meanwhile, realise their ambitions to run a public company,
joining the Chime board, with Howell becoming joint chief executive
alongside Chime’s deputy chairman, Piers Pottinger.
Rupert, over the past two years you’ve considered several options for
HHCL. Why go for this one?
RH As an agency we were too small to float. But we weren’t interested in
offers from existing advertising networks to fold us into their
operations.
The key was to preserve the independence of our brand and operation.
How did the three parts come together?
RH An offer has been on the table forever from Martin (Sorrell, WPP’s
chief executive). Tim and I had our first serious conversation
two-and-a-half years ago, although he’s been my mentor for 14 years
(when I started HHCL, I asked his advice).
TB We’ve spent ten years building up a successful public relations
business and we wanted to work with an equally successful advertising
agency: HHCL.
As for WPP, I worked with Martin Sorrell for seven years at Saatchi &
Saatchi. I know him extremely well.
RH Without Martin we would have done something but obviously it wouldn’t
have been the same. It would have been done in two stages. Martin made
sure we did it, when we did it and how we did it.
But Rupert, why not reverse into a shell backed by WPP? What does Chime
offer HHCL?
RH We wanted to merge with someone who is our equal which we could learn
from. It’s consistent with everything we have been bleating on about
over the past four or five years: clients are going to want more
integrated communications. The best model that existed before was Abbott
Mead Vickers/BBDO.
But with us, advertising is not dominant in the way it is with Abbott
Mead. Tim and I had an opportunity to put together two businesses that
are completely complementary.
TB This is a three-dimensional deal between a successful advertising
agency, a successful public relations company, and - as underwriting
party, but clearly not in control (let me stress that!) - we have WPP,
the most successful marketing communications group in the world. The
combination of advertising and public relations is almost the perfect
formula. Abbott Mead is going through the process of acquiring public
relations companies.
We don’t need to.
RH Chime is an experienced public company, a well-oiled machine. So we
can carry on doing what we do well: advising clients. Also Lowe Bell
deals with 500 clients at the highest level. It’s a ready-made
business-building opportunity.
Why was an international network so important for HHCL?
RH Now, we can tick the box that says full-service international
network. Our relationship with the network will vary client by
client.
With some clients I can imagine the network being contracted to us, in
others it might have a direct relationship with the client.
What are HHCL’s international ambitions? Will you open offices in other
markets?
RH We already have an office in Dublin to service Guinness, but it’s
literally just an office. At the moment there is no need for more.
Increasingly, clients are interested in a centralised creative resource
but they need market information, adaptation and intelligence, market by
market. If a client required our services in New York we could do that
through one of WPP’s networks.
So, Tim, you’re back in advertising
TB No, Rupert is going to run the advertising business. What little I
can contribute is out of date. I’m an elderly figure who remembers
things like OTS (opportunities to see) and column inches.
Are you grooming Rupert to take over?
TB I’m not that old! I find it really offensive when people ask how long
I want to stay. I will continue as chairman. I have never considered
retirement: I’m not at the end of my career but approaching the middle
of it. Contrary to rumour, I’m in good health. And now there’s this new
challenge.
Describe the challenge ...
TB Neither of us has a particularly large share of our existing markets
- Lowe Bell has about 6.5 per cent of the PR market and HHCL is 20th or
21st in the advertising league table. In the next few years we will grow
significantly through organic growth and acquisition.
Are you hoping to pick up business from WPP?
RH We have a choice of networks: we’re not tied to J. Walter Thompson or
Ogilvy & Mather in the way Abbott Mead is tied to BBDO. Business may
come via WPP but it’s more likely to be the other way round. We will
generate opportunities which WPP’s networks will allow us to fulfil. We
have more control over our destiny.
What about conflict?
RH Abbott Mead is inextricably linked to BBDO and can’t do anything that
conflicts with it. Martin Sorrell is pretty good at managing conflict -
JWT and O&M, for example, have conflicting business. And we can use five
networks - O&M, JWT, Conquest, OgilvyOne and JWT Direct.
TB Conflict is like beauty. It’s in the eye of the beholder. It’s an
irrelevant issue.
Are you culturally alike?
RH I’m bemused by criticism over our cultural fit. People like to put us
in boxes, but what’s been brilliant about this is that the more I’ve got
to know Lowe Bell as a company, the more I know we’re in tune.
TB If you go to Rupert’s offices you may think it is rather odd. You may
come here and see conventional offices. But there is no cultural clash.
There is a very interesting relationship which will bear enormous
benefits.
How did staff greet the news?
RH When I told my people on Thursday they cheered. The thing they
worried about was merging with another ad agency and losing our culture
and identity.
They will work for the same brand and company, in the same building, for
the same clients.
So they won’t be working closely with Lowe Bell?
TB We must preserve the independence of the operations - we mustn’t take
away what made them special. There’s no question of us sticking Howell
Henry in the same building as Lowe Bell, for example. We are not going
to effect a merger - we already have had a merger of minds, a merger of
ambition and a merging of our talents.
Why are you changing the name of Lowe Bell?
TB I would prefer not to do it. But Frank (Lowe) has certain rights over
the name Lowe and he’s chosen to invoke those. We will therefore rebrand
the company, retaining the goodwill built up in Lowe Bell but without
creating difficulty for Frank.
Rupert, you and your partners have made oodles of money. Is that what
this is all about?
RH People have said to me, ’You’re going to be rich, why not go to the
beach?’. But I’d get terribly bored after a couple of weeks. I love what
I do. This is a fantastic business and over the next ten years it’ll go
though the most exciting phase in its history. We could quadruple in
size.
TB Yes, they made a lot of money, but more importantly they get a lot of
shares in a company they have a huge influence over. Succeeding in a
public company is a much bigger challenge.
