Can Saatchi go the distance?

Having lost the opening rounds in the Saatchi versus Saatchi battle there is reason to believe that Saatchi & Saatchi plc is recovering its position.

It could be argued that after losing a dozen staff, clients worth about ú85m announcing reviews and experiencing a share price collapse, the situation could only get better for Charles Scott and the Saatchi group.

But his bte noire, Maurice Saatchi, is several weeks away from formally launching his agency (although taking a sick day from Charlotte Street at the moment is read as a direct link to a move to the new venture). Maurice, in his search for an international reach, has received “approaches from the world and his wife”, says his spokesman Sir Tim Bell. Interested parties have included Frank Lowe and Ayer chief Richard Humphreys, who is lined up for a meeting when he arrives in London next week.

But the delay in the formal launch of the new Saatchi agency is the opportunity Scott needs.

“They will spend all their time in court, clients will be neglected but at the end of the day Saatchi & Saatchi plc will be fine,” says one ex-Charlotte Street source. “The Mars review has been rumbling around for 12 months, Dixons appears to be more interested in reducing its fees and only BA looks likely to move because of personal friendship. The majority of the business and the staff have remained in place.”

BA, Dixons, Mars (handled by Bates Worldwide), Toyota and other nervous clients have all been visited.

Scott, and new UK joint chief executive Adam Crozier, met BA’s group managing director Robert Ayling on Monday and were told the agency would be on the pitch list – it will not simply be awarded to Maurice.

Saatchi has created a new inner cabinet to take charge of “specific issues arising from current events”. Its priorities will include defence of existing business, recruitment of senior players – Paul Bainsfair, John Shar- key and Jennifer Laing have been mentioned but none have taken the bait – and litigation.

But the UK accounts for only an estimated seven per cent of worldwide revenues. In reality, a far more urgent problem is what will happen to the group in the US, with or without Maurice.

Saatchi & Saatchi Advertising is underperforming. The New York office, which accounts for almost 25 per cent of worldwide revenue, lost money in 1993 and will announce small profit for 1994 through organic growth, rather than new business wins.

Bates Worldwide has been performing strongly but is the target of takeover speculation in the US where NW Ayer recently suspended a ú240m bid. Its value has been boosted by winning the $100m (ú67m) Lucky Strike ac-count earlier this week. The third member of the group, the Minneapolis-based Campbell Mithun Esty, is also said to be up for sale with a price-tag of $60m (ú40m).

The question being asked is whether the group can survive or whether it makes more sense to rationalise and split it up.

“Bates has been restructuring for 12 months and has turned the corner,” says Wall Street media analyst Karen Ficker of Wasserstein Perella Securities. “Saatchi & Saatchi New York is the cylinder that is not firing. The jury is still out on the reforms introduced by Bill Muirhead (who quit as US chief executive last week) over the past nine months to improve its creative reputation.”

The US agency wants to see growth of more than ten per cent in 1995. In the long run that figure will be more important than the number of people who finally walk out of Charlotte Street.

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