Cordiant players suffer in the dark

There was some unintended irony in Graham Hinton’s inaugural speech as president of the IPA last week. While he dwelt at length (and rightly so) on the need for advertising agencies to ‘get back up the value chain’, his own, Bates, was slithering further down it.

This was not the fault of Hinton, who is widely respected as an agency manager. Rather, it reflects on Cordiant and the continuing instability of its constituent parts. More bluntly, it is difficult to portray yourself as a world-class advertising agency when your holding company has seemingly put you up for sale.

‘Seemingly’ because, as so often, Cordiant’s real intentions have a miasmic opacity about them. Several contradictory rumours, presumably inspired at some level by Cordiant executives, are swirling in London and New York. Rather improbably, there is talk of Zenith being demerged. More plausible speculation has linked Bates with Bozell, which is known to be on the block; in a related variant True North, owner of FCB, is on the prowl. Bruce Mason, chief executive of True North, is certainly in acquisition mode and has had intermittent talks with Bozell; he also has a gap to fill: that left by the deceased joint-venture with Publicis. We also know that Cordiant has not ruled out selling Bates. And that Martin Sorrell of WPP Group would be interested in buying the network if the price were right.

But what does all of this add up to? Only that Cordiant must be truly desperate. The recent return to profitability, and the first dividend paid to shareholders in seven years, mask a fragile recovery. The US market, where both Cordiant networks hold the majority of their business, is still a basket case. Yes, Saatchi & Saatchi has done well to win the 100m Delta account, but what about all the business that has been lost?

Meanwhile, shareholders looking at the stubbornly static margins will have found little to cheer them. The question they must ask is: if Interpublic, Omnicom and WPP are performing so well, why not Cordiant? Not everything can feasibly be blamed on Maurice Saatchi two years later; and we are, after all, in the middle of an advertising boom.

Cordiant’s senior management seems to have no convincing answer to these concerns. Floating the idea of various demergers and then coquetishly withdrawing them because the striking price is not high enough portrays the group as fickle and rudderless. High-level uncertainty demoralises senior staff, as the Christine Walker affair demonstrated.

Cordiant should come clean with its corporate restructuring programme. If it cannot conjure up some serious demerger proposals soon, it should publicly and categorically disavow them. Otherwise its constituent companies will slide further down the value chain.


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