Sacked Saatchi Brothers May Start Own Ad Agency
LONDON — MAURICE SAATCHI, ousted chairman of Saatchi & Saatchi based in London, is discussing with his brother, Charles, the idea of setting up a rival advertising agency.
After being sacked by the Saatchi & Saatchi board Dec. 16, he hopes to persuade clients of the company to switch agencies.
The companies they must target if they are to succeed in a new venture include British Airways, Mars Inc., the Hackettstown, N.J.-based confectionery group, and Britain's Mirror Group Newspapers. Saatchi & Saatchi also holds the account of Britain's ruling Conservative Party.
Charles Scott, the agency's chief executive, reportedly has said he believes that, even if the brothers do set up a rival company and manage to win the three accounts, it will make only a marginal difference to Saatchi & Saatchi's financial performance. The three companies represent about 8 percent of the agency's 800 million ($512 million) annual revenue.
Meanwhile, Mr. Scott is advising his board to drop ``Saatchi'' from the holding company's name and to choose a new name. The board has told Maurice Saatchi that he has until Jan. 3 to decide whether he wants to stay with the agency in an honorific capacity.
News of his ouster from the world's fifth-largest advertising agency hit Britain like a bombshell, where the Saatchi brothers are linked in the public mind with the rise to power of Prime Minister Margaret Thatcher and the subsequent 15 years of Conservative government.
The two British-born brothers turned the agency into a business icon of the 1980s. Charles Saatchi was regarded in the British advertising industry as the company's creative genius, with Maurice as entrepreneur and strategic thinker. Charles left the company about a year ago.
Maurice Saatchi was a close Thatcher adviser and has since counseled Prime Minister John Major on political strategy. Saatchi & Saatchi coordinated Mr. Major's campaign in the 1992 general election, which the Conservatives won despite forecasts of a Labour victory.
Maurice Saatchi's ouster was masterminded by David Herro, a Chicago-based fund manager with Harris Associates. Mr. Herro is reported to have advised the board that, in the last three or four years, Saatchi & Saatchi's financial performance had been dismal, with shares quoted in 1986 at 5,300 pence down to 154 pence Wednesday.
Herro objected to Maurice Saatchi's proposal that he get a share-option package worth 5 million. He complained to the board that Saatchi had spent hundreds of thousands of pounds on his mock-Tudor country home in Sussex, England. Herro was able to point to the January issue of Architectural Digest magazine containing 10 pages of photographs of the newly refurbished mansion.
Maurice Saatchi did not endear himself to Herro or Scott by describing them publicly as ``bean counters.'' But British advertising-agency sources say Maurice Saatchi's problems go back further. In 1987, at the height of the company's success, the brothers launched a bid for Britain's Midland Bank that, at the time, was widely considered to be ill-judged.
Soon afterward came the 1987 stock-market crash. Two years later, a worldwide recession began eroding profits even further.
None of this did much to curb the brothers' lifestyles. Maurice Saatchi, on a salary of 600,000, later reduced to 200,000, concentrated on his country estates; brother Charles spent millions on building up one of the world's leading collections of contemporary art. The Saatchi Gallery in north London is today one of Britain's leading art institutions.
A former colleague of the brothers describes them as ``undoubtedly brilliant'' but says their ``high-rolling'' social style ``brought them into conflict with American shareholders and company executives who were mainly interested in the bottom line.''
Opinions are divided as to whether Maurice and Charles Saatchi could succeed in launching an agency to match the one they founded in 1970.
Sir Tim Bell, a former colleague who went on to become Mrs. Thatcher's public-relations adviser, says they have ``the talent, experience, and top-level contacts'' to start again.
But a senior advertising executive said it was doubtful whether British Airways would want to switch agencies in the current economic climate. BA officials say they have yet to decide on their future relationship with Saatchi & Saatchi.
A source at Mirror Group Newspapers, publishers of the mass-circulation Daily Mirror, suggests that the company will adopt a wait-and-see approach. If Saatchi & Saatchi's performance is satisfactory, MGN is unlikely to switch, the source said.