Listed agencies face staff losses

UK marcoms groups could be set to lose some key staff as share prices slide and incentive schemes are affected, according to industry watchers.

The City
The City

Groups such as Chime Communications, Huntsworth and Next Fifteen have all seen shares tumble by up to 51 per cent over the past year, despite posting impressive growth in profits.

Huntsworth chief executive and founder Lord Chadlington said the continuing share slide, unlikely to correct itself any time soon, brought with it three main problems. ‘First, ­incentives for staff will be hit,' said Chadlington. ‘Second, there is an inability to acquire through "paper" deals. Third, it is demoralising for staff.'

Chime Communications chairman Lord Bell agreed with Chadlington that share prices were likely to continue falling, but that PR would continue to grow. ‘Will we continue growth? Yes. Will our share price rec­over? Eventually. Are we worried? No. Will we control costs? Yes,' he said.

One media sector analyst said market sentiment was unlikely to favour PR-led groups soon, even though the figures were impressive. ‘Marcoms listings are dep­ressed. Even though PR groups make a good case, the market is nervous of the media sector,' he said. ‘It is much easier for investors to ignore PR performance.'

PR stock, he said, was being tainted by lack of trust in the advertising market and marcoms in general. ‘We won't see many acquisitions in this market,' he said. ‘Pricing of companies is difficult. Private firms are highly priced at the moment, which presents an additional problem for listed groups looking to buy.'

The downside for listed groups offers an upside for ­acquisitive private groups, though, which will find ­employees looking for jobs and less competition for agencies that are on the market.
One large private agency owner told PRWeek he would ‘look at senior staff within lis­ted groups and offer them the chance to move' as incentives are cut.

‘All listed groups will have to look at incentive structure,' said Chadlington. Bell echoed his view that listed agencies should keep their heads down and work hard.

HOW I SEE IT

Lord Bell
Chairman, Chime Communications

Chime's share price is a reflection of the volatile and skittish nature of the stock market. However, our business is remarkably stable. We have delivered against expectation every quarter for three years. Right up to 1 July this year.

Lord Chadlington
Chairman, Huntsworth Group

The market is not selective. It won't select a company inside a sector and say ‘that's doing well, we'll back it'. If you have a portfolio of money, you would maybe spend it in tobacco, mining or commodities. But we must get our heads down and battle on. Sentiment will change.

BY THE NUMBERS

50.9% Fall in Chime share price from September to 8 July

42.8% Fall in Huntsworth shares from September to 8 July

34.8% Fall in Next Fifteen shares from September to 8 July

20% Rise in first-half operating income at Chime this year

90,971 Shares Chime directors bought in June to ‘show belief' in group

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.