Media Planning Group has announced a major internal restructure, including the abolition of its board of directors, as rumours abound that its parent company, Havas, is a takeover target.
Under the new structure, the 16-director board is replaced by a new commercial team of six, headed by chief executive Marc Mendoza, who said the previous set-up was not working as a means of taking action on the challenges facing the company.
“There wasn’t much decisionmaking being taken by the board,” he said.
The move comes on the eve of Havas’ financial results being released later this week. Analysts predict that if the results are poor, the French company could be a compelling takeover target for other global agency groups.
A recent report from JMorgan says it is too early to count on Havas’ recovery. The current restructuring taking place within the network carries an executional risk, according to its report published earlier this month, and putting assets up for sale will obscure growth at the company.
MPG has been rattled over the past year by its parent company’s problems as well as the loss of half its billings, in the form of the prestigious Orange account, which moved to Initiative last October.
“If MPG is going to move forward, it has to rely on its staff to take it forward,” said Mendoza, who denied that the MPG agency brand’s days may be numbered and said there would be no redundancies as a result of the restructure.
However, MPG has been reeling since losing France Telecom’s £54m Orange business.
It desperately tried to make up for the loss by pitching for the rival O2 business, currently up for grabs, but was knocked off the pitch list last month.
The coming year will be crucial for the agency and Mendoza said MPG would initially focus on winning medium-sized pieces of business.
He said Havas was committed to building the network, which has 52 offices across Europe.
The new commercial team also includes former joint managing directors Dominic Stead and Marie Oldham, and Mike McElhatton, Simon Sadie and John Mcloughlin.
Each member will manage one of six new groups created in the agency to oversee: client services; people; the MPG network team; trading; new business and marketing; and product development.
The team will meet once a month, instead of the old board’s quarterly meetings. MPG is also in the process of recruiting a head of marketing and new business, in addition to employing a brand manager for the agency.
MPG recently took on Christine James, former managing director at CIA International, as head of its international business, in an attempt to shore up its global position.
Lingerie contract offers welcome support
MPG may have been undergoing major internal plastic surgery as well as being stuck in the middle of its parent company’s financial woes, but it has had a slight uplift after landing the £4m media planning and buying business for Gossard and Dim.
The agency already handles the media planning and buying account for Playtex, which is part of the same Sara Lee Branded Apparel group.
Its brief will include the launch of French hosiery and underwear brand Dim in the UK later this year.
“We’re pleased that our challenging approach to Playtex’s communications strategy has been rewarded by additional business from a blue-chip client like Sara Lee and look forward to developing their exciting plans for 2004,” said MPG chief executive Marc Mendoza.
The news came as a total shock to the incumbent, PHD, which has been handling the business for more than six years. It learned it had lost the business only when called by Media Week.
“The client briefed us three weeks ago and as far as we’re concerned, we’re working on the plans,” said Morag Blazey, managing director of PHD.
Annus horribilis continues for Havas.
It has been a bad start to the year for agency network Havas. Not only did it lose its chairman, Bob Schmetterer, but, this week, had to issue a formal statement denying “unfounded rumours” concerning alleged accounting irregularities.
Speculation is rife in the industry that of all the agency networks, Havas is the most vulnerable to takeover. And as Sir Martin Sorrell has now indicated an interest, how long can it really be before the might of WPP – or, for that matter, Publicis, Interpublic or Omnicom – envelops the mid-range network? Havas recently implemented a £120m reorganisation plan, choosing to concentrate on the three main agencies within the group’s structure – Euro RSCG, Arnold Worldwide Partners and Media Planning Group (MPG).
The restructure was an initiative introduced to ensure Havas became a top-five media network, and included £25m in redundancy costs alone.
This merely compounds the blow of losing swathes of the Orange business across Europe, including the £54m UK account.
MPG is shoring up its UK new business team in the hope of replacing the lost account.
The Havas full-year financial results are out this week. Looks like they could make a depressing read.
This article was first published on Media Week