MDC specialized comms shops' revenue down 1.4% in Q1

Organic revenue for the entire holding company dropped 0.9% in the quarter.

Mark Penn
Mark Penn

NEW YORK: MDC Partners’ specialized communications segment posted an organic revenue decline of 1.4% in Q1 to $39 million, the holding company said on Tuesday.

The holding company has a controlling stake in communications shops including Allison+Partners, Hunter Public Relations, KWT Global, Luntz Global, Sloane & Company and Veritas. Its creative firms include 72andSunny, CP+B, Doner, and KBS. The holding company did not break out revenue growth by agency.

During a call with analysts on Tuesday, MDC chairman and CEO Mark Penn said the fortunes for MDC’s PR firms are improving.

"The PR firms housed in our specials communications segment, which for years had been a sinking sector, are showing growth as clients look for more earned media ways to increase growth," Penn said.

In Q1, organic revenue for the entire holding company dropped 0.9% to $328.8 million.

Broken down by geography, the holding company saw Q1 U.S. organic revenue decline 1.7% to $263 million and Canadian revenue drop 3.8% to $22.4 million. However, outside of North America, MDC’s Q1 organic revenue grew 5.4% to $43.4 million.

The financial numbers are the first since Penn, former Microsoft executive and Burson-Marsteller CEO took over as MDC’s chair and CEO in March. Penn assumed those roles after the investment company he founded, Stagwell Group, invested $100 million in MDC. Separately, Stagwell also owns a minority stake in Finn Partners.

"A number of things happened at the end of last year and the beginning of this year that came together," Penn said on a call with analysts, explaining the Q1 numbers. "And it seemed to affect one particular agency and our media operation. Outside those two areas, we are seeing strong new business growth right now and strong pitch activity."

He added that sometimes a number of clients make change decisions at the same time. When that happens, he said, "certain agencies, like ones we have, will take a few months to dig themselves out."

Penn noted that he doesn’t see any "continuing trends" beyond that. Rather, he sees the opposite, he said.

MDC has struggled with high debt and declining revenues, something Stagwell’s investment and Penn’s leadership is meant to address.

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