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IT WAS THE LAST OF THE BIG killings in advertising," says Robert
E. Jacoby. He sits in the brightly lit living room of his sprawling ranch
home in Saddle River, N.J., puffing on one of the large cigars he habitually
smokes.
A 5 foot-4 inch man with an affable manner and elfin features, Jacoby
is musing about a deal he consummated in 1986. It made him unprecedentedly
wealthy - at least for an American advertising man - but turned him into
his industry's most prominent outcast "A living symbol of greed,
" Tom Delaney, a senior editor for the trade journal Adweek, put
it. The deal also, arguably as much as any other event in the last 30
years, reshaped the culture of mainstream marketing.
Now, even the 59-year-old Jacoby voices a complaint heard often on Madison
Avenue these days: "A lot of the fun has gone out of the business."
In May 1986, Jacoby sold the world's third largest advertising agency,
the privately held Ted Bates Worldwide, where he had been chairman and
chief executive officer for more than a decade, to the publicly held,
acquisition-hungry British conglomerate Saatchi & Saatchi PLC. The
price, more than $500 million, was five times larger than any previously
paid for an advertising firm.
The deal gained Jacoby a personal fortune of $111 million and turned
100 other Bates employees into instant millionaires. The buyers - two
enigmatic, London-based brothers of Iraqi-Jewish descent named Maurice
and Charles Saatchi - were already famous for parlaying a $40,000 grubstake
in 1970 into an empire of 80 subsidiaries with billings of more than$3.2
billion. With the purchase of Bates, they doubled in size, achieving their
proclaimed goal of becoming the largest advertising firm in the world.
The Saatchis signed Jacoby to a five-year contract to continue as Bates
C.E.O. But within a few months, they humiliatingly replaced him with his
longtime aide and friend, 53-year-old Donald M. Zuckert, whom Jacoby had
demoted to an administrative position only two weeks earlier. Ten months
later, the Saatchis merged Bates with another firm, Backer & Spielvogel.
After 46 years of business, Ted Bates Worldwide ceased to exist.
In an industry so dependent on perception, rumor assumes great power.
Thus, as people tried to make sense of the turmoil, a wave of gossip did
more damage to Jacoby's reputation than did his firing. Jacoby had run
a ruthless, self-indulgent autocracy, people said; he had sold out his
firm to the British to make himself rich; worst of all, he had antagonized
clients, including the Saatchis' biggest advertiser, Procter & Gamble,
and his own largest client, the Mars candy company, run by Forrest E.
Mars Jr., its domineering and eccentric co-president.
The truth of the rumors mattered less than what they showed about the
Ted Bates agency: a once close-knit group of executives had, within the
space of a few years, become so torn apart that they were calling each
other names on the street.
But the drama, dubbed "Macbates" by the trade magazine Advertising
Age, transcends the fate of any single agency. The Bates deal and other
so-called "megamergers" have put the entire ad industry on the
defensive with its main customers. The consumer-products companies that
pay for mainstream advertising have fired their newly merged agencies
rather than allow them to handle accounts for bitter competitors simultaneously,
leading to as many as 4,000 layoffs in New York. Worse, in the eyes of
some observers, the mergers have fostered creative blandness, as agencies
with polar opposite personalities are forcibly combined.
"A lot of creative people are disillusioned," says Sandy Berger,
partner in the advertising-oriented employment agency Berger Jacobs Kozuck.
"They entered the business for the joy of doing good advertising,
and now they're working for companies that care more about acquisitions."
The Saatchi brothers, the ad industry's grand acquisitors, have refused
comment on the "Macbates" affair. But interviews with three
dozen Bates employees and clients (most of whom demanded anonymity), plus
Jacoby, Zuckert and a former top Saatchi official, offer a rare glimpse
into the way the secretive brothers do business. Perhaps coincidentally,
the Bates deal also marked the end of a 16-year streak of Saatchi successes.
Their stock declined even before last month's global downturn; several
recent acquisition attempts failed. And in September, arbitrators ruled
that they had fired Jacoby unfairly.
Reminiscing about the year's events, Robert Jacoby is all too aware how
his "big killing" may have doomed a way of life that he and
others in his profession had come to take for granted.
"When we sold Bates," he says, "we thought we were preserving
the company and the jobs. It turned out just the opposite happened. I'm
sure the original Ted Bates is spinning in his grave.
Jacoby shakes his head ruefully and adds: Sorry, Ted."
IF TED BATES IS INDEED SPINNING, HE IS no doubt doing so quietly and
deliberately. A laconic, aristocratic New Englander, he founded his agency
in 1940. With his influential copy chief, Rosser Reeves, Bates promoted
the "Unique Selling Proposition" concept - that commercials
should continually hammer home only one concrete promise about a product.
Thus, under Bates, M & M's have melted in your mouth, not in your
hands, since 1954, and Wonder Bread built strong bodies 12 ways for 46
years.
Bates offered stock to dozens of trusted executives, far more than most
ad firms. 'Ted felt spreading the ownership would create a sense of belonging
and anticipation," said Archibald McG. Foster, his successor as C.E.O.
But the agency's founder kept all decision-making power in a separate
class of stock, which he held exclusively.
By the mid-1960's, the steady accumulation of cash had led Bates executives
to invest in overseas agencies. During the 1960's and 70's, as clients
demanded service from Sweden to San Francisco, Bates became Ted Bates
Worldwide, buying dozens of smaller agencies around the world.
Robert Jacoby became Bates's third chief executive officer amidst these
acquisitions in 1973, the year after Ted Bates died, rising from account
executive in less than five years. Jacoby's street-tough brashness (he
regularly used expressions like "hotsy-totsy" and "fess
up," plus a fair amount of profanity) and his cum laude economics
degree from Princeton combined to give him a disarming charm. He could
analyze client problems as astutely as any business-school professor,
while remaining the most regular of guys.
Associates describe Jacoby as a modest and kind chairman, who habitually
helped people through emergencies. Once, when buying another agency, he
insisted that a recently departed executive from that firm, who had cancer,
share in the profits. And he showed a self-effacing wit; in one speech,
he invited Bates stockholders to read the book of corporate minutes. "It
had better be after the meeting, though," he said, "because
I'm standing on the damn book so I can see over this podium."
But Jacoby also revered toughness. His heroes were Generals Erwin Rommel
and George S. Patton Jr., whose fondness for dramatic, decisive maneuvers
he shared. In 1981, he hosted former President Gerald R. Ford plus the
chairmen of the big three auto companies - Chrysler's Lee Iacocca, General
Motors' Roger B. Smith and Ford's Philip Caldwell - at a meeting where
he proposed a united campaign against Japanese imports. A prototype commercial
showed "Patton" star George C. Scott lecturing: "Hey, even
Detroit understands rejection. So they started turning out cars you don't
have to make excuses for..."
Jacoby translated his military obsession into increasingly imperious rule.
Each weekend he labored over blunt memos that appeared first thing Monday
morning at Bates headquarters at 1515 Broadway in Manhattan. One typical
memorandum threatened to, "crush ... ruthlessly" a leak to Adweek
- disturbing phrasing from a man who kept a revolver in his wall safe.
When the board of directors next met, Jacoby dismissed 12 of its 21 members
on the spot.
Jacoby's second-in-command began to chafe under what he considered his
boss's arbitrary harshness. Donald Zuckert, a balding, garrulous and popular
man, had begun at the agency in 1960 as a 25-year-old account manager.
He and Jacoby had worked together on such Warner-Lambert Company accounts
as Trident ("Four out of five dentists surveyed recommend sugarless
gum") and Certs ("It's two, two, two mints in one"). They
also socialized outside the agency, and their wives often vacationed together
while the two men worked.
A lawyer by training, Zuckert negotiated leases and contracts for the
agency's growing stable of acquisitions. In 1983, Jacoby appointed him
president of Bates's New York office, perhaps the most powerful position
next to the chairman's. But Jacoby also relentlessly needled Zuckert,
saying that he wasn't "tough enough." "He would cut you
to ribbons," Zuckert says, "with a very sharp tongue."
Yet Zuckert was drawn into the escalating in fighting among the agency's
top executives as Jacoby - some say heedlessly, others say deliberately
- encouraged his subordinates to fight over who would succeed him as C.E.O.
"It was like living in Rome in 50 A.D.," said one former employee.
"Even if you didn't get stabbed in the back, you slipped in someone
else's blood and fell."
DURI NG THIS PERIOD, Jacoby was concentrating less on creative matters,
staff turmoil or even cultivating clients than on financial controls and
his dream of building Bates into the largest and most profitable agency
in the world. By 1983, Bates was making nearly three times more profit
per dollar of income than any other large agency - a fact that its 300
employee-shareholders reveled in.
A shrewd analyst of advertising trends, Jacoby was more convinced than
ever of the industry's new conventional wisdom, termed "global marketing."
As cultural barriers crumbled, products would find their audiences among
like-minded people worldwide. And as manufacturers expanded internationally,
so would the most successful agencies.
But, although Bates was already billing $3.26 billion annually, Jacoby
worried that a privately held company could not raise enough cash to survive
in the big leagues - especially with several large stockholders, including
himself, due to retire within 10 years, which would cost the agency more
than $150 million to buy back their stock.
Thus, in March 1986, Jacoby announced at a Hawaii meeting of top executives:
"I'm going to sell this company within two years, and I don't give
a damn what anybody says about it."
Unbeknownst to most of those present, Jacoby had already conducted negotiations
with several potential buyers, including Saatchi & Saatchi.
Temperamentally, the tall and reserved Saatchi brothers were polar opposites
to the outspoken Jacoby. Charles, the 43-year-old "creative brother"
and one of the world's premier' modern art collectors, is notoriously
shy. According to a top Saatchi official he once avoided a visitor by
pretending to be a janitor, polishing his office doorknobs. Charles Saatchi
never even met Jacoby. Maurice, 41, the "financial brother,"
instigated the deal.
The Saatchis first became widely known for their audacious political ads
in Britain. Some observers credit their "Labour Isn't Working"
poster, showing a line of unemployed men, with winning the 1979 Prime
Minister's election for Margaret Thatcher. In the early 1980's, they took
their company public on the London Stock Exchange, using the cash to buy
large agencies in England and America. Their $55 million purchase of Compton
Communications brought them lucrative accounts with Procter & Gamble,
America's largest consumer-products company.
In their efforts to build a global marketing empire, the Saatchis often
bid against Jacoby for foreign agencies. But until Maurice Saatchi called
him in1985, Jacoby did not know that the Saatchis craved the Bates international
money machine.
Jacoby's front man in dealing with the Saatchis was his quiet, silver-haired
international agency chief, John A. Hoyne. Hoyne, 49, haggled secretly
with Maurice Saatchi for a year, but not about price. Jacoby wanted $500
million up front; Maurice wanted payments spread out over five years.
Around Christmas, 1985, Jacoby, Hoyne and Maurice met in a London hotel.
When Saatchi made his offer, Jacoby and Hoyne left the room. "Go
up and get my coat and let's get out of here," said Jacoby. Hoyne
went upstairs alone to say goodbye.
The Saatchis licked their wounds by buying several other agencies. But
in April, after failing in another inter-natioanl-agency takeover, Maurice
called Jacoby from London to accept his terms.
They agreed that Bates would remain independent; Saatchi, apparently seeking
stability with clients, insisted that Jacoby and 10 other key executives
sign on for five more years. The deal took less than a week to negotiate.
Jacoby revealed the results at a May 22, 1986 stockholders meeting. After
citing the stock's book value - $390 per share - he showed a slide with
the Soatchis' price, $853.02 per share. The room broke into spontaneous
applause.
There was some grumbling, to be sure. Jacoby not only received $71 million
for his nonvoting shares, but $40 million more for his voting shares in
the agency - the ones most people had assumed had little monetary value.
Some were further upset when Jacoby allowed 30 staff members, most of
them low-level, to buy more than 1,000 shares of stock each - enough to
make many of them millionaires. Jacoby says he would have offered any
employee shares of the company's retained stock; these people simply "got
to me first." However, staffers gossiped that one beneficiary was
a woman friend - a rumor that Jacoby acknowledges having heard but denied
then and denies now.
A month after the Saatchi- Bates announcement, Jacoby was elected chairman
of the American Association of Advertising Agencies, the industry's pre-eminent
trade group. Despite the long-expected honor, his peers were openly critical
of the sale.
"They're just jealous," Jacoby told his wife.
It was more than jealousy, though. The sale prompted the Warner-Lambert
Company - Bates's largest domestic client, with $68 million in billings
annually - to fire the agency in June because Jacoby didn't warn them
in advance and because their archrival, Procter & Gamble, was a Saatchi
client. When the news was broken to the
Warner-Lambert president, Melvin R. Goodes, he first asked, "How
much did Jacoby make?" and then, "What is Procter & Gamble
going to do about this?"
THE WARNER-LAMBERT defection was not the only problem facing Bates.
The agency's creative reputation was in the dumps after years of stringent
cost-cutting and creative-director turnover.
In 1985, Jacoby had brought in an outsider to fix Bates's reputation.
John H. Nichols, a 49-year-old, tall, bespectacled Texan and veteran of
Chicago's creatively renowned Leo Burnett Agency, joined Bates to head
a new, ambiguously-defined "global management group." Immediately,
the newcomer began preaching about reforming the agency and seeking new
business. Zuckert fumed at his presence, scoffing openly and sarcastically:
"New business, right. We never thought of that before."
Zuckert apparently confided his growing resentment to another top-level
executive, Marvin Lawrence Light, 46, a Montreal-born intellectual with
a bottom-heavy body, who lived near Zuckert in Greenwich, Conn.
Larry Light (who did not respond to numerous requests for interviews)
headed the $100 million-plus global account of the Mars Inc. - makers
of Kai Kan pet foods, Uncle Ben's rice and seven of the world's top-selling
candies. He had also cultivated a close friendship with the company's
co-president, Forrest Mars Jr. The super-dedicated Mars appreciated both
Light's strategic repositioning of Snickers candy bars as an adult snack
and Light's ability to bring himself to tears in evocative paeans to Milky
Ways and the
American consumer. A billionaire so frugal that, according to one magazine
report, he takes visiting executives to lunch at Roy Rogers, Dutch treat,
Mars also approved of Light's unpretentiousness. "Larry wears the
same blue suit every day and his buttons are always popping," says
a former Bates employee. "To Forrest, he's a man of the people."
Although Zuckert denies it, two former Bates staffers maintain that by
early 1986,
Zuckert and Light (who did not get along with Jacoby) were spending weekends
in Greenwich plotting their advancement in the agency. On the eve of the
'Saatchi pur- chase, Light staged a one-man coup. He refused to sign his
Saatchi employment contract, thereby threatening the whole deal, until
Jacoby gave him the position of president of Bates International - the
job held by John Hoyne, who had negotiated the Saatchi sale. Jacoby swallowed
his loyalty to Hoyne and made the appointment.
FOUR MONTHS later, after Saatchi auditors approved the final deal, Jacoby
counterattacked. On Wednesday evening, Sept. 3, he dashed off a memo,
handed it to his secretary and left for vacation. When Zuckert and Light
arrived at work the next morning, the memo was waiting on their desks.
One Bates executive recalled hearing dead silence from Zuckert's office
that morning - and then frenzied shouting.
Jacoby left Light his coveted presidency of Bates International, but created
a new, higher position called chief operating officer, and gave it to
Hoyne. Zuckert was
given a relatively powerless "housekeeping" position, vice chairman,
that he had designed for Hoyne four months before; Nichols - Zuckert's
corporate nemesis - replaced him as Bates's New York president. In the
memo, Jacoby cited "the need for an orderly succession plan."
But privately, he suspected Zuckert and Light of plotting to leave Bates
and take the Mars account with them -_ a charge Zuckert denies.
While Zuckert and Light consulted their lawyers, Jacoby spent several
days camping in Colorado, then flew to the American Association of Advertising
Agencies Western Region Convention in Lake Tahoe, Nev., where he told
advertising executives that their industry had lost credibility because
they no longer cared about the quality of their work.
"But no matter whose fault it is," he said in his Sept. 11 speech,
"one thing is certain." A slide appeared above his head with
the homily-. "Whether the jug bumps the stone or the stone bumps
the jug, it's bad for the jug."
Jacoby didn't know it at the time, but his management reshuffling had
brutally bumped Bates into several stones.
SOMETIME IN EARLY September, Don Zuckert cornered Anthony Simonds-Gooding,
the chairman of Saatchi & Saatchi's communications division, in the
Bates executive-floor men's room and insisted he come to his office. Simonds-Gooding,
reached by telephone at his home in London, says that Zuckert told him
only that "the new appointments weren't being well-received and that
he and Light were very disaffected.
But Zuckert says he also told Simonds-Gooding that Jacoby "was drinking
excessively" and that his last-minute grants of stock "received
notoriety that whipped through the halls like crazy." And two former
staffers say that after the 10-minute private meeting, they heard Simonds-Gooding
asking people if rumors about Jacoby's drinking and lax work habits were
true. (Jacoby denies excessive drinking. "I had to drink to be successful
in the advertising business," he said. "But I don't think you
would find anybody who ever saw me drunk and nonfunctional.")
Shortly thereafter, Mau rice Saatchi received a terse phone call at his
London office from Forrest Mars Jr. According to Jacoby, who learned of
the call at his arbitration hearing, Mars told Saatchi: "My good
friend Larry Light doesn't like what
Jacoby's done, and I don't like it when Larry is unhappy. Fix it."
Then he hung up.
Simonds-Gooding tried repeatedly to reach Jacoby during the chairman's
western trip. But when Jacoby finally called back from Lake Tahoe on Wednesday
night, Sept. 10, the Saatchi representative said nothing about the rumors,
nor about the management changes Jacoby had made. "I want to meet
with you to discuss the merger of Bates with Compton," Simonds-Gooding
told Jacob.
Jacoby was stunned; the Saatchis always kept their agencies separate Moreover,
his Bates contract mandated that the agency stay independen. "But
when Jacoby returned to New York, Simonds-Gooding pressed hard to secure
his agreement to a merger - and, Jacoby says, to the elimination of 1,500
jobs throughout the Saatchis' American agencies. "What would I do?"
Jacoby asked.
Simonds-Gooding says he offered him a job "by my side at the corporate
level. He couldn't go on at Bates. because he'd kind of blown it there."
But Jacoby refused.
He still felt secure; his contract gave him control over Bates for five
more years. Nonetheless, on Wednesday morning, Jacoby had the large painting
of himself removed from the lobby on Bates's 27th floor. He wrote a check
for the value of the painting, which he wanted to give to one of his daughters,
and then left for a two-day meeting of the American Association of Advertising
Agencies in Washington. Throughout the day, clerks from other floors gravitated
upstairs to stare at the blank wall and wonder what it meant.
On Friday, Sept. 19, Advertising Age's Washington bureau chief, Steven
W. Colford, intercepted Jacoby as he left the A.A.A.A. conference. "Did
you know you've just been fired?" Colford asked. Jacoby's driver,
meeting him in New York, confirmed it: the Saatchis had appointed I)on
Zuckert C.E.O. of Ted Bates.
The Saatchis sent Jacoby no letter of dismissal - in fact, they are still
paying him a salary - so he returned to work. But nearly everyone hunned
him and reported down the hall to Zuckert. The two men and their wives
had planned to spend Christmas together skiing, but now - to avoid meeting
- the men were, according to an executive, each asking about the other,
"Did he leave for lunch yet?"
Jacoby left Bates for good on Oct. 21, 1986 and sued the Saatchis for
breach of contract. Because the A.A.A.A. requires its chairman to be an
employed agency executive, he resigned his prestigious trade-group post
as well. Within a week, Larry
Light moved into Jacoby's old corner office.
MADISON AVENUE buzzed with reasons why Bob Jacoby had been fired. According
to Simonds-Gooding, "people within the company never seemed to like
the management realignment." Adweek, on Sept. 22, alluded to the
stock gifts, to "racier personal rumors" and to "reports
that the Securities and Exchange Commission would investigate Jacoby."
Worst of all, he had defamed his profession.
"Everyone knows ... that Bob Jacoby got enough money to compete with
the Sheik of Araby...," the president of the .A.A.A., Leonard S.
Matthews, said at the group's annual meeting several months later. "We
may stand today looking more like
hucksters than when Frederick Wakeman wrote the book more than 25 years
ago."
Some of the stories were clearly false. The S.E.C. never planned to investigate
Jacoby's stock transactions. And the Saatchis' complaints about the management
changes have an air of retrospective rationalization; they knew of and
approved them ahead of time. On Aug. 7, Jacoby had informed Maurice Saatchi
of the changes by letter, writing, "Zuckert is a housekeeper and
I would have changed his role whether you bought us or not." On Aug.
19 Maurice replied: "We have not come across anyone quite as dynamic
and determined as you have been ... It is a new experience for us and
a very pleasant one."
And Anthony Simonds-Gooding today maintains that the rumors of Jacoby's
"personal habits" were "never an issue as far as I or the
Saatchis were concerned. Ever."
So why was Bob Jacoby dumped? The answer is simple: power - in the form
of a $17 billion laundry-detergent-toothpaste-soap and potato-chips firm
with $700 million in ad billings annually. Procter & Gamble sneezed,
and the Saatchis caught
pneumonia.
The Saatchis had premised their global expansion on the belief that advertisers
would accept their policy of serving competing companies, as long as the
Saatchi subsidiaries remained autonomous. Thus, during the summer of 1986,
Maurice Saatchi and
Anthony Simonds-Gooding repeatedly and confidently assured P.&G. officials
that Saatchi's Compton and Dorland divisions could represent Procter &
Gamble brands like Duncan Hines baking products, Luvs diapers and Bounty
paper towels, while
their Bates division handled P.&G.competitors like Warner-Lambert
and General Foods.
P.&G. initially appeared satisfied with the assurances. But on Sept.
12 (the day after Jacoby's prescient "stone and jug" speech),'Procter
& Gamble withdrew $85 million worth of business from the Saatchi empire.
The Saatchis couldn't afford to lose Procter & Gamble. If that meant
they could not handle P.&.G.'s competitors, they apparently reasoned,
then there was little reason to keep their subsidiary agencies even nominally
independent, a costly management nightmare. No matter how valuable Jacoby's
profit-conscious approach was to them, the Saatchis knew that he would
oppose any merger. They could not afford to keep him.
WITH JACOBY GONE, SIMONDS-Gooding ordered Bates to resign one of its
clients, the American Cyanamid drug company - at the request of Procter
& Gamble. In June 1987, after months of heated negotiations, Saatchi
& Saatchi announced the merger of its DFS Doriand and Compton subsidiaries.
In July, they revealed that Backer & Spielvogel and Ted Bates Worldwide
would be blended into a single agency ... called Backer Spielvogel Bates
Worldwide.
As its name suggests, the new agency's top, management is dominated by
Spielvogel alumni. Simonds-Gooding denies that Jacoby was fired to smooth
the path for the mergers, which he says the Saatchis had planned "at
the outsel" But Jacoby's contract did call for Bates's continued
autonomy. And Robert V. Goldstein, Procter & Gamble's vice president
for advertising, implied to Advertising Age in July, shortly before he
died in a tragic rafting accident, that P.&G.'s rigid no-conflicts
policy compelled the Saatchis to act. "Once the Bates acquisition
was made," he said, P.&G. executives decided they could
not stand idly by while agencies tried "organizing themselves around
a conflict policy by incorporating different names on different floors
or different buildings or in different cities." While the Saatchi
firms stewed, Jacoby reacquainted himself with an old Princeton classmate
- Frank C. Carlucci, President Reagan's national security adviser - and
began developing a public relations campaign for the Nicaraguan contras.
Ultimately, Jacoby resigned the account because, he told Carluccl "No
advertising can overcome the Iran connection by saying, 'Hey, these contras
are great guys.' In concert with John Hoyne and John Nichols, his prodogies
who also had been ousted from Bates, Jacoby launched two takeover attempts
of his own last summer. In June, his group lost its bid to buy the declining
J. Walter'rbompson, America's second oldest ad agency. The winner, the
British financier Martin Sorrell, had once masterminded acquisitions for
Saatchi & Saatchi. Soitell's company, WPP Group, paid ?00 million
- about $N million more than the Saatchis spent for Bates.
Royne and Jacoby bought stock in prestigious Ogilvy & Mather, but
- according to Jacoby - sold their shares when they learned that Ogilvy's
management didn't want the takeover.
"It would be fun to have something that would get me closer to knocking
off the Saatchis," Jacoby says. "It's easy to do because I can
see these guys are amateurs." On July 15, at his arbitration hearings,
Jacoby and his former friend Don Zuckert
met face-to-face for the first time in nine months. Ironically, it was
the same day that Bates and Backer & Spielvogel merged. "My God,
you've put on weight," said Jacoby, who had heard rumors that Zuckert
was gradually being frozen out from day-to-day management of the firm.
Replied Zuckert (who denies the rumors): "I haven't had anything
to do but eat."
In the long run, the Saatchi brothers may have taken a greater fall
than either Jacoby or Zuckert. On Sept 11, an arbitrator ruled that the
Saatchis had violated Jacoby's contract and ordered a settlement that
Jacoby estimates may net him an additional $5 million. In September, the
Saatchis launched two abortive efforts to buy British banks. After the
second failure, Anthony Simonds-Gooding, who managed their American mergers,
abruptly resigned from the company. In a two-week period in September,
Saatchi stock declined 18 percent on the London Stock Exchange, and then
plunged 39 percent further between Oct. 12 and Oct 26, in the wake of
the international stock market crash. But the Saatchis are not to be mourned.
As their biographer, Philip Kleinman, points out, "No company can
go on growing at a compound rate of 30 percent a year forever." Their
growth, says Kleinman, will probably slow to 15 to 20 percent annually.
Whatever the Saatchis, future, it is clear that the advertising industry
will never return to the clubby style it enjoyed before their arrival
on these shores. The backbone of the business has been New York-based
advertising executives acting as intimate partners to the giant corporations
they serve. Now, with both clients and agencies merged into global bureaucracies,
New York is less and less the center of the ad world and the feeling of
fellowship is diminished.
As Robert Jacoby says. sitting in his living room: "Clients were
partners at one time; they trusted us. They lost that somewhere along
the line." He pauses to puff on his cigar. "And some warmth
went out of the business."
© Art Kleiner
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