Shop Signs Letter of Intent, Lands Divx
BOSTON–While executives at Arnold Communications worked to figure out which of its offices would handle a $50 million assignment from Circuit City, a Canadian ad agency executive confirmed he had a signed letter of intent to buy New England’s largest shop.
While admitting he is “not optimistic” that a deal will be finalized, Wolf Group chairman and chief executive officer Larry Wolf said last week he had a letter of intent signed Sept. 8 by Arnold chairman and chief executive Ed Eskandarian.
“This letter locks us up until April of 1998,” Wolf said in a telephone interview last week. “I’m not optimistic about our deal concluding. There are some issues that may not be resolved.” Wolf would not comment specifically on what those issues may be.
Arnold chief marketing officer Fran Kelly, who confirmed the negotiations, said, “I absolutely can guarantee that this deal will never happen.” Kelly added that any discussions between Eskandarian and Wolf are now “over and off.” Eskandarian could not be reached for comment by press time.
Wolf Group in Toronto bought Cleveland-based Meldrum & Fewsmith Communications in April. In addition, Wolf Group owns Wolf Advertising in Toronto; Wolf, Mansfield, Bolling Advertising in Buffalo, N.Y.; and Wolf Winterkorn Lillis in Rochester, N.Y.
Adweek reported in June that Eskandarian had signed a letter of intent to sell Arnold to Cyrk in Gloucester, Mass. Eskandarian, 60, who has been candid about his desire to retire from the ad business within the next five years, has maintained he never made any commitment to the sales promotion and fulfillment company. Industry sources have said executives from the two companies never agreed on a price.
Separately, Kelly said Arnold had landed the launch of Digital Video Express or Divx, a new technology that puts movies on digital disks that have a built-in pay-per-view system. The product, which could revolutionize the home video rental market, is being developed by Circuit City with financial backing from a variety of sources, including several Hollywood movie studios.
Peter Hanley, president of Arnold in McLean, Va., helped spearhead the agency’s winning presentation last Monday. “I’ve been doing this 33 years, and while this is not the first time we’ve won the business the same day [as the presentation], it is the first time we’ve won an account of this size so quickly,” Hanley said.
Staffing issues as well as which Arnold office would be tapped to service the account should be determined in the next few weeks, Hanley said.
“We’re trying to sort out the staffing ourselves. We haven’t met with the client, but it will probably be serviced out of both [the McLean and Boston] offices,” Hanley said.
One of the questions being addressed internally is whether the new creative team in Arnold’s McLean office has the level of broadcast advertising expertise needed to handle an account of this size, said an agency executive last week. That team, Flora Nicholas and Paul Gayter, was recently relocated by Arnold from its office in Richmond, Va., to its office in McLean. The creative portion of the Divx pitch was developed by Alan Marcus in Boston.
Arnold beat out Kirshenbaum Bond & Partners, Bozell Worldwide, and Angotti, Thomas, Hedge, all in New York, to win the account. The review was conducted by New York-based consultant Steve Liebmann, who was said to be traveling and could not be reached for comment.
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