Direct Shop Solidifies Big Agency Structure, Dismisses Talk Of Sale
BOSTON--Unable to find the right match among potential suitors and apparently unwilling take the agency public, executives at Bronner Slosberg Humphrey have adopted a holding company organizational model.
The direct marketing shop has long been rumored to be for sale or contemplating an initial public offering, despite persistent denials from both chairman Michael Bronner and chief executive officer David Kenny.
Recent suitors, according to sources, were Plano, Texas-based data processing giant Electronic Data Systems Corp.--likely through its Centrobe unit in Boulder, Colo.--and Cambridge Technology Partners, a global consulting and systems engineering firm in Cambridge, Mass.
Centrobe representative Robert Wientzen, said no talks of any kind have occurred between Bronner Slosberg and any units of EDS, which works with the Boston shop on some General Motors assignments.
A representative from Cambridge Technology said no negotiations with Bronner Slosberg were taking place but declined to say whether the two firms had held talks in the past.
Bronner and Kenny denied holding talks with any companies about selling all or part of Bronner Slosberg's operations. The executives also said taking the agency public is out of the question.
Kenny outlined a plan to operate the shop's three business units--Bronner Slosberg Humphrey, Strategic Interactive Group and Sansome Group--under the aegis of a holding company, which may be christened Bronner Marketing or something similar by year's end.
While there may be some organizational overlapping and sharing of clients, the three units will be operated as separate profit centers, each with dedicated management, account service and creative departments.
Unhindered by central bureaucracy and conflict worries, a three-pronged management structure will allow the agency to grow faster than one oversized agency and allow Bronner Slosberg to maintain annual growth of 25-30 percent, reasoned Kenny.
With more than 800 employees nationwide, Bronner Slosberg projects overall 1998 revenues at $125-130 million, yielding total billings of more than $870 million.
Its largest unit by far is the flagship Bronner Slosberg Humphrey. With offices in Boston and New York, the direct marketing unit has more than 500 staffers and a client list that includes American Express, AT&T, Enron, Federal Express, Seagram and Time-Life.
SIG employs some 200 staffers in its Boston, New York and San Francisco offices, and is one of the nation's largest interactive marketing firms, working for IBM, Hewlett-Packard, L.L. Bean and others.
Sansome Group, launched in San Francisco last month and looking to have 50 staffers by year's end, handles direct marketing chores for Charles Schwab and LA Cellular.
"This segmenting could be in preparation for an initial public offering or a sale" of the entire agency or one of its divisions, said Skip Pile, president of Pile and Co., a Boston-based management consulting company specializing in the communications business.
"It's all about money. It's not a question of if, but when and to whom" Bronner Slosberg will sell, Pile said.
Several New England agencies have changed hands this year, swept up by an industrywide wave of consolidation. Hill, Holliday, Connors, Cosmopulos in Boston joined New York-based Interpublic Group of Cos. in an acquisition valued at around $120 million. Arnold Communications in Boston and Blau Marketing in Wilton, Conn., were gobbled up for $100 million and $72 million, respectively, by Snyder Communications in Bethesda, Md.
--with staff reports