Houston Deal Is Done

Arnold to Absorb Agency's Accounts, Staff BOSTON: The meteoric rise of Houston Herstek Favat was matched only by its fall from grace. The once hot shop beset by scandal and client defections in recent months was bought last week by Arnold Communications for what sources said was an estimated $1.8 million. Agency founder and chairman Doug Houston, who owned 90 percent of the shop, is being cashed out. Neither Houston nor Arnold chairman Ed Eskandarian would comment on the terms of the deal. Houston should be out of the offices within the next few weeks, Eskandarian said. "We're not forcing him out. He'll be there for a little while packing up." Houston will likely start up another marketing-related company or a new media firm, Houston said last week, shortly after the deal was announced. "I'm an entrepreneur." He also plans to spend time at the offices of Hampel/Stefanides in New York, where he is a minority shareholder, and Houston Helm & Co., Los Angeles, where he owns a majority stake. One source said Houston is planning to move to New York to "start over." Houston could not be reached for comment on that subject by press time. Houston Herstek's 50 or so employees are expected to make the move to Arnold. Agency president Lisa Unsworth and creative directors Rich Herstek and Pete Favat will become executive vice presidents. "Eventually, I'm sure we'll have some [layoffs]," said a Houston Herstek executive who requested anonymity. "But we had no excess here. Arnold needed to hire people anyway . . . so no cuts are anticipated, at least not for now." There are no client conflicts and all Houston Herstek accounts, which Eskandarian said billed around $50 million, will transfer to Arnold. Unsworth will serve as group account director, overseeing Converse, Champion International Paper, regional Midas assignments, the Massachusetts Department of Public Health's Tobacco Control Program and other Houston Herstek accounts. Another plus for Arnold could be a proposed alignment with California anti-smoking agency Asher/Gould in Los Angeles. Despite Houston Herstek's sale, a joint venture between Arnold and Asher/Gould is viable, Houston said. The shops would pitch various states' tobacco control initiatives and compete for the federally funded national anti-smoking account expected to go out for bid early next year, Houston said. Houston Herstek is already working with the Food and Drug Administration in Washington, D.C., on a pilot program set to break this month in Arkansas and Florida. Houston Herstek's billings, coupled with recent account wins such as Century 21 and Circuit City's Digital Video Express, will likely push Arnold's billings over the $800 million mark next year. "The deal is advantageous to Arnold" because of the client and staff additions, said consultant Skip Pile of Pile and Co. in Boston. But it "diminishes the [New England advertising] community as a whole. Houston was an aggressive, vital, creative agency. It will be missed."

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Houston Deal Is Done

Judy Warner

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Judy Warner