18 August 2000

The future structure of Zenith, the London-based media planning and buying agency co-owned by Cordiant and Saatchi & Saatchi, is under discussion between the two parents.

Saatchi is in the throes of an agreed takeover by French agency network Publicis [WAMN, 20,22-Jun-00], while Cordiant has already indicated it would be prepared to slim down its stake in Zenith should it be merged with Publicis-owned media shop Optimedia.

Said Cordiant chief executive Michael Bungey yesterday: "Together they would have billings of $14 billion to $15 billion (£9.3bn to £10bn). A 20% to 30% stake would be interesting to us.''

Bungey also denied the recent rumours that Cordiant – currently the world’s tenth largest advertising network – is holding merger discussions with US group True North, although admitting that this would make strategic sense: "Tenth is not … a place we want to occupy on a long-term basis", he observed.

His comments on Zenith and possible merger coincided with the announcement of record interim results. Despite a fall in UK operating margins from 13.1% to 7%, the group overall posted a 66.4% profits increase to £17.8 million for the half-year to June 30. Worldwide margins averaged 8.4% and are expected to reach 11% for the full fiscal; Bungey says the group expects to hit its targeted 14% margin for 2003 ahead of schedule.

Analysts are predicting full year profits of around £58 million as revenues begin to flow from Cordiant’s latest acquisition, the Chicago-based Lighthouse Group.

News source: The Times (London)