The louring cloud hanging over Interpublic-owned agency network Lowe Worldwide has caused the holding company to write-off an eyewatering $310 million (€237.38m; £166.67m), part of a total $608.4m in charges announced earlier this month [WAMN 04-Nov-04].
Lowe, now relocated to its former base in London against the reported wishes of ceo Jerry Judge [WAMN 12-Jul-04], has over the past few years had vast sums lavished on it by IPG in an attempt to transform the former London hotshop into a global network.
According to the UK Marketing Services Financial Newsletter: "Among the problem deals were the Ammirati Puris Lintas merger and the injection of the former Bozell New York agency into the Lowe network."
MSFN editor, accountancy firm boss Bob Willott, believes Lowe's future as a global ad network is uncertain and that the network is a prime candidate for downsizing by its parent.
"It seems increasingly unlikely," he writes, "that Interpublic will wish to maintain Lowe as a global network, rather than retrench to a more manageable operation with a limited number of strategically placed offices."
Willott points out that Interpublic has written off exceptional costs in excess of $3bn since 1999, of which $1.2bn related to overpriced acquisitions.
In the past nine months, the company has been hit by $675m in write-offs, relating both to its now disposed of motorsport business and its investment in the German agency Springer & Jacoby.
"This appalling track record can not continue indefinitely and the sequence of management changes in the last two years has so far failed to restore any confidence," opines Willott.
Data sourced from BrandRepublic (UK); additional content by WARC staff