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over mouse-dropping
Irked Disney taking its media business to Starcom
By Kevin Downey
The mouse may be wounded but he can still roar and he can still bite. Beware ye who ignore him.
Today the media world will get official confirmation on two pieces of related business that are being heavily gossiped about: Disney is jumping from Initiative to Starcom for its media, and Lou Schultz is out as Initiative's worldwide chairman and CEO.
Both are expected to confirm the account switch.
What will be confirmed as well, if not in so many words, is that Schultz is taking the hit for Initiative's loss of Disney. Schultz is expected to remain with Initiative parent Interpublic Group of Companies in some capacity.
No replacement has been named.
Initiative's loss of the Disney media account, valued at $500 million, comes as a major blow.
Initiative had held the account since the mid-1980s, building itself into what was at one point the world’s biggest media agency as Disney’s billings grew.
Perhaps more troubling for Initiative, though, is that the Disney loss is emblematic of the company's final shift from the highly entrepreneurial culture of founder Dennis Holt to being simply one more piece in the sprawled puzzle that is IPG, which also includes McCann-Erickson and FCB Group, among other agencies.
In the Holt culture, one could not do enough for a client. In the culture that was to emerge under Schultz, say insiders, there seemed to be much more concern with justifying the account's value to the bottom line.
Schultz joined Initiative in early 2000 after serving as vice chairman of Campbell-Ewald and as president and CEO of CE Communications in Warren, Mich.
When asked about his business philosophy at the time, Schultz said, "If we can service an account profitably and effectively, I don’t care whether it’s a million dollars or a hundred million dollars, they deserve our best."
Although it isn’t yet sharing details about its severed relationship with Disney, Initiative has alluded to Disney being an unprofitable piece of business.
Still, it was perhaps Initiative’s most important piece.
During Schultz’s two years at the helm, Initiative lost key executives on the Disney account and dismantled and reformed a department dedicated to the account. It now faces the probable firing of dozens of employees.
While Schultz is expected to remain at IPG in some capacity, his expected departure from Initiative in the wake of the Disney loss leaves the media agency a deflated company scrambling to recover from major losses and failed attempts to win new business.
Initiative, which has $20 billion in global billings, arguably started the trend to unbundle media from creative duties--and launched media into a considerably higher profile in the advertising business when it formed three decades ago.
But the company has recently lost key accounts and failed to win others, like the $700 million consolidation of Unilever’s media business, which went to MindShare last November.
With Initiative out, it will be Starcom’s job to give Disney the attention it demands.
Among other things, Starcom is expected to form a dedicated unit for Disney in the Los Angeles area.
A major consideration of Disney’s when it put its media business into review last year and when it ultimately chose Starcom, revolved around a lack of attention from Initiative, according to people familiar with the account.
Key among its concerns was Schultz’s frequent absence from the company’s L.A. headquarters, which was due at least in part to his commuting between the West Coast and his home in Detroit.
That was a notable departure from the immediate access Disney had to key executives during Holt’s tenure.
Starcom will also have the chance to learn from Initiative’s mistakes. In the past several years Initiative lost the guidance of Holt, who was all but phased out of the company under IPG in the mid-1990s, and of Holt’s successor, Michael Kassan, who left the company and later filed a $63 million defamation of character suit against IPG.
January 15, 2002 © 2002 Media Life
-Kevin Downey is a staff writer for Media Life.
