By Invitation | Prabhakar Mundkur: Rediffusion – Never too late?

04 May,2021

Prabhakar MundkurBy Prabhakar Mundkur

 

“Tomorrow is nothing, today is too late, the good lived yesterday”.

 

 Marcus Aurelius

 

Rediffusion has come a long way since WPP’s Martin Sorrell made a bid to up his 26.7% stake in the agency in the early millennium, which had a tripartite shareholding of WPP, Dentsu (13.3%) and 60% owned by Dewan Arun Nanda and Ajit Balakrishnan.  The two international shareholders holding 40% were strange bedfellows making the once highly regarded agency a bit of an oddity.   The agency touted some of the industry’s best people once upon a time including the late Dr Ashok Bjiapurkar and Kamlesh Pandey who later moved on to script writing in Bollywood. Not to mention many other well-known names like V Shantakumar. Why, even Mohammed Khan was one of the original founders before he went on to start Enterprise.

 

Like many agencies of its ilk, it kept attracting back some its best names in some consultative capacity or the other.  Mr Nanda is known to have had good ties with most of the people who worked for him and that could be the reason.

 

According to the grapevine those days, Nanda might have paid dearly for refusing Sorrell’s offer to increase his stake in the early millennium.  Sorrell was known to be very clear in the ownership patterns of his acquisitions. He always wanted a clear majority and typically the starting point would be at least 51% share before engulfing most of the remaining stake in the shortest period of time.  People those days spoke in hushed whispers that Sorrell had threatened that if he couldn’t increase his stake in the agency, he would pull out its largest piece of business which at that time was Colgate, being a global Y&R account and terminate the Y&R partnership with Rediffusion. Moving global accounts to another agency is not a piece of cake, but Sorrell finally seems to have carried out his threat by moving Colgate to Bates 141, which created a special unit to handle the account, reporting directly to the Y&R global management. This gave credence to what thus far was attributed to agency gossip.

 

Team Colgate was a typical WPP style business unit that that had become Sorrell’s favourite model, a prime example being GTB for Ford.  This ensured that Sorrell had direct control over some of the most important global accounts in the group.  There is a bit of history there, since the agency heads of individual accounts can become quite powerful with time. A great example was Peter Schweitzer at JWT, who by heading the Ford account which once upon a time contributed to almost 25% of JWT’s global revenue, grew too powerful for Sorrell’s liking. When Schweitzer retired as CEO, Sorrell quickly moved Ford from JWT into WPP’s special unit called GTB thereby retaining direct control over this large piece of business.

 

When Colgate left Rediffusion, it was a telling blow.  Losing large accounts didn’t faze Rediffusion. They had lost Airtel in the first decade of the millennium. And after Colgate they it lost the Tata Sons PR business which was placed in their partnership with Edelman to Adfactors.

 

In the M&A business, timing is critical. Both for the buyer and the seller. Rediffusion no doubt was well past its best valuation having waited too long for someone to come along.  But the ego and the resilience of the founders kept it plodding along.  What has Sandeep Goyal really bought into, one is not quite sure. The press release talks of its past glory rather than anything else clearly making it a ‘has been’.

 

So it would be interesting to speculate on what Goyal would do with the agency he has bought.  He would necessarily have to fill the shell with some meat. If one goes by his earlier reputation, he is known to walk into agency pitches with a bag full of advertising campaigns, something that used to shock advertising professionals 20 years ago because it painted a picture of the ‘servile’ model for advertising.  Servility in the advertising business has peaked since then and also contributed to its downfall.

 

The industry did little to continue the legacy of equal partnership and mutual respect with clients.  It needs to be seen however whether the same tactic will work today.  His long-term gameplan of course would be to dress up the bride.  For this, he would need to build adequate value in Rediffusion to attract a global agency for an acquisition.  Of course he can hardly be underestimated. His aggressive business stance is well-known.  As is his passion for hard work, and particularly his extreme dismay at losing.

 

But it may take a while for the once famous agency of yore to re-acquire its earlier halo!  For Rediffusion, Sandeep Goyal might well be its Angel Gabriel, the Arch Angel of Resurrection, the Voice of God and the Bringer of good news.

 

Prabhakar Mundkur is a veteran advertising person, a former agency CEO – in India and elsewhere in the world, a musician, a music producer, a talkshow host, a prolific commentator and a great conversationalist with an infectious laugh. His views here are personal.

 

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