MDC Partners considers selling off non-core businesses – Info Advertisement
MDC Partners said it’s looking into possible dispositions of non-core assets or those that “might be more valuable in someone else’s hands” on its second-quarter earnings call Thursday afternoon.
“It’s an ongoing conversation around the table,” CEO and chairman Scott Kauffman said on the call. “When we have something to announce, we will.”
The advertising holding company admitted that “2018 continues to be challenging,” and outlined steps to improve its financial performance. In addition to reviewing its portfolio of agencies, Kauffman said the company is taking actions to protect its profitability and cash flow and investing in talent and strategic offerings in higher-growth areas.
Kauffman said layoffs from MDC’s leadership team last week along with real estate consolidation expenses, cost $2.5 million in 2018, but will deliver annualized savings of $4 million. Those cuts included the holding company’s global CMO Bob Kantor. But “our success as a company and our ability to deliver shareholder value of course has to be focused on more than just cutting costs,” Kauffman said.
MDC’s chief financial officer David Doft added that in the second half of the year, the cost burden of implementing new accounting rules as well as restructuring-related severance and real-estate consolidation expense, which totaled $12 million, will “begin to lift.”
The company said its net new business wins in the quarter totaled $17.1 million, with new work from marketers like Ally, MillerCoors and Fox Networks’ Digital Consumer Group.
MDC Partners reported an organic revenue growth decline of 1.7 percent in the second quarter. Total revenue in the second quarter declined 2.8 percent to $379.7 million versus $390.5 million a year ago.
The company’s earnings Thursday coincided with the news that Crispin Porter & Bogusky, the MDC-owned creative agency, was bringing back Alex Bogusky as a co-founder and chief creative engineer. Ad Age reported the news earlier Thursday.
Kauffman addressed Bogusky’s return on the call, saying that it had been discussed for a couple months. “If you think about where the industry was and where it’s headed and the need to literally redefine what it means to be an agency today, there was such a high level of sympatico of thought that it became clear to me that Alex would be a catalyst — that was true, too, of the leadership team at Crispin Porter & Bogusky,” he said. He said Bogusky’s activities since he departed the agency — which have involved social initiatives and investing in startups — make him relevant to where the industry is headed.
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