UK ad-man seeks long-term partner for growth and profits

Cordiant has been through a torrid time, issuing three profit warnings and reporting a £270m loss
Click to follow
The Independent Online

For a man who has just had a hip replacement operation Michael Bungey is looking remarkably well. The 62-year-old chief executive of Cordiant Communications appears tanned and relaxed wearing a pale blue, open-necked shirt, grey chinos, deck shoes and no socks. With his white hair and rimless glasses he looks every inch the senior ad-man. In his case his Cordiant empire includes the Bates Worldwide advertising agency and the Fitch design business.

The smooth, polished image is only dented by the hospital crutches by his side. "I feel much better, though it is still a little bit sore," he says of the operation. "I want to play tennis but I don't want to jeopardise anything so I'm doing exactly what I'm told."

We meet at his wonderful 150-year-old house in Wimbledon, south-west London. It is a splendid, six-bedroomed pile, tucked away behind the Royal Wimbledon Golf Club (where he is a member) and Wimbledon Common.

We sit outside on a patio overlooking a mature, secluded gardens, with its well-stocked borders, perfectly manicured lawn and magnificently trained wisteria climbing the white walls. His 16-year-old cat, a British Blue called Gilbert, patrols the area while his Australian wife Darleen brings some coffee before heading out to do an interview of her own. She is working on an autobiography of Arthur Boyd, the Australian painter, and is currently in the research phase. "It is very quiet here though you can hear the cars on the A3 if the wind is in a certain direction," he says of the house. "And you can hear the trains at night, which I rather like," Darleen chips in.

That Mr Bungey looks so calm is extraordinary and not just because he is recovering from a major operation. Cordiant has been put through the wringer in the past seven to eight months and at one stage was even tipped to go bust. The group's revenues were already sagging in the middle of last year as the advertising market slowed down and then came 11 September. The result was a refinancing of Cordiant's debts and huge write-downs on its acquisition binge, conducted at the height of the media boom. Last week Mr Bungey attempted to draw a line under the disastrous episode when Cordiant reported a £270m loss, hit by £224m of goodwill write-downs. It also axed its dividend.

"We haven't lacked for column inches," Mr Bungey says ruefully. "It's quite remarkable that a company our size gets the amount of coverage it does. I guess it stems from the Saatchi days [Cordiant was spun out of the old Saatchi & Saatchi business in 1997]. The people were quite high profile and it seemed liked a sexy industry. And there is always someone out there willing to make a comment."

This is a recurring theme in Mr Bungey's answers, that rivals, ex-workers or old foes are always stirring it up for Cordiant, making life difficult. He can't be talking about the Saatchis, surely, though he and Maurice (Lord) Saatchi no longer speak after the brothers were ousted from the company after a boardroom coup. "I wasn't on the board at the time," he explains. But does Lord Saatchi think he was in on the knifing? "He may do, but life is too short." He has encountered the great man many times since the fall-out of course. "We've been on the same plane and in the same restaurants. But we haven't spoken."

This attitude seems typical of the man. Colleagues describe him as "relaxed" and "polished" with particular skill in handling clients. Critics have questioned whether good operational ad-men necessarily make good chief executives.

Cordiant's knockers have certainly had plenty of material. There were three profits warnings in the last four months of 2001 and Bates Worldwide lost parts of its Hyundai account, one of its biggest. "It's been a pretty torrid period but we were always confident that we had a really solid business," Mr Bungey explains. " I was reading stuff that we might be going bankrupt. That was never going to be the case."

Some analysts believe Cordiant was lucky to resolve its financial difficulties without a rescue rights issue or a firesale of one of its assets right at the bottom of the cycle. "At no time did we think we were under that kind of pressure," he protests."

Questions remain, though, about the wisdom of the deals, particularly Lighthouse, which brought with it Fitch and Financial Dynamics, the City PR firm. Did they really reduce the group's exposure to the advertising market, critics ask. And what about those prices? "I don't regret them at all, though, with hindsight, if you were buying them today you'd definitely pay less money or you wouldn't buy them at all."

And what about the future? Those who know Mr Bungey say his agenda might have changed. Two or three years ago, they say, he would have wanted to pull off a transforming deal, as long as he could run the combined entity. Now, they say, he is more pragmatic and would like to play kingmaker, leading Cordiant to a deal before taking the applause and leaving the stage.

With Cordiant languishing at ninth in the league table of global advertising groups, analysts say Mr Bungey may need a transforming deal, such as a three-way tie up with Havas Advertising and Grey Advertising. "It might make a lot of sense," Mr Bungey admits. "We want Cordiant to be a major player in the global communications business and we might not be able to do that on our own. But right now we are not in discussions with anybody." Then he adds: "I've never been wedded to the idea that I must run the whole show."

In the short term, deals in the US look more likely. "We might need something quite radical," he says, such as merging Bates with another US agency.

As for his personal plans, he is certainly not coasting to retirement. "I want to continue working in this business."

Mr Bungey was not an obvious candidate for the advertising industry. Born in Shepherd's Bush, west London, his father was at one time a lorry driver for British Road Services. The boy Bungey did well in school, winning a place at the local grammar school and then the London School of Economics. From there it was the marketing business straight away with his first job being at Crosse & Blackwell, which had just been taken over by Nestlé. He worked for agencies such as Crawford's and Bensons, then struck out on his own. He became chief executive of Cordiant in 1997.

He is fond of the good life, with homes in The Dakota Building in New York, Sydney and the South of France. He leads an arty existence, attending the theatre twice a week with Darleen. He is also an avid reader and visits the cinema frequently. "You have got remain contemporary."

But he is not ready to go and lie on a beach just yet. "I want this company to achieve the objectives I had for it," he says.

MICHAEL BUNGEY PERSONAL COLUMN

Title: chief executive, Cordiant Communications

Age: 62

Pay: £1.3m (in 2000)

Lives: Wimbledon, plus homes in Sydney, New York and the South of France

Favourite ad campaign: Martini's "Any time, any place, anywhere", devised when he was at Crawford's.

Interests: Tennis, golf, family, theatre, cinema and Queen's Park Rangers FC.

Biggest influences: "James McMenemy. He inspired me to set up in business on my own. He died of a brain tumour on the agency's first day. And my wife. She understands the business and she tells it like it is rather than telling you what you want to hear."

Comments