View from City Road: Saatchi now needs creative credibility

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'Slow and painful' was the City's verdict yesterday on Saatchi and Saatchi's long march back to corporate health. Charles Scott and his predecessor as chief executive, Robert Louis Dreyfus, must be given credit for dragging the bloated advertising empire back from the precipice. The worry is that the troops, exhausted by the campaign, are in no state to take advantage of the recovery in advertising that should be propelling revenues forward again.

Mr Scott admitted that all the costs that can be productively taken out of the business have gone. The only way forward is to reverse the decline in market share that the group has suffered, particularly in the United States. The loss of two big clients at the end of last year highlighted the company's twin problems of failing to win new business while losing existing accounts.

This year's revenues are forecast to be lower, and although the financial position has improved considerably, through cost-cutting and cash-generation, hopes for a dividend, expressed at the time of last year's rights issue, are fading.

The fear is that Saatchi, under the businesslike Mr Scott, is lacking the sort of clear direction that clients like from their admen.

Meanwhile, Maurice Saatchi, the chairman, does not help matters by muddying the waters with hints of buyouts and grumbles about his own chief executive's performance. The City would probably like to see the back of the brothers - investors know that it is Mr Scott, and not the Saatchis, who saved the business. But Mr Scott would then need to convince clients that the company's creative spark was truly firing again.