Sorrell Brushes Past WPP Controversy in Push to Start New Firm
(Bloomberg) -- Martin Sorrell, facing a new wave of controversy about his departure from global advertising powerhouse WPP Plc, is clearly in a hurry to move on.
That’s the message from Sorrell’s first extensive public comments on how he plans to reinvent himself using the shell of a company that he bought into at the end of last month. His plan: build S4 Capital Ltd. into a provider of marketing services and advertising technology, and do it fast.
“The sooner the better,” Sorrell said in an interview in Montreal, where he was speaking at the Conference of Montreal. Certainly something of a business -- with at least one acquisition -- by the end of the year, he said.
The elder statesman of the advertising industry has a lot to prove, after an exit that was swift and shrouded in mystery from WPP. He built WPP -- itself a shell company -- over the course of three decades into the world’s largest provider of advertising and marketing services. Sorrell resigned abruptly in April after WPP launched an investigation into allegations of personal misconduct and misuse of company assets. Six weeks later, he announced his new venture.
Sorrell’s reputation took a fresh hit in recent days with reports, led by the Wall Street Journal, that the WPP investigation centered on allegations Sorrell had used company funds to pay for sex. He has denied the allegations, through a spokesman, and said in the interview Monday that he has signed a confidentiality agreement tied to his departure and can’t discuss the matter.
WPP said it hasn’t disclosed details of the allegation and is prohibited from doing so by data protection law.
The latest revelations come ahead of WPP’s annual shareholder meeting Wednesday, where executive chairman Roberto Quarta is expected to face criticism over his handling of Sorrell’s departure. Proxy advisory firms Glass Lewis and PIRC have recommended WPP investors vote against Quarta’s re-election, criticizing the lack of transparency around Sorrell’s exit.
WPP is also likely to face questions about progress on appointing a new chief executive and how it is reshaping its strategy amid a shifting advertising landscape. WPP shares have lost a quarter of their value over the last year, as major clients like Procter & Gamble Co. and Unilever have cut their marketing spending and investors fret about the rising influence of Facebook Inc. and Google.
While Sorrell’s new venture won’t have the global reach of his former employer, what it does provide is a clearer perspective, Sorrell said, calling the business a clean sheet of paper and “ground zero.” A legacy business like WPP, on the other hand, is more restrictive, he said.
In terms of marketing services, the opportunities are straightforward, given changes that are taking place, according to Sorrell. In his words, that means: faster, cheaper, less bureaucratic, more responsive, more global, less regional, with a total focus on the creative.
Rooting for WPP
Asked if he’ll compete with WPP in his new capacity, Sorrell said his stake in his former employer should dispel any concern.
“I still have 2 percent, so I want to see WPP succeed,” he said. “I can’t believe that a $20 billion company would be worried about a peanut. No offense to peanut farmers.”
Sorrell faces the challenge of building a marketing services company that is fit for the digital age, and said that he’d been looking at “one or two things” in the area of blockchain. The technology has the ability to disrupt the media landscape and “bring benefits to clients and media owners,” he said.
Sorrell was dismissive of commentary linking him with a potential acquisition of WPP’s market research unit Kantar, saying it was “total speculation”.
“I don’t know where analysts get it from, other than them wishing to cause trouble,” he said.
Sorrell said he expects to be involved in S4 Capital for at least five years, as long as his health permits it. He’s currently looking for a CEO for the company, he said.
“At the age of 73 it would be inadvisable for me to believe I can carry on for a long period of time,” he said. “I’ll probably have a five- to seven-year bite at the cherry.”
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