Alec Mattinson: All eyes on Chime to signal next PR cycle

By Alec Mattinson, prweek.com, Thursday, 01 March 2012 08:00AM

The announcement of Chime Communications' 2011 preliminary results next week will be more keenly anticipated than usual.

The fortunes of the owner of the UK's largest PR business are usually an instructive guide to the state of our industry. But this year, the release is also set to provide more information on the intriguing prospect of Chime chairman Lord Bell leading a buy-out of Bell Pottinger.

News leaked in January that Bell and others were 'pursuing the possibility' of acquiring parts of Chime's PR division. No further news has emerged, but the smart money must be on a deal being thrashed out.

Those in the know suggest that both Bell and Chime CEO Chris Satterthwaite want the deal and that Chime shareholders are supportive. So how significant would a Bell Pottinger 'buy-back' be?

Bell is by no means the only high profile agency boss looking to buy back the agency he founded - Matthew Freud bought back his agency from Publicis just last year.

But the UK comms industry has remained a remarkably stable place for the best part of a decade. Look back five or even ten years at any list of the top UK agencies and most of the same names appear. The same applies to the holding companies themselves.

The break-up of Chime's PR business points towards an industry reaching the end of this cycle of stability - it certainly seems very difficult to imagine Bell now remaining at the helm of Chime.

The million-dollar question remains what this next cycle will look like.

One argument gaining traction is based on the need for agencies to grow into truly pan-global operations or remain fleet-footed niche players.

The same logic arguably applies to the holding companies themselves - with most of the midand small-cap UK-listed marcoms groups suffering huge drops in share price recently.

The sheer scale of global marcoms businesses like WPP have protected them from a significant loss of shareholder faith and enabled them to find cash to fund heavy investments in emerging markets.

A huge challenge remains for those agencies and holding companies that have high fixed costs, but operate on a scale that cannot be called truly global. Many practitioners are evangelical about the global opportunities that remain untapped, but successfully tapping them requires cash. And that is becoming increasingly difficult to find.

Perhaps Lord Bell's latest move adds weight to the argument that growth in this cycle is best managed away from the penetrating gaze of the public markets.

This article was first published on prweek.com