Frenemies: The Epic Disruption of the Ad Business (and Everything Else) (36 page)

Further muddying the succession questions at WPP was the surprise departure in August 2017 of Brian Lesser, the North American CEO of GroupM. The well-regarded Lesser, who assumed that role in 2016, was thought to be a potential successor to Gotlieb and maybe one day to Sorrell. “He was very much on a fast track,” Gotlieb says sadly. But he chose to become CEO of a new advertising and analytics division at AT&T reporting directly to CEO Randall Stephenson.

Why did Lesser leave? A senior WPP executive traced the cause back to the aftermath of Jon Mandel's speech. “Many agency people are dispirited. They call us crooks. . . . .Brian is just the tip of the iceberg."

Unexpectedly, Martin Sorrell became part of the iceberg. On April 14, 2018, the WPP board announced that, after thirty-three years as CEO, Sorrell had resigned when confronted by an allegation of "personal misconduct." Sorrell vehemently denied the allegation. By late spring, the cause remained a secret, as the board and Sorrell agreed to sign "strict NDAs," meaning that they would be silent, provoking a hurricane of rumors.

It seems clear that the board would not have ordered an investigation unless they had reason to believe there were serious infractions. However, the board had said earlier that the "allegations" against Sorrell "do not involve amounts which are material to WPP." And, after he resigned, the board treated his departure as a retirement rather than a termination, allowing him to continue to enjoy stock grants. Gracious? Perhaps. Transparent? About as transparent as Facebook.

Looking back, what is certain is that Martin Sorrell's unexpected departure from WPP blemishes an unusually successful business legacy. A senior WPP executive, saddened by Sorrell's departure, is reminded of famed wrestler Dan Gable: "He had a stellar career, and yet a blemish unfairly marred it. Gable was one of the great wrestlers in college and the Olympics. He was undefeated—until he lost his last match."

Les Moonves's future
at CBS seemed crystal clear. In May 2017, his CBS contract was extended another two years, to mid-2021, when he will be approaching his seventy-second birthday. “I have not come up with anything I like better than what I'm doing now,” he says. “No matter what happens, they can't take what I've accomplished away from me. I think my legacy's been established.”

What wasn't as clear was CBS's future. Believing content is king, Moonves had wanted to find a way to acquire the much larger Time Warner, but AT&T swooped in. “They would have been a good fit for us,” he admits. His eyes were fixed on owning a more profitable television production studio, which was the allure of Time Warner. This helps explain his ambivalence to heed the wishes of Shari Redstone, whose family's National Amusements owns 80 percent of the voting shares of both Viacom and CBS. Shari Redstone wanted the two companies to merge with Moonves as CEO.

Publicly, in 2016 Moonves professed his reluctance. He insisted he was not in a standoff with Redstone over control of the combined companies. “Control was not a very large issue,” he says. Not true. Through his attorney, Martin Lipton
of Wachtell, Lipton, Rosen & Katz, Moonves did in fact demand control. A three-page September 30, 2016, letter from Lipton to Redstone's attorney declared, “an appropriate governance framework” was “critical” if the two companies were to be united. Assurances were needed that the new “management team will have complete and irrevocable authority to manage the combined businesses.” The form of these assurances were contained in nine demands Lipton attached to the last page. Instead of board control residing in the hands of Redstone, it specified that control would reside in the hands of independent directors, three quarters of them truly “independents,” including the addition of all the current CBS directors; Redstone would appoint only two board members. To remove Moonves required “approval by two-thirds of the independent directors.”

Despite her eagerness to combine the companies and lure Moonves as CEO, Shari Redstone was not about to cede her voting control of the company, and the negotiations ended. With media consolidation a fact of life—AT&T buys first DirecTV and then makes a bid for Time Warner; Charter buys Time Warner cable; Verizon buys AOL and then Yahoo; Time Inc. sought and found a buyer, as did MediaLink. And even Rupert Murdoch announced the sale of much of 21st Century Fox to Disney. Tech and telephone companies were sniffing around content companies like CBS. But Moonves said he liked the hand he was holding. In a conference call with analysts, Moonves declared, “We've always said we are self-contained and we like our position.”

Nevertheless, Moonves had an ultimate boss, Shari Redstone, and she didn't like his position. She and the Viacom board were stunned when Rupert Murdoch announced the sale in December 2017 of most of his film and TV studio and other assets to Disney, claiming that Fox lacked scale. They feared Viacom's financial growth has plateaued. Redstone believes a marriage between the weaker Viacom and the more robust CBS offers potential financial salvation, and wanted Moonves to be in charge. But Redstone told associates she would never cede ownership control to Moonves or anyone else.

Into the spring of 2018, Redstone and Moonves negotiated. They differed over the price for CBS to acquire Viacom. They differed over who would be the COO of the combined companies. Perhaps most of all, they differed over whether Moonves or Redstone would control the combined companies. With Shari Redstone unbending, it was possible that the most successful television executive of the modern era might be ousted, just as the most successful advertising executive was.

It has long
been
a goal of Carolyn Everson's to one day be a CEO. Asked about this with a Facebook PR person in the room, she answers, “It's not a goal I think about now. I literally love what I'm doing.” Asked the same question in the summer of 2017 without a Facebook colleague present, Everson candidly says, “I have a mixed answer to that question. Part of me feels as though I have the best job in the world working for a life-changing company and running revenue larger than many Fortune 500 companies. Another part of me says, ‘Is there another chapter for Carolyn Everson?' I don't know.”

“If she wants to get on the CEO track, then she has to step off the track she's on,” her mentor, Michael Kassan, says. “Sometimes she has to take a step back to take a step forward.”

Michael Kassan confronts
many looming questions. Is MediaLink a one-man shop, a company too dependent on his remarkable skills and relationships? “Michael is unique,” Maurice Levy says. “The biggest challenge Michael will have is how to scale. MediaLink is a boutique of artisans, of craftsmen and craftswomen, and I don't know how many Michaels there are on earth.” Kassan demurs. Ascential would not have spent so much money “just for Kassan,” he says. “They saw a real team. We built an extraordinary team. We have over a hundred clients today.” (As we've seen, the press release announcing the sale said two hundred.) “You think I could alone keep a hundred clients happy?”

One of the individuals Kassan is banking on to play a huge future role in the growth of MediaLink is his first chief of stuff, Grant Gittlin. Gittlin believes the resources of their new parent company will provide MediaLink with the scale it needs. “There's a really good reason we should have been sold,” he says. “A service company our size lacks infrastructure. When purchased by a large company, we will benefit.”

Six months after MediaLink announced its sale, Michael Kassan said of his corporate parent, “It's working out well. We have tremendous momentum. They're great partners and they are letting us run our own business.”

MediaLink's parent company hit some turbulence during the June 2017 Cannes Lions Festival. Offended by the steep costs and sometimes Babylonian excesses, Martin Sorrell slashed the number of WPP executives attending by half, to five hundred. He again claimed people feel “ripped off” by the festival, and said that in 2018 they would reevaluate coming to Cannes. Irwin Gotlieb chose not to attend in 2017. His room at the Carlton cost $2,500 a night and he said he was required to pay for ten nights even though he stayed fewer. This and what he said was the total cost for room, food, travel, and entertainment—about
$75,000—annoyed him. What outraged him was the inefficiency of what he called a “a boondoggle. The crowding is not conducive to getting business conducted. You can't get in or out of the lobby of the Carlton.” What was once a celebration of creativity, he believed, had warped into a party. And he was upset that the $63 million the Lions hauled in this year and the money they generated from the 41,170 award entries made “the largest awards ceremony in our business”—and the most prestigious—“a for-profit event. I think as an industry we deserve a nonprofit award,” as is true of the Academy Awards, the Tonys, Grammys, or Emmys. Interestingly, he and Sorrell are not on the same page on the awards, for Sorrell says the primary value of Cannes for WPP is in the awards. “Winning the awards is our number-one objective,” he declared (before WPP won Holding Company of the Year in 2017 for the seventh straight year).

Maurice Levy's successor at Publicis, CEO Arthur Sadoun, also took a shot at the Cannes Lions. On the eve of the 2017 gathering, Sadoun announced that in 2018 none of his employees would attend Cannes or submit entries in any awards programs, and would engage in no other promotional events. Instead, he said, Publicis would invest the savings in Marcel, an internal tech platform connecting and sharing information and talent among Publicis's eighty thousand employees; it would, he hoped, transform their ability to collaborate.

While many Publicis employees were surprised and upset by Sadoun's seemingly impulsive announcement, they weren't as concerned as Ascential's team was. The stock market sent Ascential's stock tumbling on the news. To prevent a fire from spreading, the festival hurriedly assembled a prestigious advisory committee that included Keith Weed and Marc Pritchard. “There have been a lot of discussions this week about the structure of the festival, and we want to create the right Cannes Lions experience for all participants,” said Philip Thomas, who had been promoted to CEO of Ascential Events. Despite the criticism,
festival revenues rose 7 percent in 2017. Nevertheless, this growth fell short of the 18 percent spurt for the festival in 2016.

Michael Kassan stoutly defended his new corporate parent and the festival. In an op-ed commentary in
Campaign US
, an online advertising news publication, he implicitly rebuked his friend Irwin Gotlieb, not to mention Sorrell and Sedoun. The Cannes Lions, he wrote, was not “a giant, rosé-infused party. . . . If you can't extract value from Cannes Lions, you aren't approaching it properly. And if you lost your compass because Cannes looks so different than it used to, that's because our industry is in the midst of transformation.” The Cannes Lions “has been reinvented the same way the industry is being reinvented.”

ALL GOOD.

It wasn't “ALL GOOD” to Martin Sorrell. In the fall of 2017, he escalated his attack on the Cannes Lions. An enterprising
Adweek
reporter got hold of internal WPP e-mails from Sorrell demanding that they withdraw from Eurobest, an advertising conference put on by Ascential. Sorrell also threatened: unless the Cannes Lions streamlined the Cannes conference and reduced costs, WPP might withdraw entirely. A decision would await a summit meeting between Sorrell and Ascential's Duncan Painter.
*

With agencies being squeezed by clients and competitors, Ascential eased their financial burden by announcing major changes for the 2018 Cannes festival. Instead of eight days, the festival would conclude after five; the number of rewards and thus submission costs would be reduced; delegate passes, which had cost more than 4,000 euros, would be slashed to 900 euros; working with the city of Cannes, hotel prices would be frozen and more than fifty restaurants would offer delegates less expensive fixed-price menus. A smiling Arthur Sadoun said Publicis
would be happy to return in 2019. And Martin Sorrell said he was pleased Ascential had agreed to reduce some of what he considered bloated costs, but wanted to see additional changes he chose not to specify.

And what about Michael Kassan's future?

His attitude toward retirement was similar to Martin Sorrell's. “It will never happen,” says his wife, Ronnie. “He can't sit home. He needs to be doing something.”

In truth, Kassan was even more ebullient than normal; the sale of MediaLink lifted a giant burden from his shoulders. I caught a glimpse of that burden the first time I tried to quiz Kassan about his legal travails in California. He insisted he did not want me to record or take notes at this session. It was late in the fall of 2016, months before the 2017 sale of MediaLink. We were in his glassed office with the doors closed and no staff present. He asked that there be no phone call interruptions. Salads waited on the small round table in his office, but he did not eat. As he started recounting the events of three decades ago, he started to sob. He was speechless. With the
ALL GOOD
sign above his head, he confessed to being terribly self-conscious, not certain if people knew of his past and fearful that they did. Not having spoken of this in many years, this buoyant man found it hard to open up. We agreed to confront the subject on the record at a later date. If I wanted to raise it in an e-mail, he asked that I send any communication on the matter to his personal Gmail so it would be private.

In the course of interviews over the next few months, he relived what happened to him in California and its courts, his conviction for embezzlement, his suspension from the practice of law, and the California State Supreme Court's acknowledgment that he made a mistake but did not take money from investors to enrich himself, and his vindication in his battle with the State Bar of California. But always he wondered: Did people know? Did they think he had been an embezzler? Did they whisper about his past?