5 questions for WPP CEO Mark Read about the FSG sale | Analysis

WPP has just seen a drop in revenue, with its creative agency division particularly suffering, and global CEO Mark Read is now under scrutiny for the high-profile sale of WPP’s stake in FGS Global, a move that followed criticism from the FGS Global CEO of the restrictions on life at WPP.

Campaigns Sister publication PRWeek sat down with Read to analyze the impact of the sale, address the criticism head-on, and reveal how WPP plans to navigate these troubled waters.

PRWeek: Why are you selling FGS Global when the company is so successful?

Mark Read: Four years ago, together with Roland (Rudd), Alex (Geiser) and the management team, we combined three different companies – Finsbury, Glover Park Group and Hering Schuppener – into a single company. We then supported them in the acquisition of Sard Varbinnen, and the intention was always to pursue an IPO.

We could have done that as part of WPP, but when we acquired KKR we saw an opportunity to accelerate value creation. With Burson and Ogilvy PR we still have two strong PR businesses. They are probably closer to our core offering of corporate and consumer PR than perhaps FGS Global. None of our competitors have a comparable business.

It allows us to focus on our core offering, support Burson and Ogilvy and capture significant value at an attractive price for the business. It is an acceleration of the strategy we started four years ago. It is a great result for WPP shareholders, who have realized more than $500 million in profit from three businesses that were very different when we launched. It was a good strategic move for us (and the business owners) and we got a great price for it.

What do you think of Alex Geiser’s comments on the limitations of operating within a holding company, the fact that WPP always has the final say and the limited synergies with WPP?

I think you will find that it will now be KKR, not WPP, who will have the final say.

When we started working, the plan was always to take the company public and that would have happened in due course, but this really accelerates it for us. Being part of WPP is quite nice. You get out what you put in. There are a lot of benefits of being part of the group that they perhaps haven’t taken advantage of as much as they could have.

Is Alex Geiser right when he says that it is difficult to be an entrepreneur in an agency holding company?

I don’t think KKR will be an easier steward of assets than WPP. If he thought WPP was in charge, it will be interesting to see how he navigates being part of KKR.

How do you view your remaining PR agency portfolio after leaving FGS?

Burson has had a tough time this year because of the Pfizer consolidation, but we’re going to work through it and I think it’s going to be OK. We have a good combination. Ogilvy is well integrated into the creative agency side and Burson has corporate and consumer capabilities. We now have the opportunity to take Burson into more strategic areas and given Corey’s background, that’s a good thing.

Will Burson expand into the areas where FGS operates?

We’re already there. Buchanan has already joined them in the UK and they have ambitions to expand internationally. This will allow us to take Burson a little more strategically into some new areas, which is good.