Has anyone read the new James Patterson memoir "Stories of My Life" ?

[anobserver2]

41. Deception #11 in Memoir: Money, and Pages 120-121 - "the fine art of negociating"

There are many reasons why a publicly held advertising agency with a client roster of huge corporate clients
might have the problem of constantly failing to pay out an acceptable sum of money to its stockholders, and why the stock profits are
therefore chronically depressed.

Here are some of those possible reasons:

1) Real estate expenses, such as rent of the office space, are way too high -- so money that would otherwise go to stockholders is instead being used up to pay high overhead costs.

2) Fat salaries of management, especially when there are many layers of management -- so that money that would otherwise go to paying higher salaries to attract top-tier, experienced creative people such as copywriters -- and would otherwise go to stockholders is instead being wasted to overpay a bunch of guys in suits.

3) Some type of kickback or accounting scheme is happening -- so that money that would otherwise go to the stockholders is instead being pocketed under the table somehow, with the financial books covering it up somehow.

Or, here is another reason why stock profits could be continuously depressed:

4) The ad agency has a client who is not a corporation, but rather a government client - and, the government official is corrupt, and is embezzling money, with the help of the ad agency.

Such a client might be saying things like: "Hey, Congress has voted to stop funding the Niceragua Contras, but they still need our help there- so if you are patriotic, then start handing me money so I can get that money to them anyway."

Such a corrupt politician, appealing to a Chairman who himself is a veteran, may then be getting that money handed to him -- and stick the money in his own pocket.

Perhaps a corrupt politician does this because not only is he a corrupt politician, but a corrupt politician without a college degree -- who has been publicly faking a college degree for decades to win votes and get elected and appointed to various government offices.

And that politician knows: he can't make any money in the private sector. The federal FERPA law allows private sector employers to obtain college transcripts - and he fears it is in the private sector where he would be exposed as a fraud for faking a college degree.

So he has to stay in the public sector -- in elected or appointed government office -- where there is no right of journalists or voters to obtain his college transcript under FERPA. And no possible real scrutiny of his educational credentials allowed.

He is thus highly motivated to somehow keep his hand in any cookie jar he can for as long as he can because he can never get a job in the private sector or serve on a board in the world because in these situations his resume fraud of faking a college degree could be exposed.
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J. Walter Thompson's full-page ad on the back of the NY Times Business Section which appeared the day after Dougherty's NYT advertising column description herein on Deception #10, mentioned a roster of the ad agency's clients by name. All were corporate clients. There was no mention of any government client.

But JWT is an ad agency that was founded by: a U.S. Marine. And, the U.S. Marines was a client of the this ad agency for decades, including at the time the 1984 NYT full-page ad was published.

In short, there was an omission in the full-page ad: as there was no mention of this ad agency having a government client.

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At the time this full-page ad came out, there were few analysts on Wall Street paying much attention to the stock prices of publicly held ad agencies. However, the JWT stockholders were very much aware that they, as stockholders, were not receiving much money -- ever. Prior to the 1984 full-page ad, for a decade or so, they were asking -- and year after year they were asking, and then loudly asking, and then VERY loudly asking at annual meetings: WHERE IS THE MONEY FOR ME, THE STOCKHOLDER?


And there never was a good answer.

So, when James Patterson approved the fake ad, and JWT published this fake full-page ad in late November 1984, I believe the hope of James Patterson, and other management, was this:

If this fake ad can generate a lot of positive press for who knows how long, then, maybe more people will buy our stock - and with this increased demand - the stock value will rise - and then maybe we can fork over some money to these VERY angry stockholders who are constantly on our back.

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The result of the 1984 fake full-page ad was lots of positive news article in various media.

And, indeed, someone was looking closely -- very closely -- at the JWT stock and its pathetic chronically low stock profits.

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That person looking very closely at JWT stock and its problems was named Martin Sorrell. He worked for years at another huge ad agency, Saatch & Saatchi, and was a financial analyst, He saw: this ad agency, JWT, has enormous corporate clients - and no profits for its stockholders.

Sorrell had left Saatchi, and created his own small company, called WPP which stood for Wire Plastic Products. They made wire shopping carts and were based in the UK, as Sorrell was British.

He wanted to own an ad agency. He did not own any ad agencies - yet.

So he went to a bank, got lots of money in credit, and now had a "war chest" to buy an ad agency.

In June 1987, he successfully appealed directly to the stockholders of JWT - and offered them a fair and high price for their stock. The stockholders were overjoyed. FINALLY someone was going to pay them some real money for their stock! This crappy stock which wasn't paying these stockholders any money for a decade! FINALLY! HERE IS THE MONEY FOR ME, THE STOCKHOLDER!


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When a 3rd party comes along and pays money to stockholders - over the objections of management, as happened with JWT, because JWT management wanted NOTHING to do with Martin Sorrell -- it is not called a "merger" or a "negociation." Rather, the correct business term is this: HOSTILE TAKEOVER.

It is HOSTILE because MANAGEMENT is NOT involved and there is NO negociation with management. JWT Management, as far as Martin Sorrell was concerned, could: GO TO H*LL.

I believe it was quite clear to Martin Sorrell, who was studying the history of those low pay-outs to stockholders, that JWT was poorly managed financially (and/or had other huge financial problems, such as embezzlement, etc.).

Martin Sorrell did not need JWT management's "permission" to buy JWT. Sorrell bought ALL the stock from the stockholders, who had been very unhappy for a decade. Management told stockholders: DON'T SELL TO SORRELL because management knew they could all be fired under a new boss, Martin Sorrell.

But the stockholders ignored JWT management, and were happy to sell to Sorrell, who again, paid those stockholders a fair and high price.

This event, this HOSTILE TAKEOVER of JWT, was the biggest story in advertising history for the past 100 years in my opinion. Yet, there are people in advertising who probably don't even know what I just told you above because: in advertising, you are really really busy. If it's not happening at your agency, and it does not impact your job, and you are not reading the trades or advertising columns regularly, you just don't know - and don't care. It impacts you not at all.

But in the much broader view of advertising, this HOSTILE TAKEOVER of JWT was an enormous, huge, incredible, mind-blowing story. Consider these two facts:

1) NO HOSTILE TAKEOVER had ever happened to any ad agency before. People did not even believe it could happen because= what are you buying when you buy an ad agency? Only the name of the ad agency and: the people who work there, That's it.

2) So JWT was the FIRST- AND ONLY - USA ad agency in HISTORY to have EVER been taken over in a HOSTILE TAKEOVER. It never happened before June 1987 when Sorrell and WPP took over JWT - and it has not happened since. It likely never will again, because I will guess that some out-to-lunch or missing in action lawyers at ad agencies have suddenly woke up from their slumber or returned from their very long lunch breaks.

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Now, when I read Patterson's 2022 memoir, I expected he would mention: this hostile takeover.

But there is no mention of any hostile takeover in his memoir.

Instead, Patterson pretends there was some type of gentleman's agreement? Some type of friendly merger? Something that he cold stick under his chapter heading of "the fine art of negociating."

There was no negociating with respect to Martin Sorrell's hostile takeover of JWT and JWT management. The only negociating was between Martin Sorrell and the JWT stockholders.

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Martin Sorrell went on to buy other ad agencies, including Oglivy& Mather. But in that deal, Oglivy's management agreed to be bought out by Sorrell. That deal was not a hostile takeover.

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To learn more about what happened to JWT while James Patterson was in management there, and how a little company called WPP took over JWT in a hostile takeover, you can read the following - and when you do, compare it with Patterson's memoir pages 120-121, the only place in his memoir where he mentions Martin Sorrell.

See if you can figure out what James Patterson is talking about. I could not.

Martin Sorrell's WPP hostile takeover of JWT is not mentioned by Patterson, even though:

JWT is the FIRST and ONLY USA ad agency in history to EVER be taken over in a hostile takeover.

https://www.nytimes.com/1987/06/27/business/company-­‐news-­‐britons-­‐new-­‐ bid-­‐wins-­‐jwt.html
https://www.nytimes.com/1987/08/09/business/how-­‐don-­‐johnston-­‐lost-­‐jwt.html
https://www.livemint.com/Companies/aZXfuDlQGtW6ynGo33rLpN/The-­‐day-­‐the-­‐ advertising-­‐industry-­‐changed.html
Hostile Takeover | Ad Age
https://adage.com/article/adage-­‐encyclopedia/hostile-­‐takeover/98710
In June 1987, WPP Group shocked the world. Led by Chief Executive Martin Sorrell, the British company launched the first hostile takeover of an ad agency: JWT. Within two weeks after the initial ...
https://www.mmm-­‐online.com/home/channel/agencies/making-­‐headlines-­‐key-­‐
moments-­‐throughout-­‐martin-­‐sorrells-­‐historic-­‐career/
-June 1987
Sorrell dramatically changed course with a successful hostile £351m bid for J Walter Thompson, the world’s fourth-largest agency and the so-called “university of advertising”. He brushed aside the thinking that hostile takeovers were madness in a personal service industry. He was convinced that he could turn around JWT, beset by internal strife, threatened with client defections and making a pathetic 4% profit on turnover. Sorrell’s experience at Saatchi & Saatchi had taught him that even an averagely efficient agency could manage 12%, a well-run one even more. The Saatchi brothers had previously coveted JWT, but had to back off because of client conflict.
https://www.theguardian.com/business/2010/jul/04/wpp-­‐sir-­‐martin-­‐sorrell-­‐ profile
https://www.mmm-­‐online.com/home/channel/agencies/making-­‐headlines-­‐key-­‐ moments-­‐throughout-­‐martin-­‐sorrells-­‐historic-­‐career/
The deal that announced he had arrived was the $566m takeover of JWT in 1987. "The funniest thing about it was we were in this tiny sort of sub-­‐basement, rather like rats underground, bidding for a company 13 times our size. It was quite amusing."