Media Square (UK)

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Media Square was a UK-based marketing communications group which accumulated a large collection of diversified agencies during the 2000s before collapsing in December 2011. Administrators were appointed and immediately afterwards, all the remaining agencies within the group were acquired by management and staff in a deal endorsed by the group's bankers. What was once a collection of 40 separate agencies had been reduced to just seven by the end of 2012. That collection now operates under the name MSQ Partners.

Media Square began its life as an acquisitions vehicle run by private investors John Butcher, Russell Stevens and Chris Swan. They floated the company on the UK's AIM market in 2000 as a cash shell and pursued a number of unsuccessful investments in the online sector. Following the collapse of the internet economy a year later, the three founders fell out bitterly, and control of the business was seized briefly by Chris Swan.

The group's fortunes finally began to improve in 2002 after it was acquired by West Midlands strategic marketing agency Equanim Group, run by Jeremy Middleton and Graeme Burns. Swan resigned from the group, and Kevin Steeds, formerly a director of marketing services group Incepta, was appointed as the new non-executive chairman. He oversaw a restructuring of the business, and helped Middleton and Burns to raise further funding in early 2003. They used this to launch an ambitious acquisition programme, snapping up mainly distressed regional marketing agencies in Manchester, Leeds and Oxford. The group made what was then its most significant acquisition in 2003 with the purchase of London-based Banc. Originally founded in 1996 by former BT marketing chief Robert Bean as Bean Andrews Norways Cramphorn, that agency built up a modest reputation for itself before it was badly damaged by the loss of several key accounts. Media Square rescued the ailing business and rebranded all its existing agencies under the BANC brand.

A new set of acquisitions commenced in 2004, and included retail agency Hudson Advertising & Marketing in Leeds, Marketplace Design in Oxford, and IAS Group in Macclesfield. Towards the end of the year the group added a set of more prestigious brands with the purchase of London-based direct marketing agency Clark McKay & Walpole, the UK arm of Havas's Arnold Interactive (subsequently renamed Ai London), and another big acquisition, Coutts Holdings, a retail marketing specialist with annual sales in excess of £35m, for which Media Square paid almost £22m. However the London outpost of BANC continued to struggle and that unit was sold in 2005 to Farm Communications, although the BANC brand was retained.

The £55m purchase of Huntsworth's various non-PR businesses at the end of the year was by far Media Square's biggest purchase to-date, tripling the group's size but also saddling the business with large debts. There were two supposed jewels within the acquired portfolio. One was the corporate communications agency Citigate Albert Frank, but it was immediately obliged to change its name to The Gate to differentiate from what had previously been its PR arm Citigate Dewe Rogerson, which was retained by Huntsworth. The other was long-established design agency Holmes & Marchant. Founded in the 1960s, it became one of the country's best-known design agencies in the 1970s and 1980s. It went public at the end of that decade, acquiring other businesses, but was forced to restructure in the recession of the early 1990s. Not surprisingly perhaps, the path forward was far from smooth for Media Square, and digesting this huge collection of disparate businesses proved a considerable challenge.

Radio and newspapers entrepreneur Kelvin MacKenzie joined the group in 2006 as non-executive chairman, but was unable to make a significant dent in the group's huge and complicated operating structure. He resigned in early 2007. Jeremy Middleton resigned as chief executive a few months later. Both roles were inherited by newly appointed executive chairman Roger Parry, former CEO of radio broadcasting and outdoor advertising group Clear Channel (and by then already also chairman of regional newspaper publisher Johnson Press and magazine group Future).

Parry set about restructuring the collection, reducing around 40 separate businesses to just 11 through merger, sale or closure. A number of separate digital agencies including Ai London were merged into Leeds-based agency Twentysix. Among the main sales were UK-based sponsorship agency Karen Earl to Engine Group; and digital adserving agency TangoZebra to DoubleClick. The group agreed to sell The Coutts Group to rival instore agency Bezier.

Issuing a warning in early 2008 that the group's results for the previous year would be disappointing, Parry commented that the company had "gone through a traumatic period of painful self-evaluation and costly restructuring. Following all the acquisitions, Media Square was being held together by bits of string and Blu-Tack. We have now put in place a more robust structure." A few months later, reporting disappointing full year figures he acknowledged that "this business was far, far more screwed up than I thought it was."

In 2010, the group acquired consumer advertising agency CST (formerly Chick Smith Trott). Just over a year later, in early 2011, that united was merged with the London office of The Gate - the former Citigate Albert Frank corporate communications agency acquired from Huntsworth - to form the uncomfortably named CST:The Gate. That was dropped in favour of The Gate London in 2012.

A temporary fix seemed to hold for a few years, but the economic downturn caused new and even more serious problems to emerge in 2011, mainly centering on the group's substantial bank borrowings. In addition, following large losses for the first half, the group announced it would take legal action against smaller rival Porta Communications for what it claimed was a conspiracy to seize control of the business. However, before that could take place, Media Square's bank Lloyds declined to provide urgently needed additional funding, forcing it to call in administrators. In what appears to have been a "pre-packaged" arrangement, the group's agencies were acquired by the management team under the name MSQ Partners for around £11m. The trading operations of the individual agencies were unaffected but ordinary shareholders in Media Square were wiped out. Main creditor Lloyds Bank was itself bought out in 2014 by investor NVM Private Equity, now owner of a significant minority stake in the new MSQ entity.

Last full revision 24th January 2018


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