MDC Partners is a mid-sized North American marketing group, housing a broad portfolio of creative and diversified marketing agencies, now headquartered in the US, but with a modest international network. Operating primarily as a venture capital investor, it accumulated stakes in a collection of separately branded, often single-office agencies, several of which have gradually developed a limited international profile. MDC has become best known for its shareholdings in three admired US-based creative agencies, Crispin Porter & Bogusky, 72andSunny and Anomaly each of whom has also established outposts in Europe. Another - formerly KBS - was merged into Swedish agency Forsman & Bodenfors, with all offices adopting the latter's name. Other subsidiaries include fashion specialist Laird & Partners, Detroit-based Doner and media agency Assembly, as well as a still sizeable collection of other agencies, mostly operating below the radar of the main industry. The key benefit MDC originally offered its partner agencies was an upfront payout for their shares. Beyond that, businesses were left with operational independence, including the freedom not to work with each other to grow faster or more efficiently. Gradually, though, MDC was forced to encourage synergies between its various subsidiaries; but after several years of rapid growth, the group ran into a succession of increasingly serious problems in the 2010s. An SEC investigation into expenses claims filed by founder Miles Nadal led to his abrupt departure in 2015; soon afterwards, the rapid growth curve began to stall, and in 2018 MDC finally launched a strategic review. That led to the effective takeover of the group by industry veteran Mark Penn, who became CEO and controlling shareholder in Spring 2019. As a result, MDC is now partnered by Penn's separate Stagwell Group roll-up, with its own roster of agencies, of which the best known are perhaps Code & Theory, Harris Research and Observatory (formerly CAA Marketing). MDC's combined revenues hit a high of $1.51bn in 2017, before slipping back to $1.48bn in 2018. The group has reported net losses virtually ever year since 2000, with just two annual profits in 2008 and 2017 respectively. The deficit for 2018 was $132m.
Capsule checked 25th October 2019
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Historical profile information for MDC Partners
Adbrands Daily Update 5th Dec 2019: MDC Partners made further moves to consolidate its large collection of agencies. Six of its smaller diversified shops are being realigned to support lead advertising agency Doner. The six in question are Canadian creative agency Union; brand strategy agency KWT Global (previously known as Kwittken); influencer marketing and digital content unit Veritas; creative boutique Yamamoto; shopper marketing specialist 6Degrees; and lifestyle PR agency HL Group. All will retain separate identities but become satellites of newly created Doner Partners Network. "Doner has an over 80-year track record," said its CEO David De Muth. "We have a big client roster. But we don't do everything, and our clients are looking for more and more specialised services. We've already been collaborating with a number of these agencies, so this isn't really a force-fit type thing."
Adbrands Daily Update 14th Nov 2019: With all results now in, Omnicom led the pack for 3Q with organic growth of 2.2%, followed by Interpublic at 1.4% and WPP on 0.7%. Havas was flat at 0.0% ahead of Dentsu -0.1%, Publicis -2.7% and MDC Partners -7.5%.
Adbrands Daily Update 7th Nov 2019: As bad as Publicis Groupe's Q3 organic decline was, the French company can at least console itself with the fact, that MDC Partners' was significantly worse. On an organic basis excluding currencies and M&A, revenues plunged by a shock 7.5% for the quarter, anew record for any of the marketing holding companies. The reported figure was $342.9m, with a net loss of $5.1m. New CEO and controlling shareholder Mark Penn may perhaps be wondering if he made the right decision in buying into the group. Yet he continues to accentuate the positive in his public statements: "We are seeing the results of prudent financial management," he said, "while we cycle through revenue softness in select areas of the portfolio and actively execute against our strategic plan. We've delivered year-to-date growth in adjusted EBITDA and [profit] margin... Net new business also remained strong this quarter... and we continued this momentum into the fourth quarter ... As we continue to move decisively on our plan, we have confidence in our ability to return to revenue growth and continue to deliver improving profit margins." Here's hoping. Yet while a handful of MDC's biggest agencies - like Anomaly, 72andSunny and recently Doner - are grabbing headlines with account wins and strong creative work, we don't hear much about the other 47 agencies - yes, 47! - in the portfolio. Could further mergers or disposals be on the cards?
Adbrands Daily Update 7th Aug 2019: MDC's results for 2Q showed no magic bullet effect from the arrival of new CEO Mark Penn, at least on topline. Negative growth of -2.4% was MDC's worst ever quarterly result, to reported revenues of $362m. Earnings remained solid at $7.3m, but most of the benefits were taken by Penn's Stagwell Group and MDC's preference shareholders. Ordinary investors were left with net income of just $775k.
Adbrands Daily Update 8th May 2019: Investors were relieved to see signs of stability at hard-pressed MDC Partners, following the introduction of new CEO and effective controlling shareholder Mark Penn. There's no magic bullet just yet: organic decline was 0.9%, actually the second worst ever from MDC, and the group reported a net decline of almost $12m in new business in the quarter. However net losses were slashed from $31m in 1Q 2018 to just $2.5m. The group predicted organic growth for the full year at between zero and 2%. It was hardly the best set of numbers, but investors rewarded the company with a 10% hike in its share price. With all results now in, Interpublic was clear champion of 1Q with 6.4% organic growth, followed by Omnicom at 2.5% and Havas at 0.1%. MDC was negative -0.9%, ahead of Dentsu at -1.6%, Publicis at -1.8% and WPP at -2.8%.
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