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Singleton Tate WPP – the deal that happened 15 years too late

John SingletonWPP’s takeover of STW Communications heralds the end of an era for Australia’s biggest holding group. Simon Canning spoke with founders Russell Tate and John Singleton to get their take on a deal that should have happened more than a decade ago.

STW, Australia’s only genuinely successful publicly-floated communications company, saw its merger with WPP approved this week, cementing a relationship begun after the two companies came together in a rescue deal for WPP’s Ogilvy operations in Australia in the 1990s.

John Singleton, one of the men who built the business, told me a decade after he sold his last shares in WPP the deal was of “little interest” to him, but also admitted he still had little affection for Sir Martin Sorrell who he felt had never had the Australian operation’s best interests at heart.

Tate: Deal should have happened years ago

Tate: “Deal should have happened years ago”

“The Ogilvy deal happened and it was a great deal for both of us,” Singleton said.

“And the JWT deal we rescued as well, and WPP insisted on ‘un-rescuing’ it. It was a crook contract which gave them management control, so we fixed it then they fucked it. And then I left. I haven’t given it another thought.”

The advertising agency launched in the Australian stock market in 1993, capitalising on the boom in investment, as John Singleton Advertising, and in 1997 WPP tapped the group, looking the to improve the local situation of its struggling flagship Ogilvy & Mather agency.

The result was the creation of Singleton Ogilvy & Mather after Singo’s right-hand man, Russell Tate, saw the need for the group to build international links and tap into the money multi-nationals were ploughing into Australia through globally-aligned clients – something Singleton’s had struggled to do as an isolated Australian agency.

Singleton and Tate’s management of Ogilvy turned the business around and, four years later, WPP reached out again and sold 49% of the local operations of its other multi-national agency brand, J Walter Thompson, to Singleton for SOM to manage in a $60m deal.

Tate – the T in what would become Singleton Tate WPP (STW) – told Mumbrella he had looked at the possibility of merging STW with WPP numerous times after John Singleton Advertising first moved in to take over the running of the ailing Ogilvy brand in Australia.

“It seemed to make the most sense after we did the deal to run JWT,” Tate said.

“When I say ‘it should have happened earlier’, on the face of it, commercially, to me and to us it always made sense. Once we had, if you like, established a real commercial association through Ogilvy and reinforced that through Thompson’s – and, to a lesser extent Mindshare, at that stage – further consolidation, with some self-interest, clearly made sense to us.

“WPP had a lot of assets here that were clearly competing with us, with Ogilvy and with Thompson, and we felt we could probably add something to it just by being bigger.

Mike Connaghan, who had become a trusted Singleton lieutenant as a successful group account director at Singleton Ogilvy & Mather, was parachuted into JWT in 2003 as managing director. After two years steadying the ship, he was elevated to CEO of the agency before being named as Russell Tate’s successor of the helm of STW 10 years ago.

But even as the group continued to grow, both organically and through acquisition, Singleton himself grew increasingly unhappy with the direction Sorrell’s influence had taken the business in.

In 2005 he sold half his shareholding as his interests in broadcasting, brewing, thoroughbreds and lingerie grew, and two years later, he finally pulled the pin on his relationship with the business, selling his final tranche of shares for $53m in an off-market transaction some believe had been devised specifically to prevent Sorrell from building on his 14.5% share.

Singo also saved a final spray for Sorrell, telling me in an exclusive interview with The Australian, that WPP had missed its opportunity in Australia.

“It’s fair to say that WPP have done a very poor job in Australia,” Singleton said at the time.

“When he (Sorrell) gives his word it’s not worth two bob. I think Australia for WPP is a missed opportunity, from my point of view.”

Speaking about the capitulation of STW to WPP this week, Singleton reiterated his views, suggesting he felt he could never trust Sorrell.

WPPWith the STW management team, led by Connaghan, now running the combined STW WPP business – which will be rebranded WPP AUNZ – the focus now shifts to the nature of the structure of the business and how the WPP elements of the company – including creative agency GPY&R, media agencies Mediacom and MEC and digital agency VML – will fit into the STW structure.

“Many benefits of this merger rely on our leaders knowing who’s in our new, larger network of businesses, getting familiar with our different strengths and finding new ways to collaborate,” Connaghan said.

“As a priority we’ll be looking for new and innovative ways for our agencies to connect and strengthen ties, and find opportunities to work together where it can benefit clients and people.”

The merger brings opportunities and synergies. Which agencies survive the next round of efficiencies, initially predicted to save at least $15m, will be the acid test for management.

Simon Canning

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