MDC Partners reported on Thursday organic revenue declines of 1.5 percent and 3.1 percent for the fourth quarter and full 2019 year, respectively.
The company released its results after the market close. MDC's stock had ended the trading day down by 3.6 percent but was rising by 19 percent in after-hours trading.
"We are transitioning from a holder of companies to an alternative to the holding companies," MDC CEO-Chairman Mark Penn said on an earnings call, commenting on the company's ongoing turnaround effort.
As part of that turnaround, which includes working to reduce real estate, Penn said on the call that MDC signed a lease on its new location in New York at One World Trade Center, and 11 agencies in New York City will be moving into that office. Ad Age reported in April 2019 that MDC was looking to exit the holding company’s pricey Manhattan headquarters location at 745 Fifth Ave.
Penn said consolidating these agencies into one office will save the company between $10 million and $12 million annually.
The holding company posted a total revenue decrease of 4.1 percent to $1.4 billion in 2019 and a decline of 3 percent to $382 million in the fourth quarter. MDC also posted net losses of $10.5 million in the fourth quarter and $17 million in 2019. The holding company noted in its earnings report that the net loss of $17 million was still a significant improvement from the loss of $132.1 million in 2018, and was driven by its focus to reduce staff and administration costs.
MDC also forecast organic revenue growth of between 2 percent and 4 percent for 2020.
Penn took the helm of MDC in March 2019 when Stagwell Group—the advertising, PR and data analytics holding company he founded in 2015—took a $100 million equity investment in the holding company. Under Penn, the company has undergone several key changes to tackle the company's $1 billion debt load including through reducing real estate and combining certain capabilities through the bundling of agency brands.
Penn said the reorganization into four "multi-agency networks" allows MDC to "better compete" and enter larger pitches with the likes of the larger holding companies. "I took on the role of chairman and CEO a year ago because I knew this company was nowhere near meeting its full potential," Penn added.
As part of the reorganization, MDC announced an agency network comprising creative shops 72andSunny and CPB; digital brand and experience shop Instrument; strategy and design firm Redscout, and production shop Hecho Studios. The creation of that group, follows the bundling of an Anomaly-led network that houses digital innovation shop Y Media Labs; design and branding agency Mono; consumer marketing communications, PR and digital firm Hunter; creative experiences shop Relevent, and healthcare agency Concentric Health Experience.
In December, MDC formed the Doner-led network that includes PR firm Veritas; shopper marketing agency 6Degrees Integrated Communications; brand and ad shop Yamamoto; creative, technology and media agency Union; brand strategy and digital PR firm KWT Global, and luxury and lifestyle PR agency HL Group. Finally, the holding company merged its data, technology, CRM and addressable content agency, Gale, with MDC Media Partners agencies Allegory, Attention, EnPlay, Trade X Partners, Unique Influence and Assembly, as well as media trading consultancy Varick.
Some notable 2019 wins for the holding company included Johnson & Johnson moving its Tylenol, Listerine and Zyrtec creative accounts to MDC Partners’ Doner; Pabst Blue Ribbon's creative account going to 72andSunny L.A. and its media duties shifting to Assembly; 72andSunny Amsterdam winning the global Audi creative account; and Assembly being hired to do the majority of ad buys for the Mike Bloomberg 2020 presidential campaign.
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CORRECTION: An earlier version of this article incorrectly stated that all of MDC Partners' New York agencies would be moving to One World Trade Center. In fact, Neither Anomaly nor 72andSunny are moving their local offices.
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MDC Partners posts further revenue declines, though at a slower rate - AdAge.com
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