Word: saatchi
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...nine months advertising giant Saatchi & Saatchi has admitted that it was enduring a rough year. But when chairman Maurice Saatchi faced investment analysts in the company's luxurious London boardroom two weeks ago, the news was far worse than anyone had feared. After 19 years of uninterrupted growth, Saatchi's pretax profits for 1989 collapsed, dropping from $217 million last year to just $34 million, an 84% decline. After taxes and other provisions were deducted, the world's largest advertising firm reported its first net loss, of $92 million...
...could a firm long heralded for its go-go brilliance stumble so badly? Somehow the company that transformed the advertising industry worldwide during the 1980s seems to have lost its alchemist's touch. Deepening the management mystery, Saatchi & Saatchi profits fell while its global advertising business continued to thrive: the company's revenues reached $1.5 billion this year, up from $1.35 billion...
Industry and financial experts could only conclude that the problem lay with the company's founders, brothers Charles and Maurice Saatchi. Over the past four years, both men have increasingly withdrawn from the firm's day-to-day * oversight. Charles, 46, has spent much of his time becoming one of the world's most voracious art collectors, sometimes buying entire exhibitions at a single gulp. Now he is unloading scores of works at the hyperprices his frenetic buying helped create. Maurice, 43, though not as aloof as his sibling, spends less and less time with Saatchi & Saatchi employees and clients...
...that he is pruning his collection, the bewilderment is great. What artists fear is not so much that their prices will falter -- though that happened to Italy's Sandro Chia when Saatchi dumped him -- as that new traders can move in and, by buying blocks from Saatchi, bypass the artists' dealers and force prices up out of all proportion to those of their new work. Robert Ryman, one of whose chaste minimalist paintings made $1.8 million at auction recently (gallery prices: from $50,000 to $300,000), now thinks it "unfortunate" that he ever let Saatchi have twelve...
Sean Scully's prices through his regular dealer David McKee have jumped from $90,000 to $140,000 in the past six months, but Scullys are trading on the secondary market as high as $350,000, and Saatchi recently unloaded a block of nine of them on the Swedish dealer Bo Alveryd, who last month spent $70 million at three London galleries (Marlborough, Waddington and Bernard Jacobson) before moving on to the New York fall auctions. There he underbid the $20.68 million De Kooning and bought, among other things, a Johns for $12.1 million. "I thought Saatchi had good intentions...