Hank Cohen has struck out on his own to launch a new media shop following the bankruptcy of the company he previously led, KSL.
Mr. Cohen, a 25-year media industry veteran who had been CEO of KSL, is setting up the new agency -- named Windstar -- under the umbrella of Intermedia Group of Cos, which already houses direct response, production and advertising groups. His goal is to service smaller marketers and challenger brands with media budgets between $10 million and $30 million.
He said he believes that by using that model, as well as a trading desk and barter operation, he can eventually grow the company beyond $700 million in billings. Mr. Cohen will run the company with Bob Yallen, president of Intermedia and a partner in the venture, as well as work with Intermedia's operational resources, such as its CFO and HR lead.
"I made a decision in 2009 to start thinking about doing something where I could put my own vision in place," he said. "[InterMedia] is a solid organization with excellent control measures, and it's a financially solvent company."
Being part of a company on solid financial footing is important to Mr. Cohen, who left KSL about a month ago after serving as its CEO since 2006. Last week, the mid-sized, independent media shop filed for bankruptcy amid claims of alleged embezzlement by a former employee.
According to a declaration by KSL controller Janet Miller-Allen, filed in a U.S. Bankruptcy Court of the Central District of California, former KSL corporate controller Geoffrey Charness "appears to have taken large sums of money from KSL for the personal benefit of himself and his wife during his employment. This apparent embezzlement occurred primarily through the transfer of approximately $145 million of KSL's money to credit card accounts held by Mr. Charness and his wife... KSL has filed an action against Mr. and Mrs. Charness seeking recovery of the embezzled funds." Mr. Charness was KSL's controller between 2006 and 2010.
Mr. Cohen said his plan to launch his own shop comes after what he describes as years of disagreements with KSL's chairman and founder Kal Liebowitz. "I was becoming increasingly disaligned with my partner's visions," he said, referring to Mr. Liebowitz. "I had a very small ownership of that company. [Mr. Liebowitz] was the guy. I worked for him for 25 years." Mr. Liebowitz did not respond to requests for comment by press time.
One of their key disagreements had to do with investment in talent, Mr. Cohen said. "There were some [legacy] people who didn't feel the need or want [to change] and they were significant drains on resources in terms of capital. So I don't think we shared the same vision on that. I didn't have control or ability to make those decisions."
Windstar won't have any clients at launch, and Mr. Cohen will focus his time on reeling in some accounts in the coming months. "I'm having discussions with everybody I've known and [using] my full list of resources," he said. Mr. Cohen said he did not have a non-compete contract with KSL and departed abruptly, giving no notice. He said he sought legal counsel when making the decision to leave.
However, he might need to worry about his ability to attract clients who might want to keep their distance given KSL's bankruptcy.
Mr. Cohen said he had been "concerned" about the firm's profitability, which influenced the timing of his departure. "Toward the end I understood profitability was dwindling. I continued to put energy into increasing revenue to offset debt. I wish I could have done more."
He pinned his inability to upend the profitability problem, among other issues with the shop, to not having the "authority to turn a company around."
"When I was suggesting all the different things you could potentially do [to increase revenue] my hands were tied. It wasn't the way I'd choose to run my household finances."
At the end of the day, "the only solution was to wind down operations under U.S. bankruptcy code," he said.