Compared to some of his competitors, such as WPP Chief Martin Sorrell, who regularly is a commentator for TV news outlets from Bloomberg to the BBC, Interpublic Group of Cos.' chief Michael Roth rarely makes public comments.
The exceptions are when he speaks to analysts during quarterly earnings calls or to investors. One of those occasions arose yesterday when Mr. Roth spoke for Goldman Sachs' Communacopia conference in New York, which assembles institutional investors with industry players in media and telecom. During a "fireside chat"-style discussion there, Mr. Roth was asked a question about consolidation among large ad holding companies. It's a timely one, given the rumors that again cropped up this summer about Interpublic being bought by French holding firm Publicis Groupe .
The question was posed as follows: "Do you think that there are opportunities for further consolidation maybe among the holding companies? There's obviously the smaller M & A that all of the holding companies engage in the small specialized niche agencies. But do you think the industry would benefit from maybe further consolidation among the big holding companies in some form?"
His answer was basically, if it does happen, he's not eager to be a part of it anytime soon.
Here's how Mr. Roth responded:
Certainly, some of our competitors seem to think that there's a potential benefit for us being merged. That wasn't coming from us. Frankly, it was coming from our competitors.
Look, why do you do a transaction? You do a transaction if you need capital. And some of you have heard me say this, but fortunately, we're in a mode right now where we're returning capital to our shareholders in the form of buybacks. We've already spent over $500 million on share buyback. We've reduced our outstanding shares by 13%. We instituted a dividend. And two out of the three rating agencies have us as investment-grade, and hopefully we'll see a third at some point in time. So there's no need for us to raise capital as a result of a merger.
The other reason for doing a merger is if we lack any particular competitive offering, i.e., media or creative. We are totally competitive on a worldwide basis with all of our offerings. So there's no need for us to rush out and do a transaction because we're not competitive.
And the third reason for doing it is if someone puts a very attractive price in front of us that from a shareholder value point of view was a compelling offer vs. putting our heads down and doing what we're doing, and that hasn't happened.
So I don't see a particular reason for mergers to take place, certainly from our side, nor from the other holding companies. Some of the other holding companies may not have as strong a presence in the United States as we do or they may have a stronger presence on the media side in Asia-Pac and less in other markets. Is that a reason for you to go out and do a transaction that 's billions of dollars? I'll let them make that decision. But right now, our mode is to keep our heads down, deliver on our objectives, which we've been doing, and enhance shareholder value by delivering on our objectives, returning -- using our balance sheet to return capital to our shareholders and get our multiple to a level where the opportunity in our share price is obvious.