That day, in Saatchi & Saatchi's opulent headquarters in London's tony Berkeley Square, Maurice Saatchi was meeting his chief nemesis, David Herro, a Chicago money manager and one of Saatchi & Saatchi's largest shareholders. Herro strongly opposed Maurice Saatchi's tenure as chairman. The free-spending, high-life habits of the Saatchi brothers amidst their company's poor financial state grated on this financially conservative Midwesterner.
But rather than demonstrating financial prudence on that fateful day, Maurice showed off his private chef and expensive art collection. He did not roll out new advertising created by any of the agencies owned by Saatchi & Saatchi -- including the agency bearing his name.
When the executives completed the meal, Saatchi offered Herro a fine cigar and ushered him to a window offering a view of the most expensive real estate in London.
What Maurice Saatchi did not know was after leaving Berkeley Square, Herro visited the modest headquarters of Saatchi & Saatchi Advertising. There, sitting in the Pregnant Man, an on-premise pub (named for a famous agency ad), Herro told one anti-Maurice ally about the lunch and went on to say that he had made up his mind: Maurice Saatchi had to be removed as chairman of Saatchi & Saatchi.
He was. And his ouster would spark one of the ugliest public wars in advertising history.
It was quite a fall from grace. In their heyday, the Saatchi brothers were the toast of the ad industry, particularly in London. On the other side of the Atlantic, they unwittingly sparked advertising's "big bang" merger spree and in less than 20 years had built the largest advertising agency holding company in the world.
The Saatchis, two brothers of Iraqi descent who were raised in London, were on paper an ideal pair to run an agency empire: Charles was the creative, Maurice the suit.
Over a 19-year period beginning in 1970, Saatchi & Saatchi (it had become a publicly owned holding company in 1979) enjoyed unparalleled growth. It was how they grew that ultimately became their undoing. By 1986, Saatchi & Saatchi had acquired 37 companies, 13 in 1985 alone. What began in 1970 as a $40,000 investment grew into a giant publicly owned holding company of 80 subsidiaries with annual billings exceeding $3.2 billion.
But if you scratched the surface of the dizzying growth curve, you would be hard-pressed to discover a deliberate business strategy. Ad agencies were bought for no reason other than bragging rights. Rarely was there a sound corporate strategic fit. And sometimes the agencies -- most notably Backer & Spielvogel and Ted Bates Worldwide -- didn't even get along.
The Saatchi brothers made many individuals wealthy as they overpaid for venerable agencies in their misguided strategy to buy their way to the No. 1 spot. When Charles and Maurice Saatchi purchased Bates, then the third-largest U.S. ad agency, for $400 million down in 1986 and another $50 million in 1988, it was the highest price paid for an advertising agency. The brothers also bought two other U.S. agencies that year, Dancer-Fitzgerald-Sample and Backer & Spielvogel. One year later, the brothers attempted to buy J. Walter Thompson Co., America's oldest advertising agency. But their former financial adviser, Martin Sorrell, who left Saatchi in 1985, outbid them. Sorrell's WPP Group paid $566 million for JWT. And in May 1989, Sorrell and WPP agreed to acquire Ogilvy & Mather for $864 million, setting a new price record.
Lost somewhere in the stratospheric selling prices for ad agencies was the work itself. Few observers focused on the creative side, instead concentrating on cash flow and bottom lines. That's too bad, since Saatchi & Saatchi was, for a time, the home of attention-grabbing, effective campaigns that caused competitors and potential clients to take notice of a revolution taking place in staid British advertising.
Prior to joining his brother professionally, Charles Saatchi worked at Benton & Bowles. Frustrated by the corporate environment, he co-founded CramerSaatchi in London.
The agency quickly got noticed when a print ad created for the Health Education Council showed a photo of a sulking man with a bulging belly. The caption: "Would you be more careful if it were you that got pregnant?" The ad would become an icon for the agency and for Charles Saatchi, even though he did not create it. That credit went to the cerebral Jeremy Sinclair, who joined at the agency's founding in 1970 and would remain with the Saatchi brothers through their professional lives.
But it was an ad for Margaret Thatcher in 1978, then the Conservative Party's candidate for prime minister of Britain, that catapulted the agency to worldwide notice. Saatchi & Saatchi created a print ad showing a long, winding line outside an unemployment office. The headline, "Labour's Not Working," was a direct attack on the Conservative Party's opposition. After Thatcher's victory, many credited the thought-provoking ad campaign as a major factor in her electoral win.
Flush with success, the brothers continued to grow and spill into businesses other than advertising: public relations, consulting, direct marketing and media buying. Saatchi & Saatchi agency rosters boasted such worldwide clients as Procter & Gamble Co., Mars, Xerox, General Mills and British Airways.
But as visionary as Saatchi & Saatchi was in the U.K., it was rudderless in America. (That held true for both the agency and the holding company, which shared the same name.) The agencies that were purchased for vast amounts received little attention from the brothers. It was as if Charles and Maurice poured all their energies into the deals, then immediately lost interest in their new toys. By the time contracts were signed, the brothers had moved on to their next acquisition target.
Actually, by the time Saatchi & Saatchi was No. 1, Charles Saatchi had lost interest entirely. He remained involved with favorite clients, such as Gallaher Ltd.'s Silk Cut cigarettes, but focused mainly on his art collection and gallery. When he wasn't nurturing new artists, Charles spent his time at the tennis court, go-cart tracks and with close friends.
Then, in 1991, the bottom fell out of advertising spending. Saatchi & Saatchi couldn't pay its debts. The only silver lining was that the advertising industry as a whole was suffering from the recession. WPP Group was brought to the brink as well.
Saatchi & Saatchi recruited an outside financial expert, and for the first time Maurice Saatchi had to relinquish control. But Maurice welcomed the outsider, Robert Louis-Dreyfus, a financially astute and talented scion of a French family, who joined the agency on Jan. 1, 1990. Louis-Dreyfus and his No. 2, Charles Scott, were an effective team. They reorganized the company and sold off virtually every business that was unrelated to advertising -- usually at a loss.
When they were done, Saatchi & Saatchi, the holding company, consisted of two ad agencies, a public relations company, a corporate identity firm and little else. After the dirty work was done, Maurice Saatchi reclaimed the helm.
But even with the downsizing, protests by Herro -- who controlled approximately 10% of Saatchi & Saatchi's shares -- grew over Maurice Saatchi's employment contract, compensation and responsibilities. For Herro, further evidence that Maurice Saatchi put himself before the company was his absolute refusal to change the name of the holding company.
Maurice didn't see what was clear to everyone else, including his supporters: the existence of Saatchi & Saatchi the corporation, and Saatchi & Saatchi the ad agency, created confusion and resentment, particularly at Bates.
On Dec. 16, 1994, following an eight-and-a-half-hour board meeting on the top floor of Saatchi & Saatchi's drab office building in a working class section of London, Maurice Saatchi was dismissed as chairman of the holding company and offered a demotion to chairman of Saatchi & Saatchi's worldwide advertising agency.
Two weeks later, Maurice Saatchi resigned. Three senior executives resigned along with him, including Sinclair. So did clients British Airways, Mars and Dixons Group, a chain of electronics stores. Charles Saatchi, who at the time had little to do with Saatchi & Saatchi, left shortly thereafter.
The Saatchi brothers and the three executives announced they would open a rival ad agency -- eventually called M&C Saatchi. Lawsuits and countersuits were filed, and a nasty civil war erupted in an industry where clients prefer their ad agencies make commercials, not news.
British Airways became M&C Saatchi's first client. Saatchi & Saatchi recouped that loss by winning the Delta Airlines account.
In the years since, M&C Saatchi has posted a mixed record. Although the privately held shop is a bona fide hit in the U.K., it has yet to make a splash in the U.S. Its executive suite is a revolving door, and virtually all of the original U.S. M&C Saatchi crew have jumped ship.
As for Maurice Saatchi, one of the most important goals he set for himself after his ouster continues to elude him -- he wanted the Saatchi name exclusively for his new firm. Instead, he continues to share it, although rumors of his interest in buying his old haunt persist.
Saatchi & Saatchi and Bates have since de-merged, and the former is doing quite well for itself, no longer No. 1 but still a major player on the global ad scene.
Kevin Goldman, a former ad columnist for The Wall Street Journal, is the author of "Conflicting Accounts: The Creation and Crash of the Saatchi & Saatchi