The costs of "realigning" the Bozell and FCB Worldwide networks hit home in the third quarter as parent True North Communications, Chicago, booked a $76.4 million charge, primarily to cover severance and real estate costs. The realignment of the two networks, announced in September, will strip Bozell Group of many of its international offices and add them to the FCB network.The restructuring charge resulted in a $31.7 million loss for the quarter on revenue of $356.7 million, up 18%, and a $3.44 million loss for nine months, on revenue of $1.02 billion, up 11.5%, TN said. Without the charge and other unusual items, TN said net income would have been $17.9 million for the quarter, up from $13.2 million a year ago, and $43.86 million for nine months, up from $34.5 million a year ago.
TN CEO David Bell said cost savings from the agency realignment will begin to positively affect TN results next year and will reach close to $25 million a year starting in 2001.Net new business rose to $233 million in equivalent annualized billings in the quarter, up 64% from the year-ago period. "We're pleased with True North's growth in the third quarter, which demonstrates the kind of improvement we think we are capable of once we fully hit our stride." Mr. Bell said.
Copyright November 1999, Crain Communications Inc.