The good news is that the battles that wracked the company internally before Mr. Saatchi's firing and escalated into lawsuits when he set up a rival agency, are over-although the out-of-court settlement announced last week is seen as a major win for Mr. Saatchi.
"Instead of being a period of continuing recovery, this will prove to be a year of transition," Charles Scott, Cordiant's chief executive, warned shareholders in the annual report just sent to them.
He is likely to have more warnings at the company's annual general meeting June 13, when the financial community expects Mr. Scott to prepare them for another downgrading of profit forecasts.
Most analysts have already slashed 1995 pre-tax profit forecasts for Cordiant from about $76 million to an estimated $38 million-down from $51 million in 1994-and further cuts are likely. One analyst plans to skip the Cordiant meeting and stay at the office to get a head start on downgrading Cordiant's forecast.
Cordiant won't even be able to distract shareholders by introducing the new chairman, as hoped, at the annual meeting. After a five-month search, the company and headhunter Spencer Stuart are still combing the U.S. and U.K. for a top executive.
Luckily for Cordiant, Maurice Saatchi has agreed to leave them alone, at least for a while. In return, Cordiant last week dropped numerous lawsuits filed against Mr. Saatchi and the former Saatchi executives who are his new partners over everything from enforcement of non-compete agreements to use of the Saatchi name.
Mr. Saatchi and seven other former top Saatchi executives are giving up hefty 1994 bonuses, but that concession is far outweighed by Cordiant picking up most of their legal bills, estimated at about $800,000 for both sides.
After snatching all the Saatchi business he and his new partners have strong ties to, Mr. Saatchi made the token concession of not pursuing any Cordiant business for the rest of this year and changing his shop's name from New Saatchi Agency to M&C Saatchi Agency.
"We are not obsessed with going out and getting other business," said Moray MacLennan, joint chief executive of the 90-person M&C Saatchi Agency. "Growth has been incredibly rapid .*.*. and what we need to be sure of is that we have the infrastructure in place before we move forward."
In fact, Qantas Airways, the Australian airline whose $35 million international account Mr. Saatchi picked up along with British Airways, has an agreement with him enabling the airline to veto the agency's new Sydney office pitching for new business.
Cordiant now has much-needed breathing space to try to keep current clients happy and pursue new ones. Top priority is to replace the $100 million British Airways account at Saatchi and the $400 million Mars business at Bates Worldwide. According to Mr. Scott, Saatchi is actively pursuing a short list of three or four airlines and "the bigger the better."
Northwest Airlines is seeking a new agency in Europe after dropping Publicis-owned FCA due, ironically, to a conflict created by Publicis working with Mr. Saatchi on British Airways. But Northwest is expected to move its business in Europe to Foote, Cone & Belding, the agency it uses in New York. FCB's New York office is temporarily handling the European business, too.
But there will always be a problem somewhere in the Saatchi empire. Last week, Saatchi & Saatchi Advertising's Puerto Rico agency was under investigation for possible electoral law violations in 1992.
The Puerto Rico Justice Department was questioning executives at Nazca S&S, Saatchi's minority-owned Latin American network, about a $1.8 million debt owed to the agency by an organization linked to the Popular Democratic Party, which lost the election and was Saatchi's client.
Saatchi's client apparently both overspent the $1.5 million limit on campaign advertising and, by failing to pay Saatchi, put the agency in the position of making an involuntary "donation" to the campaign that exceeded legal limits. M
Contributing to this story: Charles Siler in London, Geoffrey Lee Martin in Sydney, Iris Cohen Selinger in New York and Delinda Karle in San Juan, Puerto Rico.