The move, following months of speculation about Mr. Beattie's plans, is a huge blow to TBWA. The London agency has recently lost key business, including financial-services giant Abbey and Rupert Murdoch's News Group Newspapers, both $40 million accounts.
Mr. Beattie said in a statement, "This is the toughest decision I've ever had to make. ... But this is something I want to do. It will be a new kind of agency."
Mr. Beattie, who recently produced an adults-only burlesque show at a London theatre, said the shop will offer branded entertainment, sponsorship and product placement. Paul Bainsfair, president of TBWA Europe, will add the titles of chairman and CEO of TBWA, London, in addition to his existing duties and has named Danny Brooke-Taylor and Tony McTear joint creative directors. The announcement was made the day of the U.K.'s general election. Mr. Beattie masterminded the ad campaign to win Prime Minister Tony Blair's Labor Party a third term in office, including a controversial poster depicting the heads of two senior opposition Conservative Party figures superimposed on two pigs.