The Fall of the House of Pittard Sullivan

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As early as 1999, some employees of Pittard Sullivan, the Culver City, Calif., design powerhouse, began to suspect something was amiss. Some suddenly had their corporate credit cards rejected, and a few upper-level hires say they stopped getting their paychecks on time. By the summer of last year, the company had undergone three rounds of layoffs, and the staff, which at its largest exceeded 200, was down to only 55 people. Pittard Sullivan, it seemed, was involuntarily returning to its humble beginnings. That its very survival was at stake didn't seriously occur to anyone until it became a brutal fait accompli on March 29 - the company's door shuttered, all staffers laid off with some being owed tens of thousands of dollars. Adding insult to injury, Pittard Sullivan had not made contributions to employees' 401k plans for five pay periods.

It wasn't exactly how Billy Pittard, a former art director at KCBS, and Ed Sullivan, then a JWT/Chicago creative director, had envisoned it when they opened shop in 1986, dedicating themselves to good design on TV. Pittard Sullivan paved the way for a new industry - entertainment branding and broadcast design. "If the economy hadn't done what it's done in the last year, we wouldn't even be having this conversation," says a dejected Pittard. "We'd be talking about our 15-year anniversary."

Not that long ago, happy times seemed sure to last. The company, a five-time Emmy winner, produced upwards of 200 broadcast launches. Among its most notable work were the three seasons in which it evolved ABC's well-known yellow ID campaign, as well as promos and packaging for high-profile clients like CBS, TNT, CNN, Discovery, TV Guide, TiVo, CTV and Britain's Sky Box Office. The pioneering company eventually became a full-blown entertainment marketing and branding firm, adding cross-platform services in advertising, licensing and merchandising, new media, and strategic planning. Everything seemed to go Pittard Sullivan's way, with the company opening branches in New York, San Francisco, London, and Munich.

But that rapid expansion cost a fortune and didn't provide an immediate return on investment. When senior staff members saw looming signs of the company's financial troubles, which were compounded by a severe economic downturn in the media industry, some decided to pack their bags. "It was like the Titanic," observes one senior employee. "People were scrambling to get interviews, to get off the boat." Despite the problems, others held tight, expecting the firm to pull through. During those final weeks, Sullivan and Pittard continued to assure their fearful crew that a suitor was on the verge of purchasing the company and restoring its financial security. Word was that the design firm was being courted by Boston-based internet consultancy Viant. In the end, no deal surfaced. The company had no choice but to fold.

Making the meltdown all the more puzzling is the recent proliferation of cable channels, the globalization of media, and the burgeoning broadband internet marketplace. The broadcast design and entertainment branding market should be bigger than ever. Pittard Sullivan may simply have been too lumbering and slow to take advantage of it.

What happened to Pittard Sullivan is "the industry shifted and they didn't," says Steve Kazanjian, partner/managing director at Santa Monica-based broadcast design shop Belief. "The industry moved to low-cost alternatives, and their price points were out of league with the competition." Broadcast design has gone the way of other creative fields like desktop publishing and architecture, where the availability of low-cost new tools opened the business to increased competition from smaller competitors.

"There have been a variety of market factors, from a lot of creatives moving in-house on the client side, to desktop platforms like AfterEffects - things that can put two people in business in a garage," elaborates Alan Schulman, founder and former managing director of Pittard's New York office until a few months before the demise. Schulman speculates that these shifts in the industry that compelled Pittard Sullivan to branch out overseas. "I don't think they ever had a problem with their thinking or their creative product. I think that just having the resources to extend what they did globally without the investment of a third party became too difficult."

Failing to put the brakes on expansion plans seemed to be a problem for the giant despite cues from the market. "Companies weren't spending the same type of money on network packages, and budgets had been reduced; our revenues were decreasing and there was no adjustment on the cost side," offers another top-level insider. "[Sullivan and Pittard] were actually spending on additional areas that they were trying to grow into. They couldn't afford to do it, and they shouldn't have - [all these] new-media, print, outside services," including a pricey 10,000-square-foot production/soundstage facility.

Smart and nimble principals should have adapted to the new conditions. Some sources say that the firm retained unusually well-compensated designers. Other insiders mention that the company had grown unnecessarily top-heavy with equally overpaid and ineffective sales and marketing staffers. More important, the company's broadcast design foundation had been uprooted for larger, strategy-minded aspirations. "It tried to wear too many hats and it forgot about its core business," says one former producer. Industry peers have similar observations. David Edelstein, executive producer at New York-based Firm Design Group, believes that Pittard Sullivan "tried to branch out into so many different areas and they grew [too] quickly in convergence and other things." Adds Belief's Kazanjian, "Everyone says they do strategy and branding, but I think you end up forgetting that the whole point of what you're doing is design."

In response to the assertions of former employees, Ed Sullivan would say only, "We're addressing [these issues] through legal counsel, and we're addressing them through our own integrity of keeping a business from bankruptcy. It's like the children of the company don't understand business well enough to know what we're doing, so they just go around disgruntled, making weird remarks to the media." Many do so off the record, mindful of Sullivan's allegedly litigious inclinations.

Besides its legacy of memorable design, Pittard Sullivan leaves the industry with a number of business lessons. "You've got to take risks to grow, and Pittard Sullivan took a lot of risks over its 15 years - developing broadcast design as a business, marrying talent to a network, putting it all together vertically as a one-stop shop for entertainment," one staffer points out. "All that stuff was great. But the lesson to learn is, you can't ever lose sight of profits. You need to be scalable and flexible and keep your eye on the ball." Another employee concurs. "I think you need to be able to expand and contract. Your business model needs to be based on not having a lot of equipment or overhead."

Glynn Brailsford, president/CEO of broadcast design trade group Promax & BDA, says that "boutiques have the advantage of keeping overhead relatively low. Most of the money they receive goes directly back onto their clients' screens, rather than being sucked up by costly infrastructure. Maybe one or two outfits will now be re-examining their own expansion plans."

Along with the hard-learned lessons, Pittard alums have a maudlin appreciation for the creative culture that developed within the firm. "There was a real atmosphere of people collaborating and sharing ideas," recalls Derich Wittliff, a former Pittard senior designer. "Within the creative group there was a very supportive environment. We had a lot of freedom." That freedom was protected and nurtured by Billy Pittard, the quiet, laid-back half of the founding duo. His efforts included setting up what he called Pittard Sullivan University, where designers were schooled in new creative skills like live-action directing and Flash animation. There were also the Friday matinees, when an in-house curator would pay tribute to design luminaries like Saul Bass, or show reels of other people's work to jumpstart creativity and keep everyone hip to industry trends.

Founding father Pittard is still in a state of mourning. "I loved the people I worked with - and the passion and the talent and the generosity of spirit that the company attracted," he eulogizes. "There are a lot of really good people who are now in the marketplace, at a time when it's tough, and they're really first-class folks. We didn't have a clunker on the team."

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