Founding Execs Bail; One Squabbles to Buy Back the Name

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SAN FRANCISCO ( -- Black Rocket, the ad agency that developed the Yahoo! yodel and otherwise enjoyed high-profile celebrity during the dot-com era, is about to crash and burn.

Its president, John Yost, has just resigned, partner Steve Stone's contract has run out and a third founder, creative director Bob Kerstetter, left to pursue a directing career in 2002.

Mr. Stone now wants to buy back the remains of Black Rocket but parent company Euro RSCG has balked at selling him the name.

Billings once at $100 million
Founded in 1996, Black Rocket built a stellar reputation on its cornerstone Yahoo! account. It sold an 80% stake to Euro RSCG, part of agency holding company Havas, four years ago at a time when its annual billings were about $100 million.

But then the agency lost the Yahoo! work in November 2003. That same year, Euro executives arranged for Black Rocket to begin working on the planned relaunch of the French auto brand Peugeot in the U.S. The account was expected to generate billings of about $80 million. However, anti-French sentiment generated by the war in Iraq and other business priorities for the French automaker caused those plans to be scrapped.

Earlier this year, Euro had slated the struggling shop to be merged into its San Francisco operations, but that deal fell through, Mr. Stone said.

Messrs. Yost and Stone were poised to take over the merged San Francisco Euro offices, but after bickering -- and what one executive involved in the talks described as "parochial" and highly "politicized" decision-making -- that deal also fell through.

Other troubles for Euro, Havas
On top of those difficulties, industry observers noted that the Black Rocket situation has taken a back seat to other serious issues facing Havas and Euro in recent months. Euro is fighting to defend one of its key global accounts, the $300 million Intel Corp. account, and is facing a number of key defections in its New York offices.

In the latest round of events Mr. Yost, one of Black Rocket's co-founders and a former executive at Hal Riney & Partners, announced today that is he quitting to take a hiatus from the advertising business.

Mr. Stone, another founder whose contract has run out, is negotiating with Euro RSCG to buy back the shop so he can continue with its remaining clients, which include Conde Naste Publications, Aidels Sausages and projects for Walt Disney Co.

New deal being negotiated
A spokesman for Euro today said Euro's financial executives are looking over the details of the proposed deal with Mr. Stone and plan to make a decision soon. "We are negotiating to see if [Mr. Stone] could take over the space [Black Rocket's offices on the San Francisco waterfront] and launch a new operation."

Euro, however, will not allow Mr. Stone to take the Black Rocket name. The Euro spokesman indicated Euro did not want to compete with a reformulated Black Rocket entity in San Francisco. Euro's separate San Francisco operation counts ScanDisk as a client and also includes offices of Havas' media-planning arm, MPG USA.

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