Burnett to Revamp

Media to Go Independent, Follows Layoffs

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Leo Burnett Co. will announce Sept. 16 an agencywide reorganization that includes a spinoff of its media operations into an independent subsidiary said to be called Starcom.

Agency executives said Burnett, which billed $2.65 billion in the U.S. last year, will separate media operations into a unit similar to Giant Step, the interactive shop it spun off last January as an independent subsidiary.

The spinoff isn't expected to affect Leo Burnett Field Marketing Services, the media unit Burnett set up in the spring to handle the consolidation of Miller Brewing Co.'s media buying.


Burnett Chairman Richard Fizdale is expected to make the announcement at a meeting of the entire Chicago staff (AA, Sept. 8). That staff was reduced last week as the company laid off 74 people following a spate of account losses.

The layoffs affected virtually every department inside Leo Burnett USA, though its media buying operation continues to add staff.


The meeting had been scheduled to announce several initiatives to adapt to the changes in the industry, following the defections of several blue-chip clients, including United Airlines and Miller Lite's creative assignment, and a loss of lead-agency status on McDonald's Corp.--all pullbacks that propelled Burnett toward layoffs.

Burnett spokesmen would not confirm any aspect of the media spinoff, stating the agency will not comment on anything that may be discussed with its employees.

Media has been a bright spot for Burnett, even as it lost creative assignments. Many current clients have consolidated media at the agency, and even those like Ameritech Corp., which consolidated creative with Ammirati Puris Lintas, New York, still favor Burnett with substantial media-buying assignments.

After the layoffs, the Chicago staff will total 1,916 full-time employees and 218 part-timers.


Observers in the Chicago ad community were surprised at the size of the staff cuts, noting they had expected them to run as high as 300. Some observers speculated that attrition may have had a part in reducing the number as Burnett has experienced an unusual level of staff turnover this year.

But other industry executives noted that the last time Burnett cut its staff, in 1993, the layoffs were handled in two rounds. Also, they noted many staffers often leave the agency after the yearend bonuses are distributed, so Burnett may be counting on some additional turnover.

Copyright September 1997, Crain Communications Inc.

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