Robert Jacoby

IT WAS THE LAST OF THE BIG killings in advertising," says Robert E. Jacoby.He sits in the brightly lit living room of his sprawling ranch home in Saddle River, N.J., puffing on one of the large cigars he habitually smokes.

A 5 foot-4 inch man with an affable manner and elfin features, Jacoby is musing about a deal he consummated in 1986.
...
Now, even the 59-year-old Jacoby voices a complaint heard often on Madison Avenue these days: "A lot of the fun has gone out of the business."

In May 1986, Jacoby sold the world's third largest advertising agency, the privately held Ted Bates Worldwide, where he had been chairman and chief executive officer for more than a decade, to the publicly held, acquisition-hungry British conglomerate Saatchi & Saatchi PLC.The price, more than $500 million, was five times larger than any previously paid for an advertising firm.

The deal gained Jacoby a personal fortune of $111 million and turned 100 other Bates employees into instant millionaires.
...
The Saatchis signed Jacoby to a five-year contract to continue as Bates C.E.O.
...
But within a few months, they humiliatingly replaced him with his longtime aide and friend, 53-year-old Donald M. Zuckert, whom Jacoby had demoted to an administrative position only two weeks earlier.
...
And in September, arbitrators ruled that they had fired Jacoby unfairly.

Reminiscing about the year's events, Robert Jacoby is all too aware how his "big killing" may have doomed a way of life that he and others in his profession had come to take for granted.
...
Jacoby shakes his head ruefully and adds: Sorry, Ted."
...
Robert Jacoby became Bates's third chief executive officer amidst these acquisitions in 1973, the year after Ted Bates died, rising from account executive in less than five years.
...
Associates describe Jacoby as a modest and kind chairman, who habitually helped people through emergencies.Once, when buying another agency, he insisted that a recently departed executive from that firm, who had cancer, share in the profits.And he showed a self-effacing wit; in one speech, he invited Bates stockholders to read the book of corporate minutes."It had better be after the meeting, though," he said, "because I'm standing on the damn book so I can see over this podium."But Jacoby also revered toughness.
...
Jacoby translated his military obsession into increasingly imperious rule.Each weekend he labored over blunt memos that appeared first thing Monday morning at Bates headquarters at 1515 Broadway in Manhattan.One typical memorandum threatened to, "crush ... ruthlessly" a leak to Adweek - disturbing phrasing from a man who kept a revolver in his wall safe.When the board of directors next met, Jacoby dismissed 12 of its 21 members on the spot.Jacoby's second-in-command began to chafe under what he considered his boss's arbitrary harshness.
...
In 1983, Jacoby appointed him president of Bates's New York office, perhaps the most powerful position next to the chairman's.
...
Yet Zuckert was drawn into the escalating in fighting among the agency's top executives as Jacoby - some say heedlessly, others say deliberately - encouraged his subordinates to fight over who would succeed him as C.E.O. "It was like living in Rome in 50 A.D.," said one former employee.
...
DURI NG THIS PERIOD, Jacoby was concentrating less on creative matters, staff turmoil or even cultivating clients than on financial controls and his dream of building Bates into the largest and most profitable agency in the world.
...
A shrewd analyst of advertising trends, Jacoby was more convinced than ever of the industry's new conventional wisdom, termed "global marketing."As cultural barriers crumbled, products would find their audiences among like-minded people worldwide.And as manufacturers expanded internationally, so would the most successful agencies.

But, although Bates was already billing $3.26 billion annually, Jacoby worried that a privately held company could not raise enough cash to survive in the big leagues - especially with several large stockholders, including himself, due to retire within 10 years, which would cost the agency more than $150 million to buy back their stock.
...
Thus, in March 1986, Jacoby announced at a Hawaii meeting of top executives: "I'm going to sell this company within two years, and I don't give a damn what anybody says about it."Unbeknownst to most of those present, Jacoby had already conducted negotiations with several potential buyers, including Saatchi & Saatchi.
...
Charles Saatchi never even met Jacoby.
...
In their efforts to build a global marketing empire, the Saatchis often bid against Jacoby for foreign agencies.But until Maurice Saatchi called him in1985, Jacoby did not know that the Saatchis craved the Bates international money machine.
...
Jacoby wanted $500 million up front; Maurice wanted payments spread out over five years.
...
Around Christmas, 1985, Jacoby, Hoyne and Maurice met in a London hotel.
...
When Saatchi made his offer, Jacoby and Hoyne left the room.
...
"Go up and get my coat and let's get out of here," said Jacoby.
...
But in April, after failing in another inter-natioanl-agency takeover, Maurice called Jacoby from London to accept his terms.
...
They agreed that Bates would remain independent; Saatchi, apparently seeking stability with clients, insisted that Jacoby and 10 other key executives sign on for five more years.
...
Jacoby revealed the results at a May 22, 1986 stockholders meeting.After citing the stock's book value - $390 per share - he showed a slide with the Soatchis' price, $853.02 per share.The room broke into spontaneous applause.There was some grumbling, to be sure.Jacoby not only received $71 million for his nonvoting shares, but $40 million more for his voting shares in the agency - the ones most people had assumed had little monetary value.Some were further upset when Jacoby allowed 30 staff members, most of them low-level, to buy more than 1,000 shares of stock each - enough to make many of them millionaires.Jacoby says he would have offered any employee shares of the company's retained stock; these people simply "got to me first."However, staffers gossiped that one beneficiary was a woman friend - a rumor that Jacoby acknowledges having heard but denied then and denies now.A month after the Saatchi- Bates announcement, Jacoby was elected chairman of the American Association of Advertising Agencies, the industry's pre-eminent trade group.Despite the long-expected honor, his peers were openly critical of the sale."They're just jealous," Jacoby told his wife.It was more than jealousy, though.The sale prompted the Warner-Lambert Company - Bates's largest domestic client, with $68 million in billings annually - to fire the agency in June because Jacoby didn't warn them in advance and because their archrival, Procter & Gamble, was a Saatchi client.When the news was broken to the
...
In 1985, Jacoby had brought in an outsider to fix Bates's reputation.
...
Zuckert and Light (who did not get along with Jacoby) were spending weekends in Greenwich plotting their advancement in the agency.On the eve of the 'Saatchi pur- chase, Light staged a one-man coup.He refused to sign his Saatchi employment contract, thereby threatening the whole deal, until Jacoby gave him the position of president of Bates International - the job held by John Hoyne, who had negotiated the Saatchi sale.Jacoby swallowed his loyalty to Hoyne and made the appointment.
...
FOUR MONTHS later, after Saatchi auditors approved the final deal, Jacoby counterattacked.On Wednesday evening, Sept. 3, he dashed off a memo, handed it to his secretary and left for vacation.
...
Jacoby left Light his coveted presidency of Bates International, but created a new, higher position called chief operating officer, and gave it to Hoyne.
...
In the memo, Jacoby cited "the need for an orderly succession plan."But privately, he suspected Zuckert and Light of plotting to leave Bates and take the Mars account with them - a charge Zuckert denies. While Zuckert and Light consulted their lawyers, Jacoby spent several days camping in Colorado, then flew to the American Association of Advertising Agencies Western Region Convention in Lake Tahoe, Nev., where he told advertising executives that their industry had lost credibility because they no longer cared about the quality of their work."But no matter whose fault it is," he said in his Sept. 11 speech, "one thing is certain."A slide appeared above his head with the homily-."Whether the ju

IT WAS THE LAST OF THE BIG killings in advertising," says Robert E. Jacoby.He sits in the brightly lit living room of his sprawling ranch home in Saddle River, N.J., puffing on one of the large cigars he habitually smokes.

A 5 foot-4 inch man with an affable manner and elfin features, Jacoby is musing about a deal he consummated in 1986.
...
Now, even the 59-year-old Jacoby voices a complaint heard often on Madison Avenue these days: "A lot of the fun has gone out of the business."

In May 1986, Jacoby sold the world's third largest advertising agency, the privately held Ted Bates Worldwide, where he had been chairman and chief executive officer for more than a decade, to the publicly held, acquisition-hungry British conglomerate Saatchi & Saatchi PLC.The price, more than $500 million, was five times larger than any previously paid for an advertising firm.

The deal gained Jacoby a personal fortune of $111 million and turned 100 other Bates employees into instant millionaires.
...
The Saatchis signed Jacoby to a five-year contract to continue as Bates C.E.O.
...
But within a few months, they humiliatingly replaced him with his longtime aide and friend, 53-year-old Donald M. Zuckert, whom Jacoby had demoted to an administrative position only two weeks earlier.
...
And in September, arbitrators ruled that they had fired Jacoby unfairly.

Reminiscing about the year's events, Robert Jacoby is all too aware how his "big killing" may have doomed a way of life that he and others in his profession had come to take for granted.
...
Jacoby shakes his head ruefully and adds: Sorry, Ted."
...
Robert Jacoby became Bates's third chief executive officer amidst these acquisitions in 1973, the year after Ted Bates died, rising from account executive in less than five years.
...
Associates describe Jacoby as a modest and kind chairman, who habitually helped people through emergencies.Once, when buying another agency, he insisted that a recently departed executive from that firm, who had cancer, share in the profits.And he showed a self-effacing wit; in one speech, he invited Bates stockholders to read the book of corporate minutes."It had better be after the meeting, though," he said, "because I'm standing on the damn book so I can see over this podium."But Jacoby also revered toughness.
...
Jacoby translated his military obsession into increasingly imperious rule.Each weekend he labored over blunt memos that appeared first thing Monday morning at Bates headquarters at 1515 Broadway in Manhattan.One typical memorandum threatened to, "crush ... ruthlessly" a leak to Adweek - disturbing phrasing from a man who kept a revolver in his wall safe.When the board of directors next met, Jacoby dismissed 12 of its 21 members on the spot.Jacoby's second-in-command began to chafe under what he considered his boss's arbitrary harshness.
...
In 1983, Jacoby appointed him president of Bates's New York office, perhaps the most powerful position next to the chairman's.
...
Yet Zuckert was drawn into the escalating in fighting among the agency's top executives as Jacoby - some say heedlessly, others say deliberately - encouraged his subordinates to fight over who would succeed him as C.E.O. "It was like living in Rome in 50 A.D.," said one former employee.
...
DURI NG THIS PERIOD, Jacoby was concentrating less on creative matters, staff turmoil or even cultivating clients than on financial controls and his dream of building Bates into the largest and most profitable agency in the world.
...
A shrewd analyst of advertising trends, Jacoby was more convinced than ever of the industry's new conventional wisdom, termed "global marketing."As cultural barriers crumbled, products would find their audiences among like-minded people worldwide.And as manufacturers expanded internationally, so would the most successful agencies.

But, although Bates was already billing $3.26 billion annually, Jacoby worried that a privately held company could not raise enough cash to survive in the big leagues - especially with several large stockholders, including himself, due to retire within 10 years, which would cost the agency more than $150 million to buy back their stock.
...
Thus, in March 1986, Jacoby announced at a Hawaii meeting of top executives: "I'm going to sell this company within two years, and I don't give a damn what anybody says about it."Unbeknownst to most of those present, Jacoby had already conducted negotiations with several potential buyers, including Saatchi & Saatchi.
...
Charles Saatchi never even met Jacoby.
...
In their efforts to build a global marketing empire, the Saatchis often bid against Jacoby for foreign agencies.But until Maurice Saatchi called him in1985, Jacoby did not know that the Saatchis craved the Bates international money machine.
...
Jacoby wanted $500 million up front; Maurice wanted payments spread out over five years.
...
Around Christmas, 1985, Jacoby, Hoyne and Maurice met in a London hotel.
...
When Saatchi made his offer, Jacoby and Hoyne left the room.
...
"Go up and get my coat and let's get out of here," said Jacoby.
...
But in April, after failing in another inter-natioanl-agency takeover, Maurice called Jacoby from London to accept his terms.
...
They agreed that Bates would remain independent; Saatchi, apparently seeking stability with clients, insisted that Jacoby and 10 other key executives sign on for five more years.
...
Jacoby revealed the results at a May 22, 1986 stockholders meeting.After citing the stock's book value - $390 per share - he showed a slide with the Soatchis' price, $853.02 per share.The room broke into spontaneous applause.There was some grumbling, to be sure.Jacoby not only received $71 million for his nonvoting shares, but $40 million more for his voting shares in the agency - the ones most people had assumed had little monetary value.Some were further upset when Jacoby allowed 30 staff members, most of them low-level, to buy more than 1,000 shares of stock each - enough to make many of them millionaires.Jacoby says he would have offered any employee shares of the company's retained stock; these people simply "got to me first."However, staffers gossiped that one beneficiary was a woman friend - a rumor that Jacoby acknowledges having heard but denied then and denies now.A month after the Saatchi- Bates announcement, Jacoby was elected chairman of the American Association of Advertising Agencies, the industry's pre-eminent trade group.Despite the long-expected honor, his peers were openly critical of the sale."They're just jealous," Jacoby told his wife.It was more than jealousy, though.The sale prompted the Warner-Lambert Company - Bates's largest domestic client, with $68 million in billings annually - to fire the agency in June because Jacoby didn't warn them in advance and because their archrival, Procter & Gamble, was a Saatchi client.When the news was broken to the
...
In 1985, Jacoby had brought in an outsider to fix Bates's reputation.
...
Zuckert and Light (who did not get along with Jacoby) were spending weekends in Greenwich plotting their advancement in the agency.On the eve of the 'Saatchi pur- chase, Light staged a one-man coup.He refused to sign his Saatchi employment contract, thereby threatening the whole deal, until Jacoby gave him the position of president of Bates International - the job held by John Hoyne, who had negotiated the Saatchi sale.Jacoby swallowed his loyalty to Hoyne and made the appointment.
...
FOUR MONTHS later, after Saatchi auditors approved the final deal, Jacoby counterattacked.On Wednesday evening, Sept. 3, he dashed off a memo, handed it to his secretary and left for vacation.
...
Jacoby left Light his coveted presidency of Bates International, but created a new, higher position called chief operating officer, and gave it to Hoyne.
...
In the memo, Jacoby cited "the need for an orderly succession plan."But privately, he suspected Zuckert and Light of plotting to leave Bates and take the Mars account with them - a charge Zuckert denies. While Zuckert and Light consulted their lawyers, Jacoby spent several days camping in Colorado, then flew to the American Association of Advertising Agencies Western Region Convention in Lake Tahoe, Nev., where he told advertising executives that their industry had lost credibility because they no longer cared about the quality of their work."But no matter whose fault it is," he said in his Sept. 11 speech, "one thing is certain."A slide appeared above his head with the homily-."Whether the jug bumps the