Reports out of the UK today are suggesting WPP is set to cull 7500 jobs or about 5.5 per cent of its 134,000-strong global workforce.
The news of job losses comes after newly-appointed CEO Mark Read announced a hiring freeze at the world’s biggest media agency in early November.
Read will reportedly announce the staff cuts at a summit at WPP’s London HQ later today (UK time) as he attempts to placate shareholders following a dramatic drop in the company’s fortunes and share price.
How the cuts will affect the local arm of the business is unclear and WPP AUNZ declined B&T’s offer to comment. Ironically, WPP AUNZ is still to appoint a CEO following Mike Connaghan’s shock resignation in October.
According to a recent report by investment bank Morgan Stanley, WPP is aiming for cost savings worth around $875 million over the coming years which would involve merging existing agencies and cutting staff.
Read’s case not helped by the constant sniping by former WPP boss Sir Martin Sorrell that led to an extraordinary outburst by a senior WPP executive yesterday calling for Sorrel to stop “talking down” both the business and Read’s management as it was “disrespectful” and made Sorrell look “small”.
Already under Read’s watch, WPP has merged Y&R and VML to form VMLY&R and J. Walter Thompson and Wunderman to form Wunderman Thompson.
It’s being reported that many of the staff cuts will come from WPP’s IT and finance departments and not its traditional creative and media agencies.
In fact, Read has repeatedly said he wanted any savings to be reinvested into the creative arm of the business.
Despite the mergers and job cuts, Morgan Stanley is predicting that WPP’s 2019 revenues will be below that of 2018’s, however, that would depend on the global economy and commensurate ad spends.
Earlier this year, UBS analyst Richard Eary predicted that Sorrell’s abrupt departure as WPP CEO would create some “headwinds” for the company given his tight control and his relationships with many of WPP’s major clients.
Eary correctly predicted that WPP would attempt to sell its underperforming market research company Kantar, although no sale has yet been finalised.
He added that WPP could “divest balance sheet investments (such as Globant, AppNexus, ComScore, Vice) which have a £2.2 billion ($A3.8 billion) valuation and contribute £100m ($A175 million) in associate income; and simplify the business which in turn should drive cost out and ready the business for structural headwinds.”
Over the weekend, UK’s Sky News reported that the company was attempting sell its UK TV production company The Farm Group for £50 million ($A88 million).
