Sorrell: U.S. Default Would 'Surpass The Lehman Shock'
WPP CEO Sir Martin Sorrell got big laughs yesterday when he urged a conference crowd in New York to “please write to your local congressman,” to express the urgency of resolving the political battle that caused the federal government shut down.
Sorrell was cracking wise on what he actually believes is a potentially “catastrophic” event if the political standoff in Washington leads to a U.S. default on the country’s debt. The impact on the world’s economy, he said, would “surpass the Lehman shock” of 2008 that triggered the worst recession in decades. “All eyes are on the President, [Speaker of the House John] Boehner and Congress,” he said.
Sorrell was speaking by videoconference (from Turkey where the WPP board was meeting) to attendees of the GroupM What’s Next Conference in New York, which attracted some 400 client and agency executives earlier this week to ponder future industry developments.
And despite his well-reported criticisms of what he calls the POG merger, Sorrell said that he sees the consolidation trend continuing beyond Adland. “We’ll see it more and more among clients and media companies” as well, he said.
Among the newest trends he’s seeing is a “new strain of private equity,” that will help fuel deals, Sorrell said. Money is cheap, he added, noting that WPP did a finance package last year under which the company will pay just 5% over a 30-year term. “That’s unprecedented,” he said.
Another new trend is the way clients are restructuring, with a focus on both global and local operations and less on regional organizations. In recent conversations, he said, companies have told him “we’re slimming down the center [regional].” And WPP, he said, “will have to mirror” that structure in order to adequately service clients.
Sorrell also said that WPP “isn’t really an advertising business anymore,” given that two-thirds of the company’s revenues are derived from media, data and digital.