Ailing Saffer fights back

After weeks of intense public speculation about the state of its finances, Saffer Advertising has announced it is seeking protection under the Companies' Creditors Arrangement Act for its Toronto office.Under CCAA protection, a financially troubled company can remain in operation while...

After weeks of intense public speculation about the state of its finances, Saffer Advertising has announced it is seeking protection under the Companies’ Creditors Arrangement Act for its Toronto office.

Under CCAA protection, a financially troubled company can remain in operation while it tries to work out its difficulties.

Saffer filed Feb. 12 for protection under the act.

Saffer President Morris Saffer says his Toronto office has been struggling since August, when one of its largest clients, u.s. discount drug store chain Phar-Mor, unexpectedly filed for Chapter 11 protection from its creditors.

Still healthy

Saffer says his Chicago agency, Saffer/Cravit, which operates as a separate business under the management of David Cravit, remains healthy, with billings of about US$100 million.

(Although Phar-Mor is a u.s. company, it is a client of Saffer Toronto, the office that originally won the account.)

Phar-Mor hurt

Phar-Mor, which has operations in 35 states, left Saffer holding the bag for a US$2.4-million media buy made for the 1992 Summer Olympics.

Shortly after suffering the Phar-Mor losses, Saffer was hit by a string of major account defections, including Imperial Oil, Drug Trading Company and Central Guaranty Trust.

To make matters worse, Peoples Jewellers, which is struggling through a downturn in the luxury jewelry market, announced it was seeking ccaa protection to give it breathing room for a restructuring.

Before its problems began, Saffer’s combined Canadian/u.s. billings were in the area of $300 million.

Currently, it bills about $120 million, with Chicago accounting for about $100 million, and Toronto for about $20 million

As part of its salvage efforts, Saffer has merged its media department into Toronto media buying agency Harrison Young Pesonen & Newell.

Moved

Key Saffer Media employees, such as Vice-President Fred Auchterlonie, have moved over to hypn.

‘The whole problem with [Phar-Mor] was extremely sudden,’ Saffer says.

He says the agency settled with its creditors related to Phar-Mor in the late 1990.

And he is currently working on a second settlement affecting creditors hurt by his subsequent account losses.

‘I am sure our proposal will be accepted,’ Saffer says. ‘It’s a very generous one. Certainly by talking to the creditors, they’ve expressed a tremendous desire to carry on.

‘We were looking at every alternative,’ he says. ‘This [deal under ccaa] offered such a clean and professional, and, I think, honorable way to solve a problem.’

Not always clear

While Saffer appears to be regaining his footing after a tumultuous period in the life of his 25-year-old agency, it was not always clear he would manage to pull through.

‘If life had been good to me, [Phar-Mor] would have been the end of the problem,’ he says. ‘We contained it. We took our lumps. And then all hell broke loose. It was as if the piranhas were all out there.

‘I’ve been incredibly disappointed at the lack of ethics in this business in Canada.

Offers

‘We’ve had staff being called by pretty well all the members of the ica [Institute of Canadian Advertising] offering them premiums to leave and bring clients with them.

‘We’ve even had a member who, in collusion with one of our staff, took a client away.

‘When you’re in trouble, you would hope your peers would come rally around you. It was hard for us to face our problems when we were being attacked so mercilessly from within.’

Saffer says he plans to go after new business aggressively in the future, using hypn as his media resource.

30 staffers

Saffer Toronto is now a tightly run agency of about 30 employees, including senior staffers, Bob Cross and Sylvia Augaitis, who are both vice-presidents account directors, and John Wiltshire, vice-president creative director.

The agency’s remaining clients are Black Photo and Home Hardware, both of Toronto, and Home Quarters Warehouse of the u.s.

Saffer says he is pleased with the support his remaining clients have shown him.

‘Stuck with us’

‘They’ve stuck with us through the whole thing,’ he says. `They’ve known the entire situation, and have been very supportive.’

‘Even in this situation, we’ve stood up and said, `Look, we’re in trouble, we can’t resolve it anymore on our own.’

‘We’ve tried the best we could, now we need help. We’re not running away. We’re going to rebuild and restructure, and we’re going to carry on.

‘And look out competition, here we come.’

‘We’ve put our problems behind us, and we’re now focussed on the future.’

‘As corny as that sounds,’ says Saffer, ‘I’m an adman, and we come up with slogans.’