MDC names new CEO amid slipping revenues

Mark Penn takes the reins as his firm makes an investment in the holding company.

MDC Partners has received a $100 million dollar investment from Stagwell Group as it names Mark Penn as its new CEO and releases its full year and Q4 results for 2018.

Stagwell is purchasing $50 million in MDC Partners common shares and $50 million non-voting convertible preference shares.

Penn, who co-founded Stagwell with Microsoft’s Steve Ballmer in 2015, has previously been EVP and chief strategy officer at Microsoft. He also founded market research firm Penn Schoen Berland, which was sold to WPP, where Penn also became CEO of PR firm Burson-Marsteller.

Penn takes over leadership of MDC from Scott Kauffman, who announced his impending departure last fall amid warnings about the holding company’s performance.

MDC had been seeking to sell the company since late last year. However, reports began circulating last week in The Wall Street Journal that Stagwell was interested in an investment as MDC execs realized they wouldn’t be able to receive its preferred price for the entire company and opened itself up to smaller transactions.

Across the network, MDC’s revenue declined 2.3% in Q4 and 2.5% for the full year. In Canada, revenue was flat, posting a 0.5% growth for Q4 and a 0.1% decline for the full year.

MDC cited the impact of adopting the ASC 606 accounting standard. Excluding that impact, the company says revenue increased 0.8% in Q4 and 0.9% for the full year. It also said revenue was impacted by reductions and deferrals of client work; however, MDC added that it saw its strongest net-new business wins in two years, which it expects to lead to new revenue growth in Q1 2019. MDC had net-new business wins totaling $26.4 million in Q4 and $76.1 million for the full year.

In September, MDC put the KBS agency brand to bed after merging its operations with Forsman & Bodenfors. Forsman & Bodenfors Canada has since picked up worked with Seneca College and Canadian Women’s Foundation, but lost the account for The Keg to Rethink.

Other MDC agencies operating in Canada include Anomaly (which picked up a multi-office assignment with Ancestry in the fall), Bruce Mau Design, KWT, The Media Kitchen, Union and Veritas.