Sawyer Ferguson closes p.9

By: Lucia Moses 65 clients scrambling in wake of ad rep firm's demise

One of the nation's oldest and biggest independent newspaper sales representative firms, Sawyer Ferguson Walker (SFW), has shut down, putting about 65 employees out of work and leaving its roughly 65 clients scrambling to find new representation.
The New York City-based company was vague about reasons for the March 26 closing, but former employees say the firm had been late in paying its bills for some time, despite increasing revenues.
John Kephart, a 19-year veteran at Sawyer who was senior vice president and western regional manager in San Fernando County, Calif., says employees are still owed expenses and payroll checks that had been bouncing for months. He says company cars were repossessed and he routinely took calls from creditors. Kephart says he would call Sawyer president John Power, who would expedite checks to keep the office open.
"It made it very tough to do my job when I had to be a front man for bill collectors," Kephart says. "Someone needs to take a look at what's going on."
Power would not give specifics about reasons why the firm closed, other than to say that Sawyer's financing was crippled when its bank withdrew a line of credit in late February and bounced checks without notification. In addition, Power says, the company was burdened by a heavy debt service that prompted lawsuits from several retired shareholders. Power says those suits have been settled.
In a March 29 letter to clients informing them of the closure, Power wrote that the company was in a financial crisis for the past year and that it tried unsuccessfully to work with legal and financial advisers to stay open. Adding to the mystery surrounding the closing, he wrote, "the story goes much deeper than this, but it would serve no purpose to elaborate ? at least at this time."
Founded in 1929 as Sawyer-Ferguson Co., the firm grew to represent 22 newspapers, including the San Francisco Chronicle and The Washington Post, in 1959. At the time of its closing, Sawyer operated nine offices around the country, serving about 65 papers with a combined circulation of about 30 million, according to the company.
Financial troubles have plagued the company in recent years.
In 1993, lawyers representing Sawyer said the company, facing a "severe downtrend" in business due to the loss of clients, declines in the print media business, and high operating expenses, had hired a consulting firm. Two years later, the firm was sold to Berkeley Acquisition Corp. (BAC), a New York-based company with media and ad industry holdings.
Daniel Tomlinson, then chairman of Sawyer, said at the time that the company lacked the capital it needed to expand. With the sale, Power, then chairman of BAC, took over at Sawyer.
But in the past year, Kephart says, Sawyer was "on a roll," bringing in 17 new clients. He says the company was profitable last year, with revenues of about $4.5 million, although Power says the actual figure is "significantly higher."
Rumors started flying among ad rep industry figures and newspaper clients a couple weeks before the closing. Tony DiSalvo, advertising director at the Tampa Tribune, whose publishers provided backing when Sawyer was founded, says the newspaper has been shopping for another rep firm since Sawyer closed. "I had heard they were in difficult times, but I had confidence they would pull out of it," DiSalvo says. "They were a good company. They listened to their customers."
Sawyer's competitors will likely see the news as a chance to pick up some more clients. Jay Zitz, president of Newspapers First, an ad rep co-op owned by its newspaper clients, says he has been talking to some of SFW's clients about representing them and that the recent events might result in some new business.
Nick Cannistraro, president of Newspaper National Network (NNN), an ad sales organization for the newspaper industry, says that in general, times have been bad for the independent rep firms, with other media competing for ad spending, big papers opting to sell ads themselves, and the proliferation of newspaper ad networks such as NNN.
Zitz disagrees, pointing out that while the advertising rep firm industry has consolidated, national ad spending has soared in recent years.
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?(Copyright: Editor & Publisher April 10,1999) [Caption]


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