Turmoil and uncertainty continue at Direct Media Inc. as it hammers out details of an imminent restructuring with parent company Acxiom Corp.
Ongoing negotiations center on DMI’s consumer list brokerage division becoming a wholly owned subsidiary under Acxiom, inside sources say. However, it would run autonomously.
Meanwhile, top executives of the business-to-business brokerage division are negotiating to buy back their group, DMI founder Dave Florence told DIRECT in August before a company gag order went into effect. Florence’s role would be “a limited one in helping the two groups to coordinate,” he confirmed.
His lack of continued involvement is ironic given the fact that his background is in business-to-business, sources say. Florence founded DMI initially to serve B-to-B clients.
Acxiom wants to conclude the B-to-B deal first, the sources claim.
Under terms of the consumer division restructuring, Acxiom would expect the new entity to break even and – after a time – make a profit. For brokers and executives, the deal could mean autonomy from the bureaucracy and expectations of a parent that many said didn’t understand the list industry. One issue is that Acxiom, a company in a growth industry, was expected by analysts to increase its earnings by 20% to 25% annually, while DMI was realizing lower growth levels more appropriate to the mature list business.
Whether the new entity would have the ability to turn a profit depends on still-to-be-determined factors such as how much overhead the subsidiary would have to assume over expenses.
“The devil is in the details,” says one source.
Sources say Acxiom asked Florence and DMI executive Max Bartko to head up the restructuring of the consumer unit. DMI employees, who hope to remain together, have chosen Bartko to head the unit.
A much-rumored buyback of SmartBase, DMI’s cooperative database, by Florence and other executives apparently has fallen through. Acxiom announced several months ago that it would kill the co-op.
As negotiations drag on, rival list firms are closely watching personnel developments at the company.
All 12 members of the list brokerage side of DMI’s Walnut Creek, CA office left DMI to join their former boss, Randy Robertson, at the new Walnut Creek office of Paradysz Matera Co., according to Chris Paradysz, CEO of Paradysz Matera.
“I’m delighted,” Paradysz says. “The brokers’ belief in Randy and Randy’s point of view and the opportunities that we are bringing to them, encouraged them to make the decision to move over.”
No client moves have been announced yet.
In other departures from DMI:
– Steve Smith, head of consumer list brokerage for DMI, was terminated in August.
– Pat Linton, a broker at the DMI Hilton Head, NC office became vice president in the newly opened Hilton Head office of List Services Corp.’s list brokerage division.
Florence said that a smaller, leaner staff is good for the new structure.
“My personal intent is to downsize our company,” Florence said in August. “We got too big and out of control. We’re probably better off without a California office – it’s one less thing we have to control.”
Meanwhile, Acxiom has been having problems of its own. The firm announced in August that it would eliminate 250 positions, or 5% of its work force. The cuts, designed to improve performance, were to be made across all levels and functions of the company.
Each division was to be responsible for generating its own cuts.
“In each of the units common sense will be applied,” said spokesman Dale Ingram.
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