Eisner Communications, once one of Baltimore's most successful and prolific advertising agencies and a local institution since 1939, abruptly shut the business yesterday, saying it ran out of money.
The closing marks the culmination of troubling times that began last year when Eisner lost a $20 million US Airways account after the Arlington, Va.-based airline merged with America West Airlines. But Eisner still handled some of the area's largest advertising accounts, helping to sell the National Aquarium in Baltimore, Provident Bank and the Maryland Lottery among others.
Employees were told the company was in such financial straits that it wouldn't pay final paychecks or offer severance packages.
More than 50 people lost their jobs. Some were seen yesterday carting boxes out of the firm's Exeter Street building near Whole Foods Market Inc. in Harbour East yesterday. The company employed as many as 125 people two years ago.
"They came to this decision because the cash flow was just far less than their cost of doing business," said Jim Astrachan, an attorney who spoke on behalf of the company. "You keep looking down the road for that new piece of business and you keep people in place as long as you can, and all of a sudden you realize you can't do it anymore."
Eisner's 2005 revenue dropped 40 percent to $18.3 million, according to trade publication Advertising Age. Astrachan said that Eisner would not file for bankruptcy protection and would instead sell off assets. The firm's bank, which also is a secured creditor, has put a lien on the company's assets, leaving it no funds to pay workers and keep the business going, Astrachan said.
Three of Eisner's vendors have cases pending in civil court against the company for unpaid debts, according to court filings. The companies include the National Geographic Society, Bright Ideas Advertising Specialties Inc. and Engine Performance Inc.
"There is a lot of debt," Astrachan said. He declined to detail figures.
Signs of problems at the firm were first raised last year when the company underwent a reorganization. Steve Eisner, whose father named the company, stepped down as president and chief executive officer to take the role of chairman. Jeremy Clarke, a British advertising executive, took over.
Clarke eliminated many senior management positions, saying he wanted to make the company less top-heavy. Three of the company's subsidiaries were also shut down: Underground, Eisner Interactive and Eisner PR.
The company also has seen a talent drain in the past year as several key people left to work at competing agencies. Three executives left to start a new advertising company called Exit10 in Baltimore.
The future of Eisner has been the talk of the advertising community for several months.
"We feel bad for the Eisner employees who have invested their time and careers with the agency," said Allan Charles, chairman, chief creative officer and founding partner of TBC, a Baltimore advertising firm. "I don't think anyone in the local advertising community is surprised by this news. For years, people have scratched their heads when reviewing Eisner's billings."
Eisner's closing is the latest in a consolidation of the Baltimore advertising industry in the past few years. In 2003, longtime agency Doner closed its Baltimore offices. A year later GKV Communications Inc. absorbed smaller Baltimore rival the Campbell Group.
"With Doner leaving town a few years ago, having another agency that had some national business disappear is sad," said Andy Malis, president of MGH, an advertising and public relations firm in Owings Mills. "It draws people to town.
Advertising firms in the past decade have tried to better compete by becoming full-service firms with a wide range of advertising, public relations and other marketing services under one roof. Some have lost accounts when their clients consolidated, as was the case with Eisner's US Airways accounts, and don't need two firms.
"A lot of the times, somebody is left out in the cold," said Rodney Stump, chairman of the Department of Marketing and e-business at Towson University's College of Business and Economics. "There is a smaller market for them to sell their services."
Industry experts said problems at Eisner aren't necessarily a sign of a sluggish industry. In general, advertising is strong, although spending is shifting from television and print to new media, such as the Internet, industry analysts said. Total advertising spending grew 4.1 percent to $73 billion in the first six months of the year, according to TNS Media Intelligence.
"The market is reasonably healthy," said Bob Liodice, president and CEO of the Association of National Advertisers. "It's not booming but it's certainly strong enough to sustain the livelihood of many companies."