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FOUR

Media Mogul

BY THE SPRING OF 1981 it was almost ten years since Richard Branson had closed down Student magazine to concentrate on selling records by mail-order. A great deal had happened since then. Virgin had established a record label, a studio business, a chain of shops, a music publishing house; and although 1980 had been a miserably difficult year, the company was clearly beginning to prosper. Yet Branson had never conquered his early ambition to be a newspaper proprietor. For a man whose attention span was as short as his, there was something alluringly immediate about a business whose product was made one day, sold the day after, and discarded the next. The newspaper industry had a further attraction, too: newspaper proprietors had influence and respectability that would always be denied to the owner of a mere record company.

Branson would not have described himself as a friend of Tony Elliott, the founder and publisher of Time Out, the London listings magazine. But the two men were roughly contemporaries, and came from the same public school. They had the same unconventional approach to business, the same ability to guide and motivate young people, the same roots in the counterculture of the 1960s. Elliott had once even approached Branson, suggesting that the two should collaborate to launch a new magazine in New York. But the discussions had come to nothing when Branson realized that Elliott was trying to do to him what he himself had done to so many others: the publisher had no money, but was trying to persuade Branson that the two companies should establish a fifty-fifty joint venture.

By the turn of the 1980s, Elliott’s magazine had clearly become a successful and thriving business. Despite the handicap of a palpable left-wing militancy among its journalists, Time Out was the information source of choice for young, fashionable Londoners who wanted to know which films to see, where to eat, where to shop, and which exhibitions to visit. Its classified section was the place to look for meditation classes, for friendly people to sand the floors of your house, and for cheap flights to south-east Asia. The magazine also did a roaring trade in gay lonely hearts.

The idea of owning a listings magazine with a pronounced political bent would never have occurred to Branson had it not been for the strike that hit the magazine in May 1981. Like his counterpart at Virgin, Tony Elliott had soon learned to distinguish between the political ideals of his staff and the practicalities of running a business. But Elliott had made a damaging error in 1973, when his magazine was still small enough for a minor negotiating concession to seem unimportant. At that time, most of his staff were paid £25 a week; the editors of the sections received £30. When the local chapel of the National Union of Journalists demanded an increase in the rank-and-file wages to £35, Elliott had conceded the principle of a weekly wage of £32.50 – equal pay for all his staff, no matter what jobs they did. As Time Out continued to grow, the system became untenable; the standard company wage was at once too high for Elliott to be able to diversify into other publishing ventures, and too low for him to be able to attract talented writers into the magazine from outside. By the end of the 1970s, Elliott had made a firm decision: cost what it may, he would win back the right to pay some staff more than others. ‘I was pretty confident that we would in the end have either a Pyrrhic victory, in which the whole business would disappear,’ he recalled later, ‘or we would win.’

Initially, the former outcome seemed more likely. As soon as Elliott had insisted on changing the company’s wage structures, the staff struck in protest. The management locked them out, with the help of a court order; and some dismissed Time Out employees established a picket line outside the magazine’s Covent Garden offices. But the magazine itself had to cease publication.

A week after the publication of the last pre-strike Time Out, Branson telephoned Elliott at home.

‘Look,’ he said. ‘I’ve been thinking about your problem. What would you say to the following scenario?’ And Branson then outlined a plan that he would set up a new magazine called Stepping Out, or something like it, and would get it established quickly as a successor to the old Time Out. That would give Elliott the time he needed to outlast the patience of the pickets outside his office door. ‘Then,’ said Branson, ‘when you’ve sorted that situation out to the satisfactory conclusion that you want, I’ll close down Stepping Out and we’ll become the joint owners of the new Time Out.’

Elliott was no fool. He realized how much power such a plan would give Branson over him, and how little room for manoeuvre he would have once a magazine with a similar name was on the streets with his ostensible approval. But he swallowed his suspicions, and accepted Branson’s invitation to come down to the Manor on a Saturday afternoon with his girlfriend and two other people.

At Branson’s suggestion, he and Elliott went off for a walk at three o’clock, leaving their respective girlfriends behind. They returned several hours later, to the barely disguised irritation of Elliott’s girlfriend, and Branson insisted that they stay for dinner. The dinner – which the more sophisticated Elliott later dismissed as ‘school food’, citing it as evidence of Branson’s lack of attention to detail – proved to be a social disaster. Talk turned to the subject of the Social Democratic Party, the recent breakaway from the Labour Party led by a group of four senior politicians; and Branson, rarely someone to talk with interest about politics, became embroiled in a flaming row with Elliott’s girlfriend.

Elliott and his girlfriend left immediately after dinner. By the time they reached London, the Time Out proprietor had arrived at two conclusions. First, he wanted to solve the problem of the strike on his own, rather than admitting an outsider to his life on what might well prove a permanent basis. Second, he wanted nothing more to do with Richard Branson. Whatever the reason – whether perhaps he drank too much and became aggressive, or whether simply the personal chemistry had been wrong – Branson’s charm offensive had failed totally. Elliott turned down the proposal.

But Richard Branson’s interest had been tickled, and it was too late to go back. If Elliott would not start Stepping Out in partnership with him, then he was quite entitled to do it on his own. And thus it was that Branson set to work hiring an editorial staff for a new London listings magazine to fill the gap left by the old Time Out. The team was assembled in three months, and the first edition of the magazine – which Branson decided to call Event – appeared in September.

There was just one problem. A week earlier, Elliott’s former employees had established City Limits, their own listings magazine. A week before that, Elliott himself had come back with a new Time Out, staffed by a fresh corps of journalists but in many respects identical to the old. To make matters worse, Elliott had put some subtle changes into effect during the months that his magazine was off the streets. ‘Agitprop’ became less strident, and was renamed ‘Politics’; a gay section, previously vetoed by the staff on the grounds that it was ‘ghettoist’, brought together the clubs and events of most interest to homosexuals; the ‘Sell Out’ department provided more pages of consumer and shopping news than before; and a much-overdue section on nightlife covered a subject that the magazine’s former staff had dismissed as trivial and politically incorrect. The new Time Out’s first cover story, symbolizing the nascent metropolitan affluence appearing under Margaret Thatcher, was about all-night London.

Elliott knew that he would face competition, for Branson had poached Pearce Marchbank, Time Out’s design guru, to co-edit Event with Al Clark. But Event proved to be a damp squib. Its editorial approach was just a little too middlebrow; it went in for slightly tacky competitions; and it committed a fundamental error by printing the listings – for many readers, the magazine’s principal attraction – in a point size so small that it was barely legible. The staff were at each other’s throats.

Despite the undoubted literary and artistic talents of the team that Branson had assembled, the magazine soon began to go downhill. The real competition to Elliott’s new Time Out was not Event, but City Limits. As the months roiled on, Time Out’s circulation began to rise above 60,000; City Limits stayed put at around 30,000; and Event declined, equally immune to changes of personnel and of style, to below 20,000 by the turn of the year. Tina Brown, later to become editor of the Tatler, Vanity Fair and the New Yorker, described Branson’s venture with scathing accuracy as ‘a triumph of managerial incompetence over editorial flair’.

Proof of the fall in the magazine’s morale could be seen in its in-house magazine. As if it was not enough of a struggle to put the next issue of Event together, a group of mischievous members of the magazine’s staff decided to start an underground gossip sheet, entirely for internal consumption, that would chronicle its lurching progress from issue to issue. The sheet was called Non-Event, Rod Vickery, usually one of Branson’s most faithful lieutenants, did the artwork, while another couple of employees wrote the stories and a fourth ran off a copy for the desk of each member of staff. Terry Baughan, the man in charge of the Virgin Group’s finances at the time, was at first speechless with fury. ‘I’d love to get my hands on the people who did that,’ he said. Vickery, kept safe from suspicion by virtue not only of his long service but also of his seniority in the company, said nothing.

The tough decisions forced on Branson by the tottering fortunes of his magazine turned Event’s journalists against him. Jonathan Meades, one of the later editors he appointed, recalled that Branson had disputed a £30 expense claim submitted by the magazine’s film critic. ‘But he also had three phones going at the same time, and on one of them he was trying to sign the Stranglers for £300,000,’ Meades remembered. The experience of working for Branson also left him with a jaded impression of the young entrepreneur. ‘He’s impossible to conduct a conversation with because he is inarticulate … Branson’s very good at making money, but the rest of him hasn’t kept up. It’s like a form of autism.’

But Branson was never one to give up. With creditable bravado, he telephoned Elliott six months later. Brushing aside Elliott’s questions about the restyles and the firings at Event, Branson came straight to the point.

‘Look,’ he said. ‘We’ve had a really good run with the Human League. We’ve done really well, and I’ve got at least three-quarters of a million pounds sitting in the bank. I can either put it into Event, or I could put it into Time Out.’

Elliott, who was a little drunk at the time, took a deep breath before he responded.

‘Richard,’ he said. ‘There’s one thing you don’t realize. You should stop this mission to acquire all or part of Time Out. At the end of the day, my readers don’t respect you. They see you as an opportunist, as someone without genuine cultural integrity.’

Cultural integrity he may have lacked; but Richard Branson had an almost unlimited capacity to swallow failures and humiliations. ‘Business opportunities are like buses,’ he liked to say. ‘There’s always another coming along.’ And so with barely a pause for self-doubt, Branson plunged back into the daily concerns of his record business, his ability to sniff out a good deal heightened by the awareness that Virgin’s losses on Event had brought it perilously close to insolvency. It was not to be long, however, before Branson’s thoughts had returned to publishing. If he was not cut out to be a magazine proprietor, why should he not own a film company? A video production business? A cable television company? A radio station? The thought may even have crossed his mind, albeit briefly, of owning a newspaper.

Unfortunately, the early omens were not good. Branson already owned one publishing business, known as Virgin Books, and it was not going well. He had received an approach in 1979 from a man called Maxim Jakubowski, whose main area of expertise was in the food industry but who fancied himself as a publisher of books. But Jakubowski was not as successful a publisher as he was a negotiator; and in less than two years, it had become clear that Virgin Books was in trouble. Among the weird ideas he had put into practice was a series of short novels written by rock stars; at one stage he even wanted to publish a book about chickens that had appeared in the movies. But the company’s core problem under his stewardship was that it was trying to do too many things. Unable to choose even between fiction and non-fiction, Virgin Books was a small and not very successful publisher. In an ill-advised interview with the Financial Times, Branson had boasted that the company would publish books by undiscovered young talents, and would be looking for the literary equivalent of Mike Oldfield. It never found it.

Even before relations with Jakubowski began to deteriorate, however, Branson realized that he needed to bring someone into the publishing company whom he could trust. He knew exactly whom to ask for advice: his younger sister Vanessa’s boyfriend, Robert Devereux, who worked at Macmillan, one of the grander names in British publishing. Devereux was twenty-five years old, and very bright indeed. He also had the tactical advantage of having beaten Branson regularly at chess. A lunch was arranged on the houseboat to which Devereux brought with him Rob Shreeve, his boss at Macmillan. Branson put his proposal: the two men should come to Virgin and sort out its books business. Shreeve, older and perhaps a little wiser than Devereux, wanted to know just how committed Branson was to his book publishing division. How much money did he think he would be able to invest in it? How many titles might it expect to bring out over the coming year? Whatever the answers were, it became clear that Devereux would join Virgin; Shreeve, though grateful for the lunch, would politely decline.

Devereux moved fast on his arrival at Virgin Books. He fired some of the staff, and frightened others into working harder. He threw out Jakubowski’s strategy, and tried to decide how the small publishing company he was now in charge of should seek to compete against the corporate giants. Devereux’s first major decision was to stop publishing fiction. Instead, he ruled that the firm should concentrate on quick, preferably cheap, books that would appeal to young people. While the rest of the publishing world was going collectively mad, paying huge advances to a small number of star authors that could never be recouped in royalties, Devereux preferred to think small. He was successful. Virgin Books stopped losing money; over the coming few years it began to acquire a reputation as a serviceable publisher of books about rock, sport and video games.

But Devereux could not satisfy his ambitions by staying the managing director of a small publishing house. He wanted more responsibilities inside the Virgin Group, and with the help of Richard Branson, who had become his brother-in-law when he married Vanessa Branson, that was what he got. Branson’s closest advisers, Simon Draper and Ken Berry, viewed Devereux with polite suspicion when, still under the age of thirty, he joined the board of the Virgin Group. ‘We all liked him and were very impressed by him,’ recalled Draper, looking back on his feelings during the 1980s. But Devereux seemed to be trying to out-Branson Branson. ‘He thought, “I can play bridge better than Richard, I can play sport better than Richard, I can be Richard.”’ To Draper’s mind, Devereux’s self-appraisal was wrong. What Devereux lacked, for all his cerebral qualities, were his brother-in-law’s uncanny ability to inspire not merely great loyalty but also enormous effort among those who were working for him.

Those who were sceptical of Devereux’s abilities felt they had been proved right when he persuaded the board to take a 20 per cent shareholding in W. H. Allen, a publishing company that had lost its market edge. Having merged Virgin’s publishing interests into the firm, and then invested substantial Virgin funds in Allen, Devereux then allowed the existing management to carry on running it – and it was not long before Virgin was required to take a controlling stake in the company, cut out most of its unsuccessful operations, and write off substantial losses.

The company’s forays into film-making were only marginally more successful. Robert Devereux and Al Clark, the company’s erstwhile press officer and Events editor, made a little money for Virgin by topping up the finance of a couple of low-budget films, one called Secret Places and the other Loose Connections. They went on to put £4m into Electric Dreams, a high-tech love story directed by Steve Barron, a maker of pop videos. The film, whose soundtrack included a number one hit from the Human League’s vocalist Phil Oakley, produced a modest return for Virgin, made more attractive by the fact that under specially favourable tax treatment for investing in British films, the Inland Revenue allowed Virgin to deduct its entire investment in the film from its taxable income for the year. But Virgin seemed somehow unable to leave this small but successful division where it was. The next project, brought to Virgin by Simon Perry, the producer of Loose Connections, was to turn George Orwell’s novel of Stalinist totalitarianism, Nineteen Eighty-Four, into a film. It was not the first time a film of the book had been made; thirty years earlier, in the optimism of a fast-growing postwar society, a sanitized version with a happy ending had been put out. But there would be special resonance to releasing the film of Nineteen Eighty-Four in 1984. It would cost just under £2m, and the director would be Michael Radford, Perry’s partner.

When the proposal was brought to him, Branson agreed to back the film. John Hurt and Richard Burton were lined up to star in it. Before shooting could commence, however, Virgin received a piece of bad news: the film was going to be a little more expensive than its makers had expected. Instead of £2m, Virgin should now expect to stump up £2.5m. So convinced was Branson that Perry and Radford were going to pull off a masterpiece that he was bid up to £3.7m, and then, as the film continued astonishingly to overrun its shooting schedule and its budget with equal abandon, to £5.5m The meeting at which that figure was first mentioned in Branson’s hearing was a difficult one.

Still Virgin and its chairman appeared to be dazzled by the glamour of the movie business. Instead of doing what most investors would have done – sacking the producer and director, and replacing them with a pair of placemen who could be relied on to get the film in the can and then distributed with as small a loss to the backers as possible – he allowed Perry and Radford to finish off the project. But the greatest disagreement was still to come. In the hope of making the film a commercial success, Branson had arranged for the Eurythmics to produce a soundtrack. The music they came up with, assembled with breathtaking speed in a Caribbean studio while the band were serving out their required number of days of tax exile, was an impressive piece of soundtrack, but it seemed to have little connection with the movie. Perry and Radford insisted that they should use a soundtrack already written by Dominic Muldownie, which they considered far more suitable. If Branson did not agree, they said, he was welcome to distribute the film with whatever soundtrack he liked; but they could not be expected to talk of it as their own.

Faced with this threat, Branson looked for a compromise. The Muldownie soundtrack was used for the reviewers and the premiere; once the film was on general release, however, it would be replaced by the work of the Eurythmics – provided market research supported the view that audiences did not actually object to the more commercial rock soundtrack. In November 1984, a month after the film’s release, Radford took the opportunity of giving an acceptance speech for an award for best British film of the year to attack Branson’s company for having ‘foisted’ the Eurythmics soundtrack on him. That was embarrassing enough; Perry them compounded the sin by giving an interview to a gossip column in the Daily Express, in which he blamed Branson’s inability to sell the film in the United States on his ‘inexperience’, and threw in an accusation of lying for good measure. Branson threatened to sue for libel.

The small satisfaction was that Perry and the newspaper caved in quickly, apologizing and withdrawing the allegations, agreeing to pay Branson’s costs as well as their own, and making a donation to charity. But for Branson, the losses he made on the film came with an important lesson. Never again would he be tempted to set aside his own commercial interests for the sake of backing a director who wanted to make a masterpiece. In media businesses – whether records, books, films or magazines – the proprietor had to stay a little aloof from the product. Once he became too swept up in the creator’s enthusiasm, his financier’s judgement was sure to suffer.