Seventeen years ago, almost to the day, The Independent described a British company as "one of the most admired media companies in the world". By 1994, it had grown in 50 years from humble origins as a regional newspaper publisher to a £1bn+ turnover public company with fast-growth, vibrant operations in magazines, online information, exhibitions, and radio.
Within a few years, the company had scaled the heady heights of the FTSE 100. By 2001, it was making pre-tax profits of £197m and had investment analysts purring over growth rates of 30-40% year-after-year. This was EMAP. A company on a roll at a time when "media" had just come into the focus of world attention, courtesy of the burgeoning internet, mobile telephony and pay TV.
To investors, staff and competitors alike, EMAP had star quality. In the then booming magazine market, EMAP was Apple, Virgin, Amazon rolled into one. Its long run of money-spinning new magazines, touchy-feely management, thousands of employee-shareholders, and down-at-heel offices defied those who said creative companies couldn't hack it on the stock market. EMAP was hot, and was frightening its competitors to death.
But, today, EMAP is no more. The "media" has never been bigger in the minds, paypackets and spending of people everywhere. But the British company which was its brightest star for a cool 25 years fell apart in 2008. So what went wrong?
The life and times of EMAP are the stuff of business school case studies and, perhaps, hold some lessons for high-growth companies in current times.
The story began quietly enough in the mists of 1887 when an east of England aristo MP, Sir Richard Winfrey purchased the Spalding Guardian as the first of a series of local paper deals in Northampton, Peterborough, Norfolk and Suffolk. Post-war, the family's collection of 17 newspapers was brought together under the none-too-sparky name of East Midland Allied Press.
The single step along a path that would eventually transform the little-known regional publisher into a major UK company was nothing more than its search for work to fill spare printing press capacity. In 1953, this led to the launch of Angling Times, followed (snigger) by Trout and Salmon, the acquisition (for £100) of Motor Cycle News (MCN), and the launch of Garden News. MCN went on to make millions for the fledgling business and became the biggest single earner for much of EMAP's life. But the real game-changer for the company (which had by then changed its name from East Midland Allied Press), came in 1978 with the launch of Smash Hits.
The funky fortnightly magazine, which published lyrics of current hits, was itself an instant hit. An initial circulation of some 10,000 at launch in 1978 soared to 1million within 12 months, catapulting the magazine and its publishers into the big league. It had a seismic impact on the magazine market. EMAP started pumping out new titles at a prodigious rate: Q, Mojo, Empire, Looks, Bliss, and Just 17 followed in quick succession. An in-store magazine called For Him was given the EMAP work-over and became the worldwide franchise FHM, in the booming lads market, selling almost 1million copies along the way, and generating tens of millions of profit for the bursting EMAP.
The young women's market beckoned and they launched Red, and revitalised weekly gossip mags with the huge-selling titles Heat, Closer, and Grazia. After years of relatively few new major magazines in the UK, EMAP showed the power of innovation to create new growth. Even Heat , which initially bombed when it was launched as a men's entertainment title, was boldly transformed into the market's most profitable weekly women's magazine. There seemed nothing that EMAP could not do to win in the UK's booming media markets.
This rush of fresh, glossy titles for young audiences who had tired of existing long-established magazines inherited from their parents' generation, would, on their own, have made quite a company. But that was scarcely half of the EMAP success story. The company kept on making industry-best profit margins from its regional newspapers before selling them in 1996 for £200m, virtually at the top of the market.
In 1991, EMAP spotted that commercial radio (then a struggling medium able to grab only 2% of total UK advertising spend) was set to grow and went about snaffling regional franchises successively in Liverpool, Manchester, Leeds, and Newcastle before muscling in on well-heeled London. Within a few years, radio's advertising share had soared to 6% and, with it, EMAP's earnings from major broadcast brands like Magic and Kiss FM. And the company impressively pushed magazine brands like Heat, Kerrang, Q and Smash Hits into music TV channels.
It didn't stop there. The high-flying company, which had published computer magazines before most people had computers and an internet magazine and online sites before most people had even heard about the internet, went on the acquisition trail, snapping up business information and trade exhibition companies. By the mid-1990s, with its consumer magazines still growing, the company's business-to-business division (with trade magazines like Broadcast, Retail Week, Nursing Times, and Construction News, and exhibitions like The International Spring Fair) was almost as large; and the radio division was not far behind. Everything was bubbling nicely in the company nicknamed "Every Meeting AParty" by its sniffy competitors. Thousands of EMAP's employees were shareholders, who flocked to meetings to hear about the company's latest successes. It was the place everyone in media wanted to work.
The City loved the go-go company that was notching up record earnings year after year with high-yielding organic development matched by smart bolt-on acquisitions, frequently snatched from under the noses of larger competitors. Analysts were falling over themselves to heap glory onto the British company that seemed capable of almost anything. EMAP's ground-breaking 1988 deal to form the Frontline consortium of competing magazine publishers to out-muscle the retail distribution of market leader IPC showed that the hyper-active, try-harder company was more than sizzle: it also had a strong strategy and sense of purpose.
And the success was real. This was no mirage in a media market shadowed by the rise and fall of the not-quite-what-he-seemed Robert Maxwell. EMAP's magazines were solid bestsellers, its businesses were roaring along and in market-after-market, the company was able to dominate consumer and advertiser demand for new publications. And in an era when 'creative accounting' was squeezed out of public companies, EMAP's profits were real too. Overheads were low and the company outpaced its competitors with cash flows that often exceeded reported profits. It was a fantastic story burnished by the pop and media stars who breezed through shabby-chic EMAP offices in Carnaby Street and Clerkenwell. Stories of divisional managing directors themselves changing lightbulbs and buying toilet rolls only added to the image of a company at ease with itself and its rising success.
But, you guessed it. Not everything at EMAP was quite as harmonious.
The 1994 interview in The Independent was prescient. The headline was: " They may be the odd couple of business but...Emap's chiefs are happy to keep on arguing in the Boardroom". The 'Odd Couple' was Robin Miller and David Arculus, respectively CEO and Group Managing Director, the two men who had driven the company impressively forward for more than 20 years. And it was an odd relationship, alright. But like Lennon and McCartney, the end product was great. Miller, the former Motor Cycle News editor and Arculus, the former BBC producer and "corporate planner", were a perfect combination for a company low on hierarchy and status, but strong on debate, innovation and action. It is easy to characterise the 6ft 7 inch Arculus as the 'big picture' strategy man and Miller as the one kicking the tyres and checking the engine; and it was a bit like that.
They had been brought together by Frank Rogers, the former head of IPC, the company which had swallowed up (as part of the Daily Mirror group) most of the longtime big beasts of the magazines jungle. IPC was a huge, centralised and slow-moving monolith (journalists called it "the Ministry of Magazines"). Rogers effectively came out of retirement to join the fledgling EMAP in 1970, determined to build the very opposite of IPC: an agile, fast-moving, innovation-driven, decentralised business. He saw in Arculus and Miller a formidable combination of skills, experience and attitudes.
Years later, the internal scuttle-butt of a sports-mad company painted a vivid picture: Arculus, was the under-estimated football striker, hanging around on the edge of the penalty area with his hands in his pockets and, every now and then, scoring a fantastic goal. For Miller, there were insider images of agonising for hours over a pint in a Clerkenwell pub trying to get one of his executives to think about whether his idea was really the best or whether he was right to feel confident about this deal or that. It sounds odd, of course, but, in a company with a culture of giving maximum responsibility to achievers, it worked, even though the two chiefs themselves seldom seemed to agree on anything. But the blend of questioning, encouragement and contradiction, was powerful propulsion for EMAP. Stupid ideas mostly got talked out - or proved to be winners anyway. Just like Lennon & McCartney.
The 1980s were golden days for EMAP. But nobody could guess just how much would change in the following decade. Frank Rogers stepped down as Chairman in 1990, having presided over 20 years during which a regional newspaper company once making £200,000 a year was transformed into a magazines powerhouse worth more than £2bn.
Graham Ross Russell, the company's one-time stockbroker, stepped up to become chairman. He resigned three painful years later, rocked by David Arculus who had threatened to take up a post as CEO of ITV. In a parting shot, which only EMAP insiders would understand, the amiable Ross Russell said: "My job would be a great deal easier without the influence of Banquo's ghost", making clear he was referring to Arculus. A protracted search for a replacement ended with the appointment as chairman of John Hoskyns. He was a former army officer and Thatcher policy adviser, and he found the Miller-Arculus sparring just too much to take. The Boardroom noise grew louder. Hoskyns resisted a bid to unseat him and two dissenting, long-standing non-executive directors were voted off the Board. Arculus (who was later to say the company "always had a pretty dysfunctional board) left in 1997 after 24 years, to take up a post at Clive Hollick's then punchy United News & Media Group, on the way to taking the helm of IPC itself under new private equity ownership, and (like Miller, after him) a raft of company chairmanships.
Then the changes at the top of EMAP came thick and fast. Robin Miller succeeded John Hoskyns as chairman. Kevin Hand, fresh from 'taming' the French and making impressive profits out of an acquired, loss-making Paris-based magazines business, became CEO. Within a few months, Hand (who had led the company's consumer magazines through great times), embarked on a transformational strategy straight from the books of company failures. He paid a breathtaking $1.2bn for the newly-floated Petersen Publishing in America, publisher of Guns & Ammo, Motor Trend, Sports , Hot Rod and 100 other hobby magazines.
US insiders laughed openly about the price of Petersen which had effectively changed hands twice in quick succession since being sold by its founding family. Thus, many of the cost savings that investors would have expected under EMAP's ownership had already been ripped out by enriched previous owners, one of whom was initially chosen to manage it. Reuters reported gently: "Some analysts say EMAP may be paying too much".
Kevin Hand, however, was bullish and forecast that, within three years, Petersen could be contributing some 50% of total EMAP profits. That it didn't even last three years might be only one of the new CEO's regrets. Revenue collapsed as the reeling British company struggled to explain why such an expensive US acquisition had become loss-making. It killed EMAP's long-established reputation for buying smart - and for winning. The Petersen acquisition was a disaster and the company finally owned up, selling the business on for $515m (less than 50% of the purchase price) in 2001. The deal cost Hand his job and he was succeeded in 2003 as CEO by longtime deputy and inspired publisher Tom Moloney whose fingerprints had been all over the Q, Empire, Mojo, FHM, Heat, Bliss and Just 17 successes and, latterly, also over attempts to bring the fateful US acquisition under control.
Meanwhile, EMAP's business media division was growing strongly still and making hay out of the fast-growing market for online information and trade exhibitions. In fact, B2B became the company's biggest-earning and fastest-growing division, but you wouldn't easily have found that in the publicity or investor presentations of the time where the company continued to promote its image as a consumer magazine publisher - ironically, at a time when investors were just starting to foresee the internet benefits for business information providers - and the flipside dangers for consumer media. In 2005, the head of the consumer division was on the EMAP parent company Board but his business division counterpart wasn't. That was probably marginally less irritating for the B2B boss than bizarre briefings about a proposed sell-off of his fast-growing division.
Taken together, it all seemed to underline how the once high-flying company had spectacularly lost its way. It is difficult not to conclude that this crisis at the top of EMAP was directly a result of the premature 'loss' of Miller-Arculus and the change (almost inevitably) to a more centralised power structure - with none of the can-do 'creative friction' of the dynamic duo. The 2006 closure of Smash Hits, the magazine that had started the EMAP gold rush 28 years earlier, seemed all too ominous.
Amid increasing investor criticism of EMAP's lack of online activity in consumer markets, there was also a realisation that EMAP was really a conglomerate of diverse media interests whose 'glue' had been Miller-Arculus. Without them, EMAP looked like disparate consumer and business-to-business media operations confined (especially after the expensive Petersen fiasco) to UK markets rather than having the financial muscle to develop internationally. The company whose over-strong management had once seemed able to achieve almost anything was beginning to look decidedly ordinary. As the online revolution started to shake the foundations of media companies everywhere, EMAP looked flat-footed. EMAP people who had been used to talking about the company's 'flying speed' were now worrying about its loss of altitude.
The clamour for corporate breakup grew. Tom Moloney found himself at the mercy of a Board whose non-executive directors were convinced that 'shareholder value' was best served by the sale of the company. With EMAP sagging under the debt levels of the bloody Petersen deal and spluttering growth in many of its key markets, Moloney knew he could not win. He quit in 2007, and the non-executives, led by new Chairman Alun Cathcart, kicked off an auction of all the group's businesses. It was an astonishing process which saw EMAP (against all the odds) securing better-than-forecast prices for the company's operations: £1.1bn from Bauer for the consumer magazines and radio divisions; and £1.2bn from a partnership of The Guardian and private equity firm Apax for the B2B operations. The French business, which had hit the buffers after some dazzling early days, went for £380m; and the always-struggling Australian business was sold for £38m. For EMAP's disillusioned investors, it was their best news for years: an unexpected £2bn payday.
It is reasonable to assume that the privately-owned Bauer bought what they thought - but now know they paid well over the odds. Apax and The Guardian, who also paid a price maybe 30% higher than the business is worth today, must wish they had never bought it at all. The December 2007 EMAP auction proved to be almost the high-water mark for media company values even though consumer magazine circulations were already falling in the months before what became the ultimate EMAP triumph. The digital revolution had arrived and the legendary EMAP would not be there to meet it.
David Arculus (by then, like Robin Miller, a knight of the realm) tried in vain to interrupt the auction and become a revivalist chairman of EMAP. But their time had gone.
It is not so much who killed EMAP, but what? What killed EMAP may have been a certain sense of hubris. The company had grown rapidly by being bold, taking risks and by being different. But, once its principal architects had quit, EMAP needed to change substantially to develop a new way of doing things in a world that had changed so substantially, internally and externally. Arguably, the often brilliant teams and managers below Miller-Arculus under-estimated the strength of this 'Odd Couple' partnership. EMAP at its best was a bunch of brave, daring, agile teams nudged, influenced and encouraged by Miller and Arculus. A successor might have believed that the vibrant EMAP business was still in place and that "only" the dynamic duo had changed. But they were missing the point. And so the once-formidable EMAP faced its ultimate challenges with only a fraction of its legendary resourcefulness.
The egregious push into the US (graveyard of many another ambitious UK business) was a deal that should have had the alarms bell ringing everywhere. The $1.2bn price tag was: a 45% premium to the then Petersen share price; three-times that paid for the same business two years earlier; and was a big chunk of EMAP's total market worth.
The deal, though, was spurred by a cockiness and confidence that had been EMAP strength in earlier times - but with Miller-Arculus. A major transformational deal by a new CEO in the heady first few months of office are almost as familiar a recipe for corporate disaster as are upgraded offices. EMAP did it all. The company had grown stunningly in the face of seemingly strong, entrenched competitors by taking manageable risks, being imaginative and by not taking itself too seriously. Now, all that seemed to have changed. And EMAP itself was also starting to become the incumbent attacked by new competitors. So, the company that took smart risks when it had so little to lose, ended up betting the 'farm' it had so painstakingly built.
The legacy of EMAP, perhaps the greatest UK media company (so far), lives on. The magazines are still (mostly) there on the news stand. Many are strong but FHM and Heat, which each once sold almost 1million copies, are now struggling at less than a third of that. Neither the magazine market nor the former EMAP's share of it are what they once were. But the impressive Magic 105.4 is arguably the UK's best commercial radio network. And the EMAP 'brand' lives on as the banner over a strong collection of B2B magazines, online information, conferences, and exhibitions - albeit currently weighed down by private equity debt.
I am drawn to the final lines of a celebrated musical for the epitaph of a mere media company that made a strong impact on UK popular culture and media in the last 20 years of the 20th century:
Don't let it be forgot,
That once there was a spot,
For one brief shining moment,
That was known as Camelot!
EMAP was Camelot.
Declaration of interest: Colin Morrison was a director of Emap Plc 1992-1996, responsible for its B2B division.