Scoot steered away from the highway to hell

The dot com lived fast, but now Terry Martin has to stop it dying young
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The Independent Online

The sense of relief is obvious. Terry Martin, the new managing director of, an online company with a particularly unusual past, no longer has to field questions on his controversial predecessor.

Robert Bonnier, chief executive until he resigned last year, was in the headlines again last week when his name came up in the trial of Andrew Regan, the Monaco-based entrepreneur who tried to take over the Co-operative Wholesale Society. But Martin isn't commenting. "It's a personal matter, nothing to do with the company."

Bonnier, it was said in court last week, received money for his role in a bribery scandal, where the bribe was organised by Ronald Zimet, a former chairman of Scoot, who is now a key witness at the trial.

Bonnier's time at Scoot was also controversial. Rumours of investigations into share trades in the company and the perilous state of its finances did nothing for its image, and neither did malfunctioning technology and a business model that changed rather too regularly.

Scoot is now under less sensational management. Where Bonnier was a young, flash, living-on-the-edge Dutchman, Martin is a down-to-earth, sensible guy from Liverpool, with a wife and two kids at his home in Hertfordshire.

The business is also more rooted in reality. Under Bonnier, it went on a rapid expansion spree. The acquisition of Loot, the free ads newspaper, during the stock market boom was not a fruitful move. Scoot had to sell the business to Daily Mail & General Trust for less than a quarter of the price it originally paid, to avoid going into administration. Bonnier also rolled out Scoot in Europe. But to stem the huge losses on this venture, the subsidiaries in France, Belgium and the Netherlands were sold to media giant Vivendi in July for one euro (around 60p).

Bonnier's influence is now at an end. He has even sold his significant shareholding in Scoot for £484,000, although at the height of the dot-com boom when Scoot's shares soared to over 350p (they now stand at 1.5p), this stake was worth £155m. As he goes, a new era for Scoot begins. It has finished its restructuring and is now sticking to the original plan: running a UK phone service that gives local directory listings. The only extras are the website and interactive TV services.

Martin thinks things are looking up. He says there is a genuine opportunity next year to expand, if and when the 192 directory service is deregulated. The market could be worth some £350m, he believes, which would provide strong revenues for a business that had around £10m of sales in the last quarter. Scoot no longer uses its freephone number, 0800 192 192, once the subject of a legal battle with BT which wanted the number for itself. Now calls are charged at 50p a minute in an effort to bring in more revenues. Martin admits this had an impact, with a 65 per cent slump in the number of callers. But after a nationwide ad campaign, the numbers are on the way up again.

And he thinks that subscriber revenues – from the businesses listed on Scoot's directory – will improve as the company's future looks more certain. "People expected we were going to go bust," he says. "I think confidence has come back to the subscribers, as we are able to spend significant funds on marketing campaigns."

Scoot's future is not completely secure as it has said it only has enough money to take it through to next May. But after staff cuts and big reductions in the cash burn, the next quarter's results will reveal whether Scoot can survive for longer. "This is the first real quarter where we will see benefits," says Martin. "The loss will reduce significantly in quarter four." It is also crunch time. The business cannot reduce costs further, so sales must increase to bring it into a profit.

There is another option. Scoot is currently in takeover negotiations, although Martin won't reveal who he's talking to. He only says that he is allowed by the authorities to talk to up to six companies.

But he's assuming that this won't happen and he's going to have to make it on his own: "The business is now in a stable position, so the best option is to see it through to profitability."

To do this will be a huge challenge for Martin, who joined Scoot in 1999 as a sales director. "The business has gone through some very difficult times, and I guess that if you go through that, you learn a lot."

Most investors in Scoot have written off their holdings, as has Vivendi, which owns a 19 per cent stake. Should Martin manage to deliver some value back to the shareholders, he will be as admired as Bonnier is now reviled.