The problem faced by companies in the creative industries is whether to treat the “talent” like normal members of staff.
There is a concern that if stars are not indulged, it somehow stops the creative juices flowing. The standoff between Jeremy Clarkson and the BBC this week after the Top Gear presenter’s fracas with one of his producers revolves around whether the value of his on-screen entertainment outweighs the off-screen misbehaviour.
I am reminded of the fallout between Chris Evans and SMG, the Scottish TV company that acquired his Ginger Media Group, including Virgin Radio, for a racy price in a bid to become a nationwide player. It was the ultimate “key man” risk: Evans was the station’s breakfast show presenter and the TV shows that Ginger made strongly bore his imprint.
When SMG sacked Evans after a three-day drinking binge, during which he failed to turn up for work, it was the start of a downward spiral. The company successfully defended an unfair dismissal case but was forced to sell its better-performing Herald newspaper to cut debts. Virgin, now Absolute Radio, followed it on to the sales block within a few years and SMG, now STV, slunk back to Scotland to rebuild.
Clarkson is nowhere near as crucial to the BBC, although Top Gear remains a great international moneyspinner for the corporation. Still, it pays for media groups to reduce their reliance on any one star. One way of reading ITV’s £781m acquisition this week of Talpa Media, maker of the talent show The Voice among other formats, is that it provides options outside its longstanding relationship with Simon Cowell, the music svengali behind two of its highest-rated shows.
The best media bosses – think Lucian Grainge at Universal Music or Bob Shennan at Radio 2, Evans’ latest boss – walk the line between freedom of expression and accountability. Profits or listeners have followed.
Does Clarkson personify Top Gear or does the programme have a future without him? The BBC should regenerate the show’s line-up just as it has done successfully for decades with Doctor Who, another of its biggest worldwide hits.
Private equity and the shift to ‘profit with a purpose’
There must be something symbolic about the British Private Equity & Venture Capital Association (BVCA) holding its annual dinner in the Banking Hall in the heart of the Square Mile. The venue is the former headquarters of Lloyds bank, but the funds represented on Tuesday night had moved in on the banks’ territory long before they sat down to eat.
Sir Ronald Cohen, a founding father of the private equity industry and its trade body – and the after-dinner speaker - foresaw such a time. In 1981, when he raised his first £10m fund, he was asked why he wasn’t setting up a bank instead. He replied that he thought the private equity world’s balance sheets would dwarf the assets of the merchant banks in time. True enough, the BVCA’s members now have £30bn sunk into 2,300 investee companies, with another £33bn to spend over the next five years.
While the public outcry continues over bankers’ misdeeds, private equity has become private once again. It has all but shed its “locust” reputation – although the Christmas collapse of Jon Moulton’s City Link parcel chain set the industry’s reputation back a bit. One worry is that George Osborne’s tax crackdown on fund managers’ fees – details are due in next week’s Finance Bill – could inadvertently hit venture capital and co-investment funds. But apart from that, life is good.
Sir Ronald’s favourite topic is the shift from profit-driven business to “profit with purpose”, which he sees as every bit as seismic as the move from bank finance to private equity. At the moment his favourite example of social entrepreneurship is Toms, the Californian footwear company that donates a pair of shoes for each one it sells. It must generate a decent profit alongside its purpose, or else it wouldn’t just have refinanced with a valuation of $600m (£400m), he argues. Before that, Apax Partners, Sir Ronald’s old firm, was reported to be in the running to buy it – a very visible stamp of approval for a new way of doing business.
How Tidjane Thiam did the slam dunk at Prudential
Much poring over the secret of Tidjane Thiam’s success this week as the Prudential boss quit after six years to run Credit Suisse in Zurich. Mr Thiam is known for being an Arsenal fan but he picked up tips on team building on the basketball court. He told a TV interviewer that if “you are five on that pitch, God, you learn a lot about teamwork and the weakest link and how you have to get together and pull each other forward”. I suspect he might also have learnt a lot leading a government department with a staff of 4,000 at the age of 30.
Success is also bred of humility, like when he took two suits to the Pru’s AGM straight after the botched £24bn bid for the Asian insurer AIA because he had been advised to expect some egg throwing. There wasn’t any, and the next year he didn’t pack a spare.
In his Desert Island Discs appearance, Mr Thiam said that in his country of birth, the Ivory Coast, the measure of a citizen was decided by the turnout at his or her funeral. His passing from British corporate life has rightly drawn an enthusiastic crowd of wellwishers.