How the DJ turned the tables
Capital Radio is kicking itself for letting Chris Evans get to Virgin first. But, Hilary Clarke wonders, is theirs the next station on his list?
Sunday 14 December 1997
In the same way, executives at Capital Radio are now kicking themselves they didn't give more credence to the in-your-face, sacked Radio One disc jockey, Chris Evans. Last week the 31-year-old Evans snatched Branson's Virgin Radio from under the nose of Capital, which had made a pounds 87m bid for the station.
It was a spectacular coup for the red-haired Evans and one that has led pundits to proclaim him Britain's media magnate of the next decade. On the surface though, Evans appears more motivated by the desire to keep his job at Virgin. He had been hired by Branson on a 10-week contract to keep up the profile of the station while the Monopolies and Mergers Commission examined Capital's bid for Virgin.
"It was quite difficult to operate with a dark cloud hanging over you," said David Campbell, chief executive of Virgin Radio. "Capital wouldn't give any reassurances to the staff, so morale was low." By hiring Evans, who Branson had previously tried to woo from Radio One by paying for the two of them to travel to New York together on Concorde, Virgin hoped to maintain the value of the station. Evans' pounds 200,000 fee was paid for out of the marketing budget. It was money well spent. Within less than a month Evans had doubled the breakfast show listeners to 4 million. Capital, however, refused to talk to Evans, who was, he says, by this time completely enamoured with Virgin Radio and his job there. "It's hard to understand why Capital never ever had a conversation with Evans. I suppose they thought he was a wild man," said Campbell.
Any doubts Capital had were doubtless confirmed when Evans, realising he would lose the slot if Capital's bid succeeded, appealed on 27 October to listeners to help him find the funds to buy the station. "We have to buy the radio station by 19 November, otherwise we're out on our ear," Evans told listeners. "We need to get this sorted out - this is not a joke. If you can lend us 50 million quid between you, we need it." Listeners responded, including the Royal Institute for the Blind, which offered to buy a small stake in the company.
The live appeal was, however, illegal and Virgin bosses quickly dismissed Evans' act as a stunt. Cheques were sent for a few hundred pounds, but they were returned with a thanks, but no thanks note. Evans, meanwhile, was busy on an alternative fund-raising venture, this time with the respected venture capital and corporate finance firm Apax Partners. Evans' agent, Michael Foster, had met Apax director, Barbara Manfrey, at a dinner party in a Scottish castle.
"We were immediately excited. We saw this as the foundation of an interesting media company," said Manfrey. In less than a month, over relentless rounds of Pret-a-Manger sandwiches, Evans' aides and Apax staff hatched a complex financial deal that enabled the disc jockey to make his successful bid for his employer. Pinning down Branson to discuss the proposal proved a problem, though. By chance, Ronald Cohen, head of Apax, bumped into him at a breakfast in London hosted by the Israeli Prime Minister, Benjamin Netanyahu.
Evans' choice of Apax was a shrewd one. Apax was one of Virgin Radio's original investors and knew the company well. It also understood the media business and recognised the importance of Virgin's guaranteed slot on the soon-to-be-introduced national digital radio network.
On 11 November the MMC announced it would delay its verdict on the Capital bid until the turn of the year. On 12 November Evans submitted his formal bid to buy Virgin. The Sun got wind of the deal and ran the story the following morning. "It was probably the first ever takeover to make the Sun's front page," joked Campbell, who faced the embarrassment of having to attend Capital Radio's interim results the same day. "From then on, it became a contract race. The catch phrase at Virgin was: show us the money."
The details of the deal were hammered out between Evans and Branson in a smoky backstage room at the Virgin Radio Christmas party on 2 December at the Astoria in Charing Cross Road while the star guests, the Electric Light Orchestra were playing. On 8 December Virgin accepted Evans' offer to buy the station. The money was in Virgin's bank account by 3pm and the staff were officially informed at 6pm. All of them were to receive a bonus to compensate for the insecurity they had endured over the past few months. "I'm the boss, I'm the boss," Evans chanted on his show the next day.
Under the agreement, Apax put up pounds 23.7m and Branson was to contribute pounds 17.8 m. The French bank Paribas agreed to loan a further pounds 42.5m. A new company is to be created, the Ginger Media Group, which will include Chris Evans' TV and radio production vehicles and Virgin Radio. Evans will have 55 per cent of the company, Apax Partners 20 per cent and Branson and his family another 20 per cent. Virgin Radio managers are to get a 5 per cent holding. Evans got new shares in the company in exchange for the ones he held in the Ginger group of companies, worth about pounds 30m. Even though Evans is the majority shareholder, important strategic decisions have to be agreed by all the partners.
Evans' role in the company will be as creative director, spotting new talent and overseeing its development as well as hosting the breakfast show. Executives from Virgin, most of whom have retained their positions, are due to meet for the first time today. Meanwhile, the MMC is to publish its report in the new year on the Capital bid; something it requested because it may offer pointers to the station's chances of future expansion. Is there a chance Ginger Media Group will make a bid for Capital Radio? "It is an amazing theoretical possibility," said Campbell. "But then so was Chris's bid for us, so don't rule it out."
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