Pearson's eyeball-counter focuses on a bigger prize

THE MONDAY INTERVIEW: Greg Dyke

It has emphatically not been a good year for Pearson, the pounds 7bn media and financial services conglomerate. But it hasn't been a half-bad one for the man who runs Europe's largest independent producer, Pearson Television - Greg Dyke.

Consider that Grundy Worldwide, the makers of Neighbours, produces soaps and game shows in Germany, Holland, Sweden and Italy and ten other countries. Or that Thames, makers of The Bill, are supplying popular programmes to ITV, cable and satellite channels and Channel 4. Or that SelecTV, the production company, is starting to export its award-winning formats to international markets, on the strength of hits like Birds of a Feather, Lovejoy, Shine on Harvey Moon and Auf Wiedersehen Pet.

"Two-thirds of our profits and half our revenues now come from overseas," Mr Dyke points out proudly. Revenues in the half-year ending June 1996 were pounds 100m, up 66 per cent year on year. In 1997, the stakes get even higher, with the launch of the new Channel 5, in which Pearson Television has a 24 per cent stake, and for which it is a privileged supplier.

Pearson as a whole is a different story. Uneven profit performance, bad acquisition judgement, and mounting criticism over its corporate strategy have fuelled a year of takeover speculation and the early departure of the chairman and the managing director.

The differing fortunes of the group and one of its leading subsidiaries is, one suspects, behind Mr Dyke's year-long refusal to do a major interview in the business press. Those close to him say he was just getting on with the job. But Pearson insiders concede he was keeping his head down for another reason. Why annoy management at head office, who were fighting off unwanted attention, takeover talk and potshots from analysts, by appearing to take public credit for Pearson Television's stellar performance?

The silence was all the more necessary when speculation began to grow about Mr Dyke's fervent wish to form a buyout group to purchase the television subsidiary. Pearson, which is in the midst of a wide-ranging rethink about its strategy, has not ruled out the idea of spinning Pearson Television off to shareholders, or even selling it.

Mr Dyke, a man of enormous television talent, even if possessed of a rough-hewn management style, had been widely reported as having sounded out the City on an MBO. The idea was not wholly incredible, as Mr Dyke has personal money (pounds 8m was his share of the windfall when his then company, LWT, was bought out by Granada in 1994). He also has won the respect of many in the City, who (mostly) like what he has done with Pearson Television.

The speculation was fuelled by persistent takeover rumours that swirling around the sprawling parent company, which in addition to Pearson Television owns Madame Tussaud's, Penguin Books, Addison-Wesley-Longman, the Financial Times, 50 per cent of the Economist and 50 per cent of Lazard, the merchant bank. Too diffuse a group of operations, the City complained. Worse, an ill-fated attempt to diversify into the CD-Rom and electronic games market, through Mindscape of the US, brought nothing but misery to the management that masterminded the acquisition.

Last week, Mr Dyke re-surfaced. In an exclusive interview with The Independent, he happily discussed his wide range of responsibilities - Thames Television, SelecTV, and particularly Grundy Worldwide, the production company bought for pounds 175m 18 months ago, as Mr Dyke's first big corporate move.

But he would not comment on the arguably more fascinating behind-the- scenes developments at corporate head office, not least the departure of Frank Barlow, managing director, and Lord Blakenham, the chairman and last remaining Cowdray family representative on the board.

He is equally tight-lipped on the challenge facing Mr Barlow's successor, the US-born Marjorie Scardino, formerly chief executive of the Economist group. She is to begin the new year with a series of strategy meetings with senior management, including Mr Dyke, who sits on the main board.

"You're the one I am meant to like," Ms Scardino was overheard to say to Mr Dyke when they first met. The two ought to get along: both are cheerful, bright and unpretentious; neither likes the stilted, blue-blooded atmosphere at 3BG, as insiders have christened headquarters at 3 Burlington Gardens, central London.

But does she like him enough to give him what he wants - Pearson Television? The coming year will tell.

Meanwhile, Mr Dyke professes to like what he is doing. He likes the risk and the rewards of taking Pearson into international markets, exploiting a stable of rights to popular programmes. "I'd rather be a rights-owner than a broadcaster," he declares, in what might be taken as his mantra.

In the future, Mr Dyke says, broadcasters will be less important. The real value will be generated by those who own the programmes. Fragmenting audiences, the launch of digital TV and the gnawing demand for cheap, plentiful shows will conspire to give Pearson Television an advantage.

So why aren't the traditional broadcasters doing the same thing? "I came out of ITV, and certainly I can say that it is not the kind of business that encourages you to take risks," Mr Dyke says. "We have known about the challenges of digital, of rights, of new competition in broadcasting, and the need to expand overseas and on the Continent. But not one of them has done anything."

The other problem is that the traditional broadcasters are too stuck in their elitist ways. In the UK, you are not applauded for the popular programmes. The production process was captured by the intellectual elite."

In the end, the logic of the changes in UK television will mean broadcasters will want to expand more aggressively into programme-making and rights acquisition.

"The monopoly is crumbling and broadcasters will have to own their product."

Mr Dyke has thought it all through. "As broadcasting fragments, it becomes harder and harder to hold on to brands. The ones with the good names are worth their weight in gold. You couldn't afford to build The Bill from scratch today. Building the name will get harder.

"I guess what I am saying is that, logically, broadcasters need to look at owning a company like Pearson Television."

That's as close as he will come to conceding the company could well be bought one day, and not necessarily by him. Rupert Murdoch's BSkyB has already looked carefully, aware it needs to develop a true presence in British programming if it is to reduce its huge programme acquisition budget.

The big challenge in 1997 will be to get Channel 5 right. Mr Dyke will become chairman of Channel 5 Broadcasting in the New Year, and has been taking a close interest in the preparations for launch.

He has had to live down his infamous contention that the controversial door-to-door retuning exercise - necessary to ensure VCRs don't suffer interference from the signal - was nothing less than a "burglar's charter". "That was the most expensive comment I ever made," he says. "Just look at the security features we had to build in as a result of that quote!"

He says that he is unbothered by the rocketing costs of retuning, now estimated at pounds 180m compared to just pounds 55m in the Pearson-led Channel 5 bid. Part of that stems from the addition of 4 million new homes in areas that originally could not have received the signal.

"The extra retuning costs are not a problem for the shareholders, because the more eyeballs there are, the more money we can make," Mr Dyke says.

Not a bad set of challenges to keep a chief executive busy. A new channel, global acquisitions, the prospect of digital television by the end of 1997. And in the midst of it all, a radical restructuring of Mr Dyke's parent company, perhaps even the demerger of the television operations.

Mr Dyke may be counting eyeballs for the new Channel 5, but his own eyes look focused on the bigger prize: growing Pearson Television, and one day perhaps owing part of it.

Start your day with The Independent, sign up for daily news emails
News
Bobbi Kristina Brown with her mother Whitney Houston in 2011
people
News
The actress Geraldine McEwan was perhaps best known for playing Agatha Christie's detective, Miss Marple (Rex)
peopleShe won a Bafta in 1991 for her role in Oranges Are Not The Only Fruit
News
peopleHere's what Stephen Fry would say
Sport
David Silva celebrates with Sergio Aguero after equalising against Chelsea
footballChelsea 1 Manchester City 1
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Caroline Proust as Captain Laure Berthaud in 'Spiral'
tvReview: Gritty, engaging and well-acted - it’s a wonder France’s biggest TV export isn’t broadcast on a more mainstream channel
Arts and Entertainment
music
Arts and Entertainment
Laura Carmichael in still from Madam Bovary trailer
film
News
i100
Sport
Serena Williams holds the Australian Open title
sportAustralia Open 2015 final report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links