Profile: Chris Anderson: Media with passion
Magazine publishing: Future Network and John Brown Enterprises have made fortunes outside the mainstream; Ruth Nicholas meets a mogul with a burning enthusiasm for hobbyist titles
Sunday 11 July 1999
The founder of the UK's fourth-largest magazine publisher, Future Network, is slight in build and unassuming in manner. Apparently, whenever Anderson has a meeting at one of the company's offices, he waits patiently to be collected from reception rather than marching straight into the boardroom. Seeing him folded neatly and unobtrusively into a corner of the sofa in the Bath hotel where we meet, it is easy to believe.
Last month, the company he launched with a pounds 15,000 bank loan in 1985 floated with a market capitalisation of pounds 577.5m. At the end of the first day's trading that had risen to pounds 632m, valuing his 25 per cent stake at pounds 140m.
Yet Anderson appears more flushed with embarrassment than success. He prefaces many of his answers with awkward little coughs and chuckles; he uses the phrase "it turns out" frequently and attributes much of his success to luck.
Here's a snatch of Anderson-speak: "A huge piece of luck was to discover after the event - we didn't know this at the time - that there was this giant trend away from generalist media to specialist magazines. Future just happened to be [laughs] in one of those growth hotspots."
Colleagues are convinced that his new-found status as seriously rich won't change him - he was not exactly short of a bob or two before the flotation. Ranked 600th in this year's Sunday Times Rich List, Anderson had an estimated personal wealth of pounds 40m but few of the trappings that went with it. His clothes, like his demeanour, are understated if unquestionably expensive.
The former computer games magazine editor made his first fortune when he sold Future to Pearson for pounds 52.7m in 1994, trousering somewhere between pounds 30m and pounds 40m in the process. He bought it back last year, with Future chief executive Greg Ingham and Apax Venture Partners, for pounds 142m. Given that the company has just attained a valuation 450 per cent higher, that looks like a bargain.
"Clearly, in retrospect, it was a terrific bargain. We spent the money because we thought we knew what to do with the company and we had a different vision from the other buyers, but we weren't laughing up our sleeves or anything," he says.
Anderson and his partners had only 10 days to raise pounds 100m. He heard about the sale through an investment banker.
"I think Pearson would have preferred me not to participate in the auction - it complicates things when the founder of a company comes back into it - but I just had to get back involved. The potential horror was that it would be taken over by something like an IPC, ripped apart and moved to London and I would have felt really miserable about that whole scenario. It was also awareness that the thing had incredible potential beyond what Pearson saw in it."
Pearson's view is naturally somewhat different. The Future sale was part of a pounds 2bn disposals programme instigated by chief executive Marjorie Scardino and designed to refocus the business into four key areas: educational and consumer book publishing, business information and broadcasting. As far as it is concerned, Future gave a good return on investment and was a profitable business but one "that was worth more to someone else than else than it would be to us", a spokesman says.
Anderson is also quick to point out that the Future which has just made its market debut is a different beast from the one Pearson sold, as it now includes Anderson's US business interests, Imagine Media, and Il Mio Castello, an Italian publisher acquired in March.
According to co-lead manager Warburg Dillon Read, Future's growth projections (for operating profits on a pro-forma basis) amount to 55 per cent this year, 39 per cent next year and 36 per cent in 2001, which is the "incredible potential" to which Anderson refers.
As for the London thing, Anderson is practically allergic to the capital. This is at least partly because Bath is intertwined in his mind with the success of his company.
Anderson started the company after being fired by his then employer for refusing to move the magazine he edited to Ludlow.
"I remember driving down the motorway singing at the top of my voice. I was so happy to be free to do the thing I had been getting really excited about," he recalls.
The object of his enthusiasm was a magazine for Amstrad users, Amstrad Action. Anderson has always been a bit of a nerd, interested in games, spreadsheets and generally fiddling with technology. It stood him in good stead when he visited his local bank manager.
"One of the joys of being in Somerset was that I don't think my bank manager had ever seen a presentation with spreadsheets before. Usually he had farmers asking for money, scratching their heads and saying: `What do you think then?'" he says.
Anderson, who wears his 42 years very lightly, presented the bank with three scenarios "including the death one" in which Anderson would lose his house. In the early days, Future did almost die. At the time it seemed reasonable. To the best of his knowledge, there is not a drop of business blood in Anderson's lineage. He has always had an affinity with numbers, he says, but no formal business training. The plans he showed to the bank were based on playing around with spreadsheets.
"It was fairly easy to model the business, albeit all completely self- invented," he observes.
A few months after the launch, Anderson noticed that the magazine was running at below the death-scenario level. So he then bet the company on a hunch - that sticking software to the front cover would reverse its fortunes. This had never been done before and Anderson was right. Sticking software on the cover allowed him to double the magazine's price and it doubled the circulation.
Cover-mounted software is not so much commonplace as obligatory nowadays.
"It seemed like a bizarre thing to do at the time," he reminisces, particularly as software came on cassettes."
In addition to pioneering cover-mounted software, Anderson accepted software in payment for advertising space and flogged it through the magazine's pages. "Anything to pull money through the door," he remarks.
Another magazine that almost killed off the company was subsequently responsible for reversing its fortunes. Advance Computer Entertainment (ACE) was the first UK magazine to be produced via desktop publishing using Apple Macintoshes.
This was back in the dark days of the Eighties, when Macs crashed if you looked at them askance. In Anderson's words, it was a nightmare: "We produced a complete dog of a first issue." A complete reworking of the product and a year later in May 1989, Emap made Anderson an irresistible offer to sell it for just over a pounds 1m.
"That was another great piece of luck. By the time we got the offer, we thought that the market was heading in a different direction and that another magazine we had was where the real action was. Getting a million quid from them allowed us to stamp the foot on the accelerator and drive the rest of the business," he comments.
Future took off like a rocket. It now publishes 101 titles and employs 1,200 people in the UK, Europe and US. All of its magazines are for hobbyists, such as Total Film, Total Guitar, Mountain Biking UK and Classic CD. The key thing, according to Anderson, is that they are also written by hobbyists.
"Media with passion" is a favourite phrase and Anderson emphasises again and again that his people allow the company to identify trends in computer gaming and other specialist interest areas because his staff live and breathe their subject matter.
"From the very early days to today we get deluged with magazine proposals saying: `Hey, let's do this, this thing is hot, it's cool, let's launch a magazine for it,'" he says.
"It is surprising how far just a few good ideas can take you."
Given his devotion to Bath, it is ironic that Anderson now lives in San Francisco. He moved to the US after selling to Pearson "a wrenching, terrible decision" taken to fund Stateside expansion and internet development.
Anderson is tremendously excited about the internet. His American business, which is now part of Future, builds networks of related websites that it sells to advertisers as a means of targeting specific audiences. It establishes a host site, or network hub, that links to 15-25 independent sites, which receive a percentage of advertising revenue.
Anderson is just as passionate about the internet today as he was in computer games in the 1980s. And he still thinks of himself as lucky.
"What if I had been passionate about stamp-collecting?" he ponders. What indeed.
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