Profile: Reformer badly in need of a good result: Sir Colin Southgate: The man who pruned Thorn EMI down to two core businesses has yet to see the fruits of the changes, writes Patrick Hosking

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THE BEATLES might have written Yesterday with Sir Colin Southgate specifically in mind. Not so long ago his troubles seemed so far away. But in the space of a few months, Sir Colin, whose Thorn EMI group purchased rights over many of the Beatles' biggest hits last week, has suffered enough setbacks to send McCartney hurrying back to the score to add more doom to the lyrics.

In September, Thorn's US-based TV rental empire, Rent-A-Center, was accused in the august pages of the Wall Street Journal of using strong-arm tactics in the repossessing of its products - including the hiring of Hell's Angels - and of charging usurious rates of interest to America's poor.

The group had already come under fire, along with other music publishers, over allegedly exorbitant prices for CDs, a charge now under the scrutiny of the Monopolies and Mergers Commission. In the United States, alleged restrictive practices in music retailing are under investigation by the Federal Trade Commission.

Thorn EMI further stands accused of paying too much for some acquisitions, notably the pounds 510m it paid for Richard Branson's Virgin music operation, and of failing to get rid of some dogs, notably the defence electronics business (the sale of which to GEC has twice fallen through.).

Last week, Sir Colin reported flat half-year profits and left the dividend unchanged. There was further disappointment for shareholders when it was revealed that the troubled defence unit had lost another pounds 14.7m.

A year ago, Sir Colin was riding high, enjoying the reputation of the man who had turned Thorn round.

He had transformed a hotchpotch of unrelated businesses into a well-disciplined group, standing proud on the two pillars of music and rental.

That is a fair assessment. But for all the plaudits, the rewards have yet to come through in the bottom line. Thorn's most recent earnings per share - the most commonly used measure of corporate performance - were 45.3p. That compares with 53.1p in 1988, 58.6p in 1989 and 78.4p in 1990. The unpalatable truth, and one not fully grasped in the City, where Sir Colin has won many admirers, is that the old overgrown version produced better returns for shareholders than the lovingly pruned and reshaped group.

The octopus whose tentacles included Elstree film studios, EMI cinemas, Inmos microchips, and a string of factories making everything from Tricity cookers to light bulbs, Kenwood mixers to Ferguson television sets, was a better performer than the two-legged creature it was transformed into. The Thorn share price over the last five years has done no better than track the stock market.

According to Jason Crisp, an analyst at stockbrokers Societe Generale Strauss Turnbull Securities: 'It's been one of those companies which has been on the verge of coming good for an awful long time, but hasn't yet done so.'

'But Southgate's a charismatic guy and well liked in the City. He's probably worth a point on Thorn's stock market rating.'

Bruce Jones, his counterpart at Smith New Court, agrees: 'Investors have a lot of respect for Southgate, but there is a feeling of 'when is he going to deliver?' ' And Sir Colin has little truck with dissenters, he adds: 'They're a very thoughtful management. They reckon they're pretty right. If you disagree with them, you haven't thought it through as carefully as them.'

The conventional wisdom is that Sir Colin's vision will come good. Certainly the music division has performed superbly, restored to a disciplined world-class business with a mouthwatering array of artistes, including Janet Jackson, Tina Turner and Queen.

One associate, however, confides that Sir Colin has 'had a tendency to hold forth on his views a little too publicly before delivering on them'.

Certainly his vision has changed since 1987, when he was appointed chief executive, and 1989, when he took on the chairmanship too. There are some who believe that Thorn's development is as much an accident of history - the result of what was sellable and what wasn't - than the product of a perfectly executed strategy.

Four years ago, for example, Sir Colin saw lighting as one of the core businesses and wanted to buy a big lighting company in the US.

A tall and charming man, he is well liked. 'He's a decent, straightforward, trustworthy man,' says one adviser who knows him well. 'He's very good with people, especially at handling the monster egos in the music biz. He's the kind of guy who likes to work the shopfloor.'

He has been known to fly from London to Denver, Colorado, and back the same day to attend a bunfight at a subsidiary company.

The Thorn chairman is good company, eschewing the Perrier water regime favoured by so many chief executives and enjoying fine wines. Occasionally a short temper gets the better of him. He has been known to explode over a coffee stain on the carpet or a dud light bulb, say insiders at the small head office in Hanover Square.

Another Thorn adviser, the consultant Dennis Stevenson, who has just been appointed chairman of GPA, says: 'I like Colin. He's a big man in every sense. He's got passion and conviction. He couldn't be described as an intellectual, but he has a habit of getting the big picture right. One of the things I admire about him is that he won't sell businesses cheaply. The City says 'what a weed]', but Colin sticks to his guns and waits till the day he can get the price he wants.'

A computers man by background, Sir Colin enjoys the razzmatazz of showbiz, but is somehow distant from it. He sometimes appears to regard it as quaint, interesting but essentially alien territory, complete with fascinating customs. His office is decorated with old gramophones and pop memorabilia.

Whenever the subject of his pounds 703,000 salary and three-year evergreen contract crops up, he is able to contrast his pay with the millions earned each year by the singers on his books.

Even James Fifield, his lieutenant, who runs the US-based music division, earned five times as much last year. As well as having the dual role of chairman and chief executive, Sir Colin sits on the board's remuneration committee.

Now 55, he was born Colin Grieve Southgate, the son of a wholesale fruit merchant in the old Covent Garden market. At school, he hated sport and loved maths: his parents had him pegged as an actuary, and he spent the worst two and a half years of his life learning the profession at National Provident.

His break came when he was advised to go into the fledgling computer business. He joined ICT (which became ICL), designing customised programmes for corporate customers.

It was there he met Sally, daughter of the chairman, Sir Colin Mead. He married her in 1962, and they now have four grown-up children.

Eight years later, he and his father-in-law decided to launch their own firm, Software Sciences, which was sold first to BOC, then to Thorn. Sir Colin went with it, but retired after a few months to enjoy his new-found wealth.

He spent 18 months enjoying the good life of racehorses and travel, before rejoining Thorn as head of its technology business, in charge of security systems, data products and business systems.

His rise to the top was swift, accelerated by the 1985 sacking of Peter Laister, the then chairman and chief executive, in a dramatic boardroom coup.

His ascent through the ranks of the great and the good has been equally rapid. He served on the prime minister's advisory panel on information technology in the early 1980s, sits on the CBI's president's committee, is vice-president of the Engineering Employers Federation and a governor of Henley Management College.

The knighthood came in June 1992, six months after he was appointed to the Court (the board) of the Bank of England. He also finds time to chair PowerGen.

The ultimate irony of his strategic vision is that he could do himself out of a job. Thorn may eventually demerge its rentals division, leaving just the music arm, which is efficiently run by Fifield. Thorn's argument that the two businesses go together because they are both consumer-driven is tenuous. The rentals division, which runs the Radio Rentals and Rumbelows chains in the UK, is essentially a financial services business.

An alternative is for Thorn to acquire a large publisher. Sir Colin privately sees synergies between music publishing and the print media.

He may have to move sooner rather than later: the supply of large independent publishers is fast diminishing.

(Photograph omitted)

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