Tom Moloney: How he got Emap off the rack

The success of women's magazine 'Grazia' - the first of its kind in Britain - has put a smile on the face of Emap's chief executive and has also given the company a much-needed boost. Raymond Snoddy meets him
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The Independent Online

Tom Moloney, the head of a media empire worth more than a £1bn a year, was brought up above his mother Margaret's traditional Irish pub in north London.

His vast stable of magazines, radio stations, TV channels and websites includes such brands as Heat, Closer, Kiss, The Box and Empire, which revel in the glamour of showbiz and Hollywood, celebrating the trappings that come with success.

But there is no chauffeur waiting for Moloney, 46, outside the Emap headquarters at Russell Square. He prefers to take public transport from his home in Stoke Newington, often walks to corporate meetings and rarely gives interviews.

But if he was given just one word to sum up what Emap, was all about at the moment he would probably simply say Grazia, the glitziest of all the titles under his command. The launch of the new glossy women's weekly magazine earlier this year - the first of its kind in the UK - was one of the best things that Emap has done and even bitter rivals are able to concede in public that Grazia was one of the most accomplished magazine launches of recent years.

"We saw that in the women's market in particular the monthly magazines were just beginning to look slow in a very fast-moving world. It didn't matter whether it had fashion, editorial or celebrity content. They were not providing the sense of immediacy that we are seeing with Heat and Closer," says Moloney, who rose through the ranks at Emap.

He has topped media polls as the most influential figure in commercial radio and has presided over a series of successful magazine launches that have included not just Heat and Closer but also the men's weekly Zoo, which has established a new men's weekly sector with rival Nuts from IPC.

But while Zoo was fun and Heat a great money-spinner, it is Grazia, a title licensed from the Italian publishers Mondadori, that is currently bringing a smile to Moloney's face.

"Any independent observer can see that Grazia was something that had never been done before in the UK and we have really stuck to our guns," says Moloney before adding what he calls a "nuance". "It would have been incredibly easy to go down the glossy weekly route but it's not a glossy weekly - it's a weekly glossy."

The difference, Moloney explains, is that existing monthlies such as Vogue, Cosmopolitan and Marie Claire appeal to readers with an aspirational lifestyle while the weeklies are more celebrity-led, more disposable. "Grazia is taking those ingredients one finds in a glossy monthly and doing it every week and doing it successfully, and the consequence of that is that the readership is a bit older, a bit more upmarket with a lot more disposable income."

Whether the nuance is too subtle or not, it is clear that Grazia is a success. The latest official circulation figures show a weekly circulation of 155,000 (it is currently believed to be selling around 170,000), a level that has survived a 20p price rise to £1.70 less than eight months after its launch.

"This makes it the highest retail sales value glossy. The retail sales value of Grazia is greater than Glamour (the Condé Nast monthly)," says Moloney.

The launch may have been smaller that that of Closer, but it was also, Moloney believes, the most innovative Emap launch since the days of FHM because it was creating a whole new market in the UK that didn't exist before.

The current issue ranges from "Kate's rocky first week out of rehab" to "Sienna's fashion crisis", not to forget four pages of the 50 hottest boots anywhere.

Moloney was appointed nearly three years ago in the aftershocks of Emap's disastrous move into the US market. The group paid around £1bn for Petersen, the American magazine group, and sold up for £366m on the way out. As a result, chief executive Kevin Hand departed and for nearly two years the Emap chairman, Sir Robin Miller, stepped down to the chief executive's role to help to stabilise the listing ship before handing it on to Moloney, who had himself tried and failed to make something of Emap's US adventure.

The task turned out to be beyond anyone. The British company, he explains, had simply paid too much, an error that was cruelly exposed by an advertising recession in the US.

The painful memories have faded now and Emap has been expanding again this year - if not exactly on the old grand scale - through launching titles and making acquisitions in both radio and the online world.

Last month Emap dramatically extended its presence in the fashion business by paying £140m for the online portal Worth Global Style, a dotcom company set up in 1998 by Marc and Julian Worth. The subscription service, which provides news on global fashion trends, has a presence in 60 countries and 1,550 clients who include Giorgio Armani, Marks & Spencer and Selfridges.

Some analysts have suggested that Emap might have overpaid and hinted at a new dotcom bubble in the making.

Moloney will have none of it, arguing that the online service provides must-have information from the designer perspective about what is going on in the world of apparel, fashion and design-led consumer products.

Moloney says it has been a joy getting to know the people involved, before slipping into finance speak. The average subscription rate is £13,500 a year and the rate of subscription renewal is more than 90 per cent.

The purchase fits in, Moloney explains, with Emap business magazines such as Retail Week and Drapers (the fashion business weekly). The plan is to try to double the number of subscriptions to the website in three to five years.

Within five years Moloney hopes that Emap' s present 75 per cent dependence on magazine revenues will have been reduced to around 50 per cent, as faster growing media opportunities such as radio, online business-to-business information and events expand.

The significance of the Worth acquisition goes far beyond making some more money out of the fashion business. It is the latest expression of a traditional media company's attempts to come to terms with the internet, and there will almost certainly be further Emap online acquisitions to add to its existing portfolio of online business information brands that includes Glenigan, Brad and De Havilland.

Yet even though the shares of many traditional media organisations have been hammered because of worries of the competitive threat from online operators, Moloney is far from gloomy about the future prospects of the existing media.

"My view is that all traditional media products are facing an increased level of substitution, particularly from new digital platforms. But it's also clear, from what I can observe, that it's not binary. It's not one turns on, and another turns off. The winners will be those who offer, whether online or offline, services that are effective and relevant," insists Moloney.

The Emap chief executive explains, for instance, that he is not particularly worried about the threat of people turning off the radio to listen to music on their iPods.

"They want the news, the weather and what is going on in their local community," emphasises Moloney, who earlier this year mounted a successful £391m takeover of Scottish Radio Holdings, and with its stations such as Clyde in Glasgow and Forth in Edinburgh. It made Emap, whose radio brands include Kiss and Magic, the second largest radio group in the UK behind GCap, the group formed from the merger of GWR and Capital.

The deal was Moloney's answer to those who suggested either that Emap was not interested in radio in the long term or that the group either had to acquire or sell.

"We are quietly proud that we took a decision not to overpay and we didn't rush," says Moloney, who emphasises that they moved on SRH only once the froth had come off radio station prices.

He concedes that the decision to rebrand Emap stations in the north of England as Magic has been only a mixed success and there is absolutely no plan to extend the strategy to the Clyde 2 or Forth 2 AM stations.

"You have to ask yourself all the time what is it about radio that makes people want to turn it on, and it's not just music. The music is important but it's also about getting the tone of voice and local content right," he says.

Moloney accepts that for a time the advertising community fell out of love with radio partly because all the talk of consolidation in the industry tended to drown out everything else. The word, he believes, is getting through again that commercial radio is flexible, affordable and good at extending the reach of advertising campaigns launched in other media. He believes the worst may now be over for radio advertising.

"We feel that while we don't have the biggest commercial radio business in the UK we have the strongest, the most coherent and probably the most profitable," he says. "More importantly the business is best positioned for the future."

Apart from buying radio stations, Emap has successfully launched digital services such as Kerrang! and Smash Hits.

Emap's future expansion in radio will mainly involve new digital channels for everything from Sky, Freeview and the internet to mobile phones, as well as applying to communications regulator Ofcom for new licences. We will see tomorrow what progress Moloney and Emap are making in a difficult market environment when the company announces its results for the first half of the financial year.

Stockbrokers Credit Suisse First Boston are forecasting revenues of £544m for the six months with underlying profits of £108m.

But Credit Suisse declares itself merely "neutral" on Emap shares because of the tough times in radio and troubles in its French operations following from a weak advertising market and a price war in French TV listing magazines.

Early last year Emap's two French listings magazines TéléStar and Télé Poche faced new competition from the German publishers Gruner + Jahr, who had launched fortnightly publications at approximately the same price as Emap's weekly titles.

Moloney faced calls to get out of the French market or launch competing fortnightly publications and sales slumped.

Instead Moloney decided to stay and fight and invest more money in the weeklies, making them more timely with pages of news about television and television stars.

The company may have taken a hit on circulation in the first half of last year. After the usual time lag there will be bad news tomorrow about the advertising revenues of the two television magazines.

"This moment is the dark before the dawn, the blackest moment," says Moloney who also concedes that rioting in the streets in France is not exactly conducive to selling magazines.

Emap's commitment to France will remain and a French edition of Closer is selling 400,000 copies, following on from the success of a Gallic edition of FHM.

"Emap is a very tenacious organisation. We put a lot of store by brand. We put a lot of store by loyalty, both to our to our staff and our customers, and we tend to stick to things," insists Moloney.

There is another potential headache for Emap much nearer to home and one that has attracted the attention of many media groups.

The advertising revenue of Nursing Times, one of Emap's health service magazines, fell off the edge of a cliff earlier this year. Was this the result of the creation of the website NHS, and was the situation a sort of canary in the coalmine for a larger number of media groups than Emap?

What if there was a rash of such do-it-yourself recruitment websites across industry and commerce? Where would that leave the advertising revenue of business and professional magazines?

Moloney insists there was a misunderstanding and that things are not as bleak as they look. Clearly NHS had an effect but he believes that the main reason why both Nursing Times and Health Service Journal saw "massive, massive declines" in advertising revenue year-on-year was because of recruitment cuts in the health service.

"We feel at some time in the future that those revenues will come back, though not to historic levels," he says.

Moloney remains optimistic about the consumer magazine market and Emap's position within it. Both Emap and IPC, he believes, have benefited from the fact that there is head-to-head competition in men's weeklies. It has helped to create a market that didn't exist and get it quickly accepted by advertisers. And although IPC's Nuts has got its nose in front of Zoo, Moloney is not conceding defeat just yet and believes it is still early days. "The battle now is about the wider men's market because I think there are a number of Me Too Monthlies which really are unsustainable," he says.

The upmarket men's magazine sector, he argues, is led by two titles, Arena (Emap, sale 46,680) and GQ (Condé Nast, 125,050), unfairly omitting Esquire (NatMags 63,605). The mainstream is dominated by Emap's FHM with Emap's Zoo and IPC's Nuts defining the weekly skirmishing. His point is that Emap is always there where it matters.

History, Moloney says, is about to repeat itself in the women's weekly market.

It will only be a matter of time before glossy weeklies for women - or should that be weekly glossies - are launched to compete with Grazia.

The only thing that is certain about Emap, which prides itself on its decentralised structure and its small creative teams, is that Grazia will not be the last innovative magazine to come out of the stable.

There is in the company a semi-formalised system of generating new ideas, something that Moloney calls "creative conversations". Space and time are made so that people can just sit down to talk, often without a fixed time or agenda to see what ideas they can spark off each other.

Moloney admits that the company's executives do not spend too much of their time "refining strategies to the nth degree". Rather, there is a broad idea, a lot of aggressive opportunism and what Moloney calls a lot of faith in the ability of his staff to be creative and innovative.

"We would be surprised if in the next 12 months Emap were not to launch again because this is what we do and we do have a number of exciting ideas," he says.