Witness Statement of Aidan Barclay

17 Pages·2012·2.92 MB·English

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WITNESS STATEMENT OF AIDAN S, BARCLAY
Chair h Media Grou~
I make t&As statement fn my capaci%~ as Chairmm~ of Telegraph Media
Group Limited (TMG) m response [o a Sec~on 21 no~ice from the Inquiry dated
19~h March 2012.
2. I have been Chabman of TbfG since July 2004 when Press Acquisitions
Limited (a company incorporated for ~e purpose of the b’ansacflon) acquired
~ae Telegraph Group Liwdted @om Holq~ger UK Holdings Lkmited.
Hfstoricai Acco~n~ of Ce~ercial Interests
3. ~e commercial interests of my faraiIy fa!! into five main categories: hoteIs
and leisure; retailing; newspapers and magazines; detiveD, and logis~c
opera~ons; and property,. We employ in excess of 20,000 people in ~ne UK. I will
deaI wi@~ each of these categories below) wiS}~ notes about ~e role of
gover~ment decision-making and the reguNtory environment in wNch t~ey
operafe. I will not single ou~ in eac5 case the role of ~be Office d Fair Trading
(OFT) obviously has si ant responsibN~ in scru~Nsqmg and denting
mergers and acquisi~on% and wid~ whkh i have had a number of dealings over
tl%e years, but i set out in Appendix A a chr®nological list of ~ansaeffons
concerning ~e family interest d~at have been notified to the OFT or Compe~i~on
C ssion for approval since 2004. I would note ~nat neither Sir David nor Sir
Frederkk Barclay has opera~onaI invoh,~ement wi~ any of ~e busk~esses.
4. Hotels and leisure. Our interests in ~is sector are ~e Ritz Hotel, which
we acqmred @on Trafalgar Hoarse in 1995, and The Cavendish Hotel wNch we
have owned since December 2006. Following the purchase of The Ritz Hotel, we
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obtained a gaming ~cence to operate %~e Ritz Casino. Be>*~een 2007 and 2009 we
bulk up a 10% stake in IHG pIc (lnterContlnentaI Hotels Group), which we sold
in July 2010. We currentIy have approximately a 64% :interest in Coroin Limdte6
the parent company of Maybourne HoteI Group, whi& owns Claridge% The
Connaught and The Berkeiey t~@tels.
The regulatory environment for ~qe Ritz Casino is monitored and
supervised by The GamNing Commission.
6. Retailing. in this sector we own Shop Direct Group, the fox~mer
woods home shopping business which we purchased from ti~e Moores
family in Nbvember 2002 and then merged with the Great U%iversal Stores home
shopping business, which was acquired in May 2003 Shop Direct Group is one
of ~e UK% largest on-line and home s~pping retaiI businesses, supported by its
own financial services group. The Littlewoods stores were subsequently sold to
Associated Bri~sh Foods in July 200,5.
71%e Government dc%par~ent which is mainly responsible for this sector is
the Department for Business, I~ova~on and Skills (DBIS}~
8, New ers and magazines. As stated above~ we ~¢1~ T\4G,
pubAishes ~%.e Daily Telegraph, The Sunday Telegraph, rr~e WeeHy Telegraph
at@ tNeg~%,:~.co~gk. We also ow-n The Spectator and Apollo magazines. We
owned The ~otsman, EdLnburgh Evening News and Scotland on Sunday
newspapers ~om !995 untiI we sold them to Johnston Press pk in December
2005. We also owned ~e BuJmess magazine (former]y Sunday Business), whi&
was closed h~ 2008.
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~I~he general reg@ato~~ environment for ~he editorial operations of
newspapers and magazines is established by the Press Complair~s Commissiom
Occasio~lly issues arise which relate to OFCOM or to ATVOD. The
Government depar~ents cover dqis area include ~Ae Department for
Cul~re, Media and Sport and DBIS~
I0, Delhreries and ~cso We own the Yodel delivery business @ormerly
known as ~he Home Delivery Network), which is a parcels business and includes
~e DHL domestic home delivery service fhat we purchased in March 2010.
<~e Government depa mainly responsible for ~is area fs DBIS~
Proz)er~ and real estate We have been involved in proper~¢ for more
than 35 ye~s. This business is run through our Group proper%~ management
company Trenport Im:es~ents Limited. Trenport owns its own port,clio of
development proper/des and also m.~ages the proper~ irr[erests within our
Group of companies~
13. The mam~ re~latos,~ ~amework withh-~ which Trenport operates is laid
down by local planning auhhon~fies. ~ne main Government departmen~
responsible for this area is ~ue Depar~ent for CommuniNes and Local
Business Model
14~ Philoso vernance and leadership. My family’s business interests are
relaNvely diverse, but one cepStral philosophy has underpinned our approach [o
acquisition and grow[h~ As a fa~y we believe in stewardship - it is somethLng I
am passionate about - and over ~he last few years we have acquired assets c¢
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ins~ta~ons that were un]oved~ underf~ves[ed am{ m decline, and sought to
resusd[ate sad renew d~em to face d~e h~[ense challenges of ~e 21st cen~ary and
global c@mpeddon I have always made dear that - with great iconic companies
such as ~le Telegraph and ~e R~z - we wanted to reinv%orafe them and
ensure t~ir conS~nued success well into the fuVare.
15. The Telegraph is certah~y a good exampb of that philosophy. When we
Ix}ugh[ it, [t was a business seemingly in long term dec]h~e. It had been starved of
hwes~e~L IS cukure was defea~st [here was no wiH[o win and to be the best
~nere was no focus c@ custom<~ps, and the company was riven wifh
org~Sadonal basiers fha~ made k impossible to do so° There had been no
attempt to embrace £~e di~ta[ revolu~on d~a[ was already be
g k’}
h~ansform the newspaper indus,)< And bo~ the editoriM and c
rcial sides
of ~e business had no unders%anding of each o6her’s needs and prioides~ or
how Jley could work effec~ve% to eDi~ance all our p:roducg~ This was a business
~a[ was neglected.
16 As new ®wners, fhere were four priori~es for us. Eirsdy, to ensure dnat we
operated as one business~ not a group of compe~ng vested h~erests. ~cond, ~at
the business concentrated sharp focus on customers, bo~ readers and
commercial p~ers. Third, t~at we rea~sed d~.a[ dne old woid of pff~nt -was
declgning and that in order to sundve we needed to renew ourselves as an
integrated mul~-media business that offered customers first class news and
comment on what@~,er platform iqey wished to read or view it ono And finally,
that we needed to create a g culvare, in which all [hose w g for us
believed iqat ~ey were capable of performing at the highest possible level.
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17~ ~ose were demandmg o~ectives for a company that was -as i noted
above ~ unloved and undeNilvested, and requked first and foren-tost si
cant
cul~ral and technoIogicaI change, and at s what we set about dohlg°
18. In complex busm~esses such as the pubIishing hndus~y, that level of
change requires ~e best people to run fl~e management m~d to push ~$~rough
51ndamen~ reform of the commercial s~uc~res. Our approach to the
Tele%aph, as it has been wi~ every off~er busk~ess we own, is to put [he best
avaflabIe teams in, and [o encourage and empower them to drive change In the
case of , I appoLuted Murdoch MacLennan, who was then Group Managing
Director of Associated Newspapers and frc~m whom the Inqu~y has alrea@
heard, to head the business. 1%ve him ~e four key obiectives I set out above,
and he ibsen set about puttmg together a new management team with the best
possg~le expertise in aI1 i~e areas we needed to tackIe. I am very proud of
everything tha~ they have achieved to date in reshaping ~&e business and taming
ft into a commerciaIIy successf@ organisaEon, although tlnere is fur~er to go on
our ioumey and there wN be many challenges in fine fuVdre. At the end of March
2012, fhe Group reported pre tax pr~{its of £55.7 n for C~e 20!1 financi, al
year, even h-~ extremely tough economic condNons and despite having made
si can~ inves~nent in tl~e digiNI tecb~uologD: we need to embrace in order to
I a]so made dear to Mr MacLennan~ as I always make dear to all d~oe other
CEOs, that I expect the Nghest standards of governance and of ethicai behav~our~
as would be required in a punic company, it is one of my rods to ensure that
iaose discipiines are work±ng, and I wilI set out beIow in paragraph 22 F~ow I
seek to do ~haL
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~ce Mr MacLens~a:n and }is team were m place, I devolved opera~onal
responsibi]i~ to them° Of cou~rse, I took - and continue to take - a great deal of
personal L~terest fn the development and success of aI] [he businesses and dqe
people involved Lq ~em, as wei! as Lq issues of governance: but it is not m},-
philosophy or prac~ce to seek k) mdcro-manage them. It is up to the CEOs to run
them. That is an approach I take across al! our opera~ons. This impacts in some
areas that d~e Inquimj is cove , such as rc£a~onships with pol~ldcians, and I
will deal with feat later in paragra~> 39.
I very much see my role in the businesses - aside from se~ing the
governance frameworks - as helpLng my teams to create value and improve
per[ormance. I firmly believe that fn an); successhi enterpise, c~@nge is a
constant: it’s not son g to be feared, but embraced. I encourage the CEOs
and senior teams to be radica! in their £~inking, and to back their instinct.
Enterprisi~g businesses need c(~nstant~° to be pushk~g forwal~d~ If a bu.iness is
sta.dc, it is in effect - in a fa~ changing woid= going backwards. For me,
incuIca~ng ~is philosophy into senior management is "~,,%~at leadership is about
22. I seek to s~ucture my involvement xkn h~o ways. Efrst of atl, I have
established very clear and consiLstent Hnes of reporNng. I am based at ~e office of
E1]erman InvesNnenS~ Limited, which is the Group Mead ~fice for each of the
businesses~ At Ellerman, I have a senior colleague who)is fn effect ~e
~n" for each of the CEOs. whose prLnciple fundion is to maintain re~alar
contact with [hem. In the case of T},4G this is Rigel Mowa[t, an experienced
execu~ve 7%e flow of mfocma~on fl~om ~e businesses to their point man, and
t~ough ~em to me~ ~s exkemely re~lar. If keeps me in touch, it makes sure I
am aware of problems, and i~ helps to higt~.2igh~ oppore~nifies. I Hke also k)
ma reg~ar persona! contact. So, for instance~ there are weekly video
conferences wifia most of @~e busmesses, as well as
a call on a Friday
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affernoon for a round-up of the week. And I also make myself arab[able by
phon% or dqrough a meedng, ~t any dme that a CEO has a specific issue with
which 9~ey w£sh to deal or to discuss~ ~is com.bhna~on of s~uctured, re~alar
reporting through to the centre, and my more inforrna~ discussions, wois well
fo ensure both that the bushues.ses are accoun~ble and @at in hJrn I am able to
con~fbute where I can to Lheir growth and development It is an effec6;ve S’}~r>
As ~ar as ~e isk managemen[ and governance s~uc~res at are
concerned, these have been covered in a n r of previous wi~ess statements~
I refer in particular to Murdech MacLennaWs ~ad~ess statement paragraphs 7-%
rr Ronayne’s, paragrapM 7-1% Tony Gallagher% paragraphs 5 and 41, and
Inn MacGregor% paragraph 9
24. Press @eedom and 2ublic interest. A free press is fundamen~ol to %he
proper func~on~ng of a d ~.c sode%< It is the role of newspapers, and tlqeir
associated websites, to scru~nise those in positions of influence and power and
to report in ~e punic interest. I also believe it to be 6%e rob of newspapers to
aign on issues which are of Lmportance 1o their readers.
25. Over the Ias~ few years, the Telegraph has estaNished its cred
s as an
inves~gadve and campai~m~g newspaper. The award-winning expose of the
scandal of s’ expenses ~ 206}9 - about which the Inquiry has heard ~om a
number of wi~esses - was prdDably d-~e most irnportan2 piece of invesdga~ve
journalism across [he Bi~sh press in d~e last ~’o decades,, It is a brillfant
example of what a free press is about: holding polf~cians to accoun% espedaIly
When it involves tiqe abase of taxpayers’ money. ~qa{ scandal would not have
come to light without the abfli>7 of a quali%~ newspaper and its website to
assimilate, veri%" and publish a huge amount of informa~cm. Other impotent
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m~,esdga~ons in recent monks moclude the scandals over Exam Boards and over
abor~on clinics: ~ley undetine what a vi~l Kie a vibrant newspaper ~ndus~y
piays in punic deba~e and scrutiny.
CampA g is also an important :~Jnc~on of newspapers and their
weksites. In recent years Telegraph titles l-rove campaigned <m a broad range of
poli~cal and :social issues. 7%~e best examples b~clude the Daffy Telegraph%
campaign regarding d~e redorm of ti~e pianning Iaws and ~e Sunday Telegraph%
campaign against hhe foresh3, sell off, as we]l as its ~’Lest We Forge~~ ini~afive to
proVect crumbling war memoriak
27. As far as a poten~aI conflict bee~}’een our commercial interests and the
punk interest in free and independent reporffng are concerned, as I set out
~io~~ I do not interfere in tie editoriaI content of ~ae newspapers or magazines
we own. Moreover, there are very clear dhdding lines be~,e~m the Telegraph
and our other business in,rests and the ~’o do not collide. I insist that where
[here is any form of reladonship ° for instance, one of ~e businesses bookh~g a
venue at a hotel, or ad space in a newspaper- that it is arms tength, ~ansparen[
m-~d paid for. Normal c c~dai and corr~merdal obIigafions a]wa),s apply and I
regard ~is as maintaNk~g good fLrmncial discip~ae. I believe it ~ important in
~he public interest no such conflict could occur at TMG:
28. Editorial governance and Lndepende.nce I am a passionate beIiever in [l~e
vital imporNnce of edkoriaI independence. Editors working for the Tele%aph
have the fl’eedom to edit ~heir newspapers as the), Lhink fit and make a]I editorial
decisions. 7~ey are req@red, of course, to operate wi~in the terms of ~he law
and of ~,e PCC Code (as nil staff are), and these are in fact conSacVaal
responsiYflities, but wlhat appears in ~’~eir paper or on the website is their
responsibili%,; and, indeed, ~eir key acco~mtabi]ih~ is to d~eir readers,
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°D~e appoi nt of the editors of the newspapers - abng with al] senior
management - is a ma~er for the CE@ as senior appoin~nents would be i:n a~[
J~e businessem I made dear above fimt I do not seek to mffcro-manage the
businesses, and that includes the hiring and dismissal of key staf£ biurdoch
MacLennan is d~erefore responsible {or this area. He is free to ask me for my
op~nian and has some~mes &eked me to mee[ people he fs intending to appoi~qt
for my view. If asked, I am happy to do so, and iv)provide ~oa[ is in effect a
second opiiono B@ the decision is Es. I regard that as an important aspect of the
editoia] and c erda] independence o:f the newspapers°
Once they are ~fippoin~ed, I Hke to have a rela~onshfp with arn editor o as I
would with a senior execu~ve in any of ~e businesses ~ but I alwa) s make clear
[o them thai I regard [~eis rela~onship and any expression of views as being @~ose
of an avid readen I do not issue ins~uc~bns to editors, interfere in their editorial
judgement or do anything to compromise their posi~xm. Will Lewis, in his
evidence to ~he House of Lords Communica~ons C
~e{~, underlined this
poin~ (and I aeach t~t exchanf~e as Appendix B for ease of reference); as did
Gallagher when he gave evidence to the tnq~i0<
3L I speak ~o d-~e editors on average once every couple of weeks, and vet)’
~mch on an ad f~oc basis~ It may sometimes be more o~en~ but it is as likely tha~ a
for~ight or more can 8o by before we ~lk We discuss a range of issues about
the paper, but also about current affairs and what is happening in different parts
of the wofld~ These conversa~ons take place with the clear understanding on
both sides that editorial dedsioF6 rest wid~ the editors.
32. h terms of our support for particular political parties, including in.
Generai Elecffons, I think it is fair to say that ~e Telegraph has been a
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censervagve newspaper - most importantly wi@l a Ii~Ie ’%" 5ut also with a big
"C" - for many )Tears now, re~ec~ng its readership. It was when m} fa:mi]y
bought it and we have not sought to change that. Successful newspapers must
understsa~d and ~ke accouRf of their audience. We operate under an
overarching principle that customers come firs[. That does not mean fAo papers
do not ci~cise Conserva~ve Gow~rnments and polffticians: i~ regularly do.
Decisions on how to cover General Elec~ons and when and how ac~vely
to support a Par%~ with an endorsement I leave to t~ editors (as indeed was the
case when we owned newspape-s in ScoFiand). If my memoo~ serves, af the due
of the 2005 and 2010 General Elections, successive editors have sent me a copy of
the leading ar~des on [he paper’s choice ~e ~ 5efore ~ey appeared as a
ma~er of informadcm. However, I was not asked to comment The same goes for
the papers" c ~ on hudividual Ministers as issues arise from flue to flrne~
Quali%~ newspapers like ~e Telegraph d[Ies depend on conveying news
accur~ely and fully: ~a~ re s dialogue across the poli~caI divide, and I
~at, thanks [o ~e efforts of successhe editors and poli~cal editors, we have now
achieved that
3K I noted the comments Dominic Lawson made about me g a House ef
Lords Selec~ C e inves~ga~on in reference to f]~e ay Telegraph’s
coverage of David B~unke~ hn 2008~ %~e Inquiry will be aware tha~ these
c ts were rebuked soc<n af£er by WHliam Lewis (then Telegraph ed~or) fn
evidence Wen to [he same Commi~ee. However, in case it’s helpful, I a~ach his
evidence as Appendix C,
My memory of my conversa~on with Mr Lawson fs very different ~om
Ms. As I noted above, I speak perhaps every few weeks to editors to discuss
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