by Tom Bower
In the three years since he had bought BPC, Maxwell had assumed that rejection was something of the past. He had after all become the printing industry's self-styled great hope. Over the following six weeks, as the two men engaged in a hectic battle to secure the support of Waddington's institutional shareholders, Maxwell was convinced of victory because he had secured acceptance in the City. But according to Watson, 'I was going to use any tactics to give him a nasty shock.' Maxwell, however, possessed the initiative and his tactics were unnerving. There were regular telephone calls to both Watson and his managing director David Perry, who had recently resigned from BPC, to persuade them to surrender. Perry recalls particularly the calls early on Sunday mornings:
'Bob Maxwell here. I just want you to understand that we can work together.'
'The business is not for sale,' replied Perry.
'You know that I'm going to win. It's inevitable,' concluded Maxwell with intimidating certainty.
Maxwell also persistently telephoned Watson in attempts to arrange a meeting. ‘I always refused,' recalls Watson, 'because I feared giving the wrong impression.' Finally, on Maxwell's promise that he would never reveal the encounter, the two met to discuss Maxwell's offer of a better price for the company and a seat for Watson on BPCC's main board as the vice-chairman. This, Watson realised, was Maxwell's classic ploy which had so often evaporated. The story of Donald Davies, who had been offered the post as BPCC's managing director by Maxwell in 1982, was already legendary. At lunchtime, Davies had excitedly confided the offer to two friends in a pub, only to hear that they had received identical approaches. Watson thought of the Yorkshire maxim, 'He talks as he warms.' All Maxwell's offers were refused and Watson returned to Wakefield. The next day's newspapers carried reports that the two men had met. Watson was shocked and called in experts to check Waddington's offices for bugs. 'He established an atmosphere of paranoia,' recalls Perry, 'and it seemed to be successful.'
Towards the end of August, Maxwell was heading towards a slender majority. Watson was as desperate as Robinson had been three years earlier: ‘I wasn't going to let him win.' His defences included the use of private detectives. One of their tasks was to check the truth of a claim by BPCC that it had sold a large property in Watford for £20 million with planning permission for development as a shopping centre. If true, BPCC's profits would be higher than predicted, so enhancing the value of the BPCC shares which were offered in the bid for Waddington. The detective reported to Watson that planning permission had not yet been granted since the local council was still hostile. BPCC's announcement had been premature.
Watson seized upon that mistake as an example of the 'optimism' which characterised Maxwell's past transgressions. His targets for the message were Waddington's shareholders, among them the Norwich Union, whose holding was 5 per cent. Their stake had already been pledged to Maxwell. 'I appealed to the fund manager to change his allegiance,' says Watson. 'I told him it was his duty to see me on a moral issue.' Take-over bids have rarely been perceived as moral issues but Watson transformed the bid for his small company into a test of Maxwell's character.
Unaccustomed in his recent past to such resistance, Maxwell was distressed by the unusual blitz of antagonistic propaganda which Watson had inspired. ‘I have had several Waddington shareholders complaining they had up to eight telephone calls urging them to withdraw their acceptances,' he complained. 'This borders on harassment.' Maxwell had clearly forgotten his own tactics during his bid for the News of the World. But when the Norwich Union switched sides, Maxwell tersely conceded defeat: 'Mr Watson threw a googly at me.' 'When he said that,' Watson remarks, 'he betrayed himself as a foreigner because every Englishman knows you "bowl" a googly.' When prejudice and prospective profits compete in a contested bid, Maxwell would always be the loser. His opportunities lay only where the unique talents of the 'jungle man' could be applied.
In 1982, Sir Alexander Jarratt, the chairman of Reed International, was seeking an opportunity to save the conglomerate from the legacy of merger mama and bankruptcy. Among its loss-makers was Odhams Press in Watford, an inheritance from the International Publishing Corporation, which was sited near BPC's Sun Printers. Odhams, which printed Woman and Woman's Realm magazines, would lose £5.5 million that year and had accumulated losses over the previous ten years of £30 million. Odham's plight could only worsen. Magazine circulations were still declining, there was chronic overmanning and there was no money to buy new printing machinery. Both Jarratt and the chairman of IPC, Leslie Carpenter, identified the only potential customer for their liability in Robert Maxwell. 'Although Maxwell was helped by the change of environment introduced by the Thatcher government,' says Jarratt, 'he had also changed the environment. But also, we lacked Maxwell's temperament and style to confront the unions.' Jarratt was soon to discover that he was a less effective negotiator than Maxwell.
'Negotiating with Bob', testify both Reed executives, 'is not a pleasure. We agreed to the terms of the sale within ninety minutes and then he began haggling and spent days and weeks renegotiating and rewriting the deal we thought had been settled. He's a born haggler.' When they finally did sign, Maxwell had obtained for a mere £1.5 million the Odhams factory, its twenty-three acres of land, a print order worth £30 million for IPC magazines plus a £7.5 million interest-free loan from Reeds for two years. It was a brilliant deal if he could cow the unions into agreeing to mass redundancies. His scheme was to sack 1,500 Odhams employees and transfer the printing to BPC plants. He would then sell the Odhams estate. If the unions protested, he would threaten to close not only Odhams but also BPC's own Sun Printers on the grounds that only one factory could be profitable. As always, there would be a deadline. 'Maxwell can say and do things', says Carpenter, 'which would stick in the gullet of traditional British owners. He is hard, skilful and persuasive.' All those qualities were exploited on the day the deal was signed. It ended, Jarratt recalls with amazement, 'in true Maxwellian style'.
Carpenter had travelled to Southend to brief SOGAT about the deal. Meanwhile in London, Jarratt, surrounded by lawyers, was signing the raft of documents which such agreements entail. Maxwell sat impatiently until he announced that he was flying by helicopter to Watford. Jarratt was still signing when one hour later Maxwell telephoned:
‘I addressed all the workers in the canteen and told them that at least half of them would be made redundant but I would save the rest of their jobs.'
'Yes,' replied Jarratt in trepidation.
'And do you know, they cheered me . . .'
'Well done’ interrupted Jarratt with relief.
'Yes, I'm rather good at that sort of thing,' swooned the man in Watford with pride.
After financing the 1,400 redundancies, the remaining profits of the Odhams site saved BPC from losses in 1984. Without that property sale, and the purchase and asset-stripping of the Bishopsgate Trust in the same year, BPCC's spectacular growth of profits, which played such a vital role in Maxwell's self-promotion, would not have occurred. Combined with Pergamon's record profits from sales of journals and his share deals, Maxwell started 1984 with substantial funds.
In contrast, Carpenter and Jarratt were still pondering how they would rid themselves of their last commitment to Reed's printing legacy - the Daily Mirror group.
13
'I only want to be of service to my fellow man' is a phrase which Maxwell fondly professed whenever asked to justify the apparent contradictions of his politics, lifestyle and business career. To many listeners, it struck the same chord as the superlatives which peppered his companies' annual reports. Invariably, they contained a surfeit of phrases such as 'excellent results', 'valuable source', 'record level', 'outstanding contribution', 'significant profit increase', 'very substantial', 'world leader', 'dramatic profit growth', etc. Throughout Maxwell's life, his chosen words conveyed meanings to his audience very different from those he intended. Accordingly, while the phrase 'service to my fellow man' implies the performance of a charitab
le or beneficial act, used by Maxwell in 1984 it meant, besides much else, his intention to purchase the Daily Mirror.
Soon after Odhams was sold, Alex Jarratt and the Reed board agreed that they also wanted to be rid of the Daily Mirror and the grinding struggle with Fleet Street's print unions which was sapping managerial energy in return for paltry profits - just £1 million on a turnover of £200 million. Jarratt is a former civil servant but with a distinctly non-Whitehall ability to take initiatives. He harboured no sentimental reservations about selling the Mirror, and had no wish to play the power game as the chairman of Britain's largest newspaper group whose six titles (Daily Mirror, Sunday Mirror, Sunday People, Daily Record, Sunday Mail and Sporting Life) sold thirty-one million copies every week. Jarratt was nevertheless mindful of the Mirror's historic traditions.
Formerly owned by Lords Rothermere and Northcliffe, it had in recent memory been controlled by similar giants, Cecil King and Hugh Cudlipp. The paper's radical editor, Guy Bartholomew, who in fifteen years had pushed the newspaper's circulation from 720,000 to 4½ million, had secured for the Mirror a mention in history as the western world's largest-selling daily newspaper. Its soaring popularity was based upon a mixture of sensationalism, original journalism and easily digested but intelligent reporting. The newspaper's heady success bolstered its executives' image of themselves as godlike figures who could stride the world without care about censorship or cost. The first major casualty was Cecil King in 1968, after he wrote and published a signed editorial 'Enough is Enough', demanding the removal of Harold Wilson, the Labour Prime Minister. Two years after his well-publicised dismissal, IPC merged with the Reed group, its glamour and prestige still intact, but its profitability declining fast.
Reed placed most of the blame for its losses on the thirteen trade unions in the Mirror Group. The machine room in the Mirror building had by 1970 become an unendearing model of anarchy and villainy. During the nights, especially Saturdays, large numbers of highly paid but unneeded printers sat in the basement of the ugly red-topped building watching blue movies or playing high-stake poker. Depending upon their seniority and muscle, many had even clocked in under two names and were receiving double wages for no work. Others had registered but were working or sleeping elsewhere. It was not unknown at the end of a shift for wage packets to remain unclaimed because the printers were too drunk to recall which phony names they had registered under on arrival. By any standards, their wages were phenomenally high, ample to provide luxurious homes, several foreign holidays every year and even funds to set up private businesses. It was an abuse whose roots could be traced back four centuries to the introduction of Gutenberg's presses. Although after 1970 technology had rendered their ancient crafts long redundant, the printers' jobs and privileges were protected by their mere threat to stop production if management dared to interfere.
At the Mirror, in common with all Fleet Street newspapers, the printers were paid not only to perform their task but also extra sums as 'compensation' if work was contracted to outsiders. Whenever the management attempted to interfere with this notorious catalogue of 'old Spanish customs', the consequences were predictable. A flick of a knife on a paper run or an inspired malfunction of a machine would sabotage that night's production, causing irrecoverable losses. Anxious to keep their papers on the street, the Mirror's management paid their printers' demands and suffered in as much silence as their self-interest determined.
The management's tolerance of those abuses would have been surprising had they not enjoyed similar privileges. In the floors above the printing presses, the Mirror Group's executives and journalists enjoyed a lush all-expenses-paid lifestyle which their talents would not have earned in pastures outside journalism. Both Tony Miles, the chairman of the Mirror Group, and Douglas Long, the deputy chairman, were grateful that Reed's granting of total editorial independence allowed them considerable freedom over expenditure. New arrivals at the newspapers were always pleasantly astonished by gargantuan meals, constant high-cost celebrations on the smallest pretext and profligate foreign travel in the style which few could defend as vital for journalism. There was constant ribaldry that the Mirror management's introduction of new technology had actually increased costs while similar machinery installed in Lagos, Nigeria, was functioning perfectly and saving money.
Throughout the 1970s, Jarratt and Carpenter hardly interfered with the abuses in High Holborn and did not even appoint a representative to the Mirror board. Deliberately, they made High Holborn into a no-go area. The sole overt sign of their control was a monthly dinner which Jarratt hosted at the Savoy for the senior editors. Jarratt rarely complained that the Mirror's circulation of 3.3 million had fallen behind the Sun's or that the newspaper's profits were declining despite his editors' down-market chase in the nipple stakes. But by 1983 the excesses were infecting expectations of other employees throughout the group and Reed's share price was suffering by association with its unwholesome subsidiary. Nearly all the traditional newspaper families had been driven out of Fleet Street because of the abuses and Reed wanted to join the exodus, especially since its shares in the Reuters news agency had become unexpectedly valuable and boosted the price it might expect.
During the summer of 1983, Jarratt and Leslie Carpenter put out what are known as 'discreet feelers' intimating that the newspaper group might be for sale. To their disappointment, there was absolutely no interest. 'The papers' profits had fallen badly and the reputation for excesses was so bad that no one would risk their money,' says Carpenter. Even Maxwell declined the offer, because, it was believed, he did not have the £100 million in cash which Carpenter mentioned as the price. Reed's problem was how to dispose of its costly asset. After brainstorming with its advisers, an unusual formula emerged which would make a virtue of their failure to find one individual who was prepared to buy the whole group.
In October 1983, Jarratt announced that Mirror Group newspapers would be floated as a separate company on the Stock Exchange and there would be a special provision in the conditions of the sale to prevent one individual winning total control. Ironically, since no one knew that he had privately rejected the chance to purchase the group, Jarratt's public announcement was interpreted as a deliberate snub to Maxwell's known ambitions. Jarratt mentioned two further conditions which would be included in the prospectus for the sale. The first was the tradition that the Mirror Group's editors had enjoyed unfettered freedom from the newspaper's owners. The second was the support for the Labour Party which the paper had espoused for decades. Reed's announcement was therefore greeted by the Mirror's staff with some regret but no foreboding. It fell to Leslie Carpenter to supervise this unusual transaction.
Carpenter, who was educated at Hackney Technical College, had worked in the print industry all his life and was well acquainted with its problems and personalities. Unlike Jarratt, he was a technician but he shared the lack of sentiment about the proprietorship and power of newspapers. His first task was to select the chairman of the new company. Significantly, his ideal candidate was not expected to know anything about the newspaper industry; instead he was to be an expert in management and finance, since his function was to present a glowing prospectus of the independent Mirror Group to City institutions and persuade them to buy shares prior to the flotation. Since Jarratt's announcement had stressed that Reed intended that the paper should retain its pro-Labour bias, Carpenter's candidate needed also, for the sake of credibility, to be at least not an obvious Conservative, who might also keep the unions quiet 'for the duration'. Consistent with Reed's benevolence, Carpenter asked Tony Miles and the Mirror board to suggest their ideal candidate.
Their choice was Clive Thornton, the stocky, fifty-four-year-old chairman of the Abbey National Building Society. Over the previous four years, Thornton had become nationally recognised for transforming the dowdy savings and loan agency into an active cartel-buster, pushing the number of depositors up from four to nearly ten million in four years. Thornton, a solicitor, had enjoy
ed the glow of media attention which his success as a 'people's maverick' had attracted and he responded swiftly and positively to Carpenter's approach. When, at their short introductory meeting, Carpenter suggested that Thornton might remain at the Abbey and take the Mirror chairmanship part-time, Thornton replied that he envisaged the chairmanship as a full-time job. Carpenter shrugged, pleased at least that there was someone who would take the responsibility. 'Everyone thought that we had a credible and popular man who might become a super-hero,' recalls one of Reed's advisers. 'He had successfully turned an old-fashioned business around and we thought he would just run the business successfully until the float.' A press release was issued which stated that, under Thornton's management, shares in the new Mirror company would be offered during 1984. The secret target date was January. The new chairman threw himself into the job with relish. 'We thought that very unusual,' says Jarratt.
Thornton is candid: 'I am ambitious and I'm not everyone's cup of tea.' Within weeks, relations between Carpenter and Thornton became uneasy. There were reports that Thornton was dictatorial and difficult towards the Mirror's executives, who had known their business for years. The cause was the new chairman's discovery of Fleet Street's debauched style of life. 'It was the expenses of the executives which really hit me,' recalls Thornton. 'Everyone was spending thousands of pounds taking each other out for entertainment.' He had heard about the Street of Shame but these antics were beyond his imagination, and on top of that were the intransigent print unions. As Thornton raged, Jarratt advised him to 'ride your troops a little more gently'. Thornton ignored the suggestion and in October handed Carpenter a poison pill: the flotation was impossible unless the union problems were resolved. 'I told Carpenter and Jarratt that we needed a package agreement with the unions of no-strikes and non-automatic replacement of printers.' At first the Reed executives were bemused. Thornton's aspiration had eluded the managers of Fleet Street for generations. Ennobled families like the Thomsons, Berrys and Beaverbrooks had been humbled to near ruin, unable to persuade the unions to agree to that simple formula. Thornton, the Reed executives signalled to each other, was naive. 'Just float it first and worry about the union negotiations later,' advised Jarratt. Thornton disagreed. He would not accept that trade unionists could behave so insanely and for the next months he intensively sought to reorganise the Mirror Group's industrial relations. The unions were decidedly unsympathetic. According to Bill Miles, the SOGAT representative in Fleet Street, 'Thornton thought industrial relations was having cups of tea with the workers in the canteen.' Bill Keyes was equally sceptical: 'He spoke visions and not nuts and bolts. We couldn't lock into his proposals.' Consequently, the flotation was repeatedly postponed.