MEDIA: HEADLINER - Will Phillis' liberal qualities be enough to take GMG forward? - Bob Phillis' straightforward nature is exactly what GMG desires, Ian Darby reports

Parts of Bob Phillis' CV resemble an EM Forster novel. Up to a point it's so English in creating a sense of frustration and thwarted ambition.

Phillis left his post as the group managing director of Carlton Communications soon after it started broadcasting on ITV. He was the deputy director-general of the BBC, but never quite landed the top job. Then in 1997 he finally reversed this trend by gaining the most senior position at a UK media group.

Since then, Phillis, 56, has steered Guardian Media Group as its chief executive. As everybody knows, GMG is something of an anomaly in the world of large media corporations, as it is owned by The Scott Trust, which has a mission to preserve editorial standards and the financial independence of its titles, and as such does not answer to shareholders. As one observer points out: "It's a media company run like a kibbutz compared with some of its rivals."

Unfortunately, Campaign was unable to talk to Phillis about the recent fortunes of GMG - its profits were savagely down on the previous year's - as a series of back-to-back meetings put paid to our conversation. However, recent comments from Phillis suggest he is not too worried.

Despite increasing turnover by 4 per cent to £456 million, GMG's pre-tax profits plummeted from £67 million in the previous year to £9.8 million.

Phillis remains upbeat: "GMG has emerged strongly from a testing year. While we do not anticipate any significant upturn in the levels of advertising demand until the second half of the financial year, the start to the new year has been encouraging."

Falling advertising revenues at The Guardian and The Observer are partly behind the fall in profits, but Phillis also points to its £33 million investment in the online Guardian Unlimited brand as a contributing factor.

The situation could have been worse for GMG had its regional newspaper division and 48 per cent stake in Trader Media Group, the publisher of Auto Trader, not weighed in with increased revenues.

As well as its national newspapers, GMG's radio and dotcom divisions lost money. However, it is still investing heavily in commercial radio with the acquisition of Jazz FM and an investment of more than £4 million in developing the Real Radio brand across South Wales, Scotland and Yorkshire.

Phillis is clearly a man whose views fit with the liberal sensibilities of GMG. He has recently been pushing its corporate responsibility credentials through its support as media sponsor of the Commonwealth Games. And his outside interests - he is a director and trustee of the Television Trust for the Environment - confirm his commitment to "putting something back".

But the big question remains: has Phillis got the right strategy to ride out the tough market conditions?

The plan seems to be continued investment in the core Guardian and Observer products, while building revenue streams through radio, online and regional newspapers. Phillis has been behind its retreat from the television market with the disposal of stakes in GMTV and GMG Endemol. A recent, ill-advised, investment of 24 per cent in Sir Jeremy Isaacs' Artsworld channel will be written-off unless a buyer is found.

John Bartle, a non-executive director of GMG since January, says: "It's a terrifically interesting group. In recent times we've seen Jazz FM do interesting things and The Guardian being at the forefront of new media."

But is Phillis the man to take things forward? Bartle says: "He's straightforward with no side, and embodies the kind of decent qualities that the group likes."

However, one former colleague says: "His weakness is mainly the strategic, big picture stuff - and Paul Myners (the group chairman) will be of huge help to him here. He has in the past been encouraged to bring in a strategic person at group level."

Because of its ownership structure, GMG has traditionally been cautious in its acquisitions policy. The next major decision facing Phillis on this front regards the future of Trader Media, in which the venture capital group BC Partners owns a 52 per cent stake.

GMG could move to buy this stake or toward a stock market flotation. But comments made by Phillis last week suggest that a sale of its own stake in Auto Trader is unlikely. "We would have even more bloody cash. What are we going to do about it? he said.

GMG's large pot of assets, totalling £333 million, should insulate it against any further downturn in its fortunes.

However, doubts linger over his eye for strategy and the wisdom of GMG's heavy investment in online and radio businesses. Any further downturn in GMG's fortunes could lead to further disappointment for Phillis.

THE PHILLIS FILE
1981: Central Television, managing director
1987: Carlton Communications, group managing director
1991: ITN, chief executive
1993: BBC, deputy director-general
1997: Guardian Media Group, chief executive

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