Lorna Tilbian has made her name by calling the market right for 34 years, so when the media industry’s favourite banker quit her role at stockbroker Numis Securities at the end of last year, it was not only the end of an era but also a "sell" sign.
"It’s been a hell of a ride and great fun, but I really didn’t want to do a fourth downturn," Tilbian says, explaining why she felt it was time to step down as head of media at Numis after 17 years and sell her £17m shareholding.
"[Downturns are] very long and very hard," she says. "The City is full of people who haven’t operated in a rising interest rate environment. They don’t know what’s coming."
Tilbian’s record means she commands attention in advertising and media circles. As a young analyst, she called the top on Saatchi & Saatchi’s shares at the end of the 1980s before the crash, and called the bottom on a debt-laden WPP in 1992. Later, she became a corporate financier who advised Aegis on its £3.2bn sale to Dentsu, the biggest M&A deal in advertising history, and floated Ascential, the owner of Cannes Lions, and Auto Trader.
It’s been a hell of a ride and great fun, but I really didn’t want to do a fourth downturn
She says she has always been on the side of "the good guys" against "the charlatans" and has a story about seemingly everyone in the industry, from Maurice Saatchi and Sir Martin Sorrell to Conrad Black and David Cameron, during his days as a "very slick" PR man.
Tilbian’s leaving dinner at The Ritz in February was a who’s who of media and ad people. Lord Saatchi showed he harboured no hard feelings by toasting her as "the undoubted queen of the media". Sorrell said in a message that he would "miss her contribution at a time when the industry really needs her enthusiasm". And her erstwhile colleagues from Numis quoted a line from Campaign’s A List, which read: "She is simply a legend."
Her love of media remains undimmed and Tilbian has taken a clutch of non-executive directorships in the sector since leaving banking, but she senses that the tectonic plates are shifting, just as they did at the start of her career in the City in 1984. Back then, the big themes were globalisation and the rise of "one-stop" advertising and media groups. Now, it’s technology and streaming, Tilbian says.
She is not alone in calling change. Rupert Murdoch unveiled the sale of his Fox TV and film assets to Disney a few months after Tilbian announced her Numis exit. "If you’d said a year ago that Rupert was a seller, there’s no way I would have believed that," she confesses.
"I think the FAANGs [Facebook, Apple, Amazon, Netflix, Google] have just made so much headway in the last year that he realised it was an unequal struggle and it is better to have a small part of a big giant, rather than fight on his own, and to get back to his roots, which is news."
Tilbian believes the Disney-Fox deal is one of many signs that the global economy is near the top of the cycle. (Comcast’s subsequent, higher offer to buy Sky, the jewel in the Fox business, reinforces the point.) She has a list of six warning indicators: all are flashing.
• An advertising slowdown, dating from WPP’s annual results a year ago.
• Debt "has been rearing its ugly head", as the collapse of Carillion showed.
• Record M&A deals, with Broadcom bidding for Qualcomm and Disney’s play for Fox’s assets.
• A big, leveraged deal, with Blackstone buying a stake in Thomson Reuters by borrowing heavily.
• Art has been achieving record prices, with Leonardo da Vinci’s Salvator Mundi selling at auction last November for $450.3m.
• And "some kind of madness", which is how she describes Bitcoin.
She adds that a downturn might take another year to play out. In previous cycles, there has often been a brief correction and then the market leaps again, before a collapse.
History matters to Tilbian. Her family is from Armenia, but moved to Cyprus, where she was born. Her father was the biggest private landowner in the north of the island, but lost much of it when the Turks invaded in 1974. She went to school in England at the age of 12. "If Cyprus hadn’t been invaded, I’d have probably gone back and been a lady of leisure," she reflects. "I did have fire in my belly – but it only came after losing everything."
Tilbian went on to study English and history at the University of Southampton. "I liked storytelling and machinations," she says, adding that it later helped her separate the good guys from the charlatans.
She set her sights on becoming a journalist and landed her first job at Campaign, where she sold classified advertising for a few months as she tried to break into editorial. Then she spotted a vacancy for an analyst at Sheppards, a stockbroker, and found her métier.
We went from very hot in the 1980s to nearly dead, and then really hot in the dotcom boom
At the time, the agency sector, comprising ad agencies, recruitment agencies, news agencies and estate agencies, was taking off on the London Stock Exchange.
"It was the sector to be in – oh my god, it was," Tilbian recalls, reeling off companies such as market research firm Audits of Great Britain and ad agency Geers Gross, which she first covered. Then there were Saatchi & Saatchi and Wire and Plastic Products, which Sorrell acquired as a shell, and many more, including Boase Massimi Pollitt, Gold Greenless Trott and Abbott Mead Vickers. "It was like having the FAANGs in America today," she says, and "every fund manager" wanted to invest in the sector because "it was the growth area".
Things turned sour with the recession of 1990-91 and stock market chiefs broke up the agency sector. Advertising was moved into a new sector – media, which also included publishing (moved from printing, paper and packaging) and TV (from leisure and pubs).
"We went from being very hot in the 1980s to nearly dead, and then really hot in the dotcom boom," Tilbian chuckles. Media continued to fare pretty well "until this latest twist in the knife by the FAANGs", which have been gobbling up all the ad growth. The sector, she says, has suddenly had to move "from being ad-driven to being subscription-driven".
Tilbian has followed Sorrell’s career closely and is full of admiration for the way he has built the world’s biggest ad group, not least the "phenomenal" achievement of increasing its shareholders’ dividend for 20 years.
A visiting Martian could chart every peak and trough in the ad market by looking at Sorrell’s M&A moves, she says, from buying JWT and Ogilvy at the top in the 1980s, the M&A debt-for-equity swap at the bottom in 1992, acquiring Y&R at the next peak in 2000, snapping up Cordiant during the trough in 2003 and then 24/7 Real Media and Taylor Nelson in 2007 and 2008.
"In the past 10 years, [Sorrell] hasn’t done anything that transformed [WPP]," she adds.
In the past 12 months, WPP’s growth has hit a brick wall and Sorrell has been merging agencies to simplify the group. "I can see Hanson happening there," Tilbian says, referring to the industrials conglomerate that broke itself up in 1996.
"You can’t grow double digit [every year] when you’re that big. You can’t grow faster than the industry when you are the industry."
Hypothetically, breaking WPP into different parts – say, J Walter Thompson, Ogilvy, Y&R and Grey, each with a range of disciplines under one roof – could "realise value for shareholders" and make it easier for each to grow faster than as part of a group, according to Tilbian.
She reckons it will be hard for WPP to "live on" in its current form after Sorrell steps down because he is "the ringmaster". "If there’s no-one who can do the job, they have to change the structure," she says. She points out that other ad groups such as Omnicom and Publicis Groupe are less reliant on their chief executive.
Sorrell remains one of Tilbian’s "good guys", although she has dealt with plenty who weren’t. She recalls how she was the only analyst to have a "sell" note on Mirror Group and went to the office of its owner, Robert Maxwell, to quiz him about the debt. He kept dodging her questions by getting his secretary to interrupt their meeting with calls from "world leaders". First it was "George Bush" on the line, then "Nicolae Ceausescu". Eventually, Maxwell said he had run out of time to talk to her.
In contrast, the Saatchi brothers were "very nice", even when Tilbian was warning that the company was overvalued and its plan to buy Midland Bank was a huge mistake. Nowadays, if an analyst is negative about a company, the management will "ban you from the meeting", she says. "Everyone is so obsessed with short-term performance. They just want to get rich. In the 1980s, they wanted something different, they wanted reputation."
She was unfazed by these largely male egos, describing herself as "feisty and tenacious – I was never a damsel in distress". While Tilbian did not feel "different" as a woman, she knew there was bias. "Why do white, middle-class men not believe in reincarnation? Because they know it doesn’t get any better," she jokes.
Tilbian, who will turn 61 this year, has picked her new, non-executive roles as if she were managing a share portfolio. She has joined M&C Saatchi (a small-cap in advertising), Euromoney Institutional Investor (a mid-cap in B2B publishing) and Rightmove (a large-cap online business).
However, she has decided against taking a directorship with a B2C media owner for "all the [same] reasons" as Murdoch, whom she describes as "my hero". She predicts things will "be very hard" for as long as the FAANGs maintain their dominance, although, she adds "there’s always the regulator and the taxman – you can’t live outside the rule book forever".
Tilbian has worried about how the online platforms would disintermediate the ad agencies ever since the internet took off, and "the chain of command" between brand, agency and media owner has been "broken". However, she remains bullish about agencies "in the longer term" because of the importance of creativity. "It’s the only way companies and businesses can grow," she says.
With no plans to retire, Tilbian is relishing her new portfolio of directorships. "I’d like to be chairman of some of these companies," she declares with a parting flourish. •
The best of Tilbian
Favourite analyst note:
Her WPP "buy" note when the share price was 30p in October 1992.
Dubbed EMI "Every Mistake Imaginable" and GWR "Going Wrongly Regularly".
Selling Aegis to Dentsu, floating Auto Trader and Ascential, selling UTV to ITV and Wireless Group to News UK
On running Numis:
"I never fired anyone in 17 years. I think it’s a failure of management to have to fire people, not to know what the outlook is."
On media moguls:
"I could see who the good guys were as opposed to the interlopers who just wanted to make money. I never backed a charlatan – a Robert Maxwell or Conrad Black."
On Rupert Murdoch building Sky.
"He took on the TV establishment. Michael Grade and Greg Dyke were laughing at him and saying people would stay in the pub and watch for free. It’s amazing what he achieved with regulation and the taxpayer funding the BBC to the hilt."