18 October 2007 - 12:48pm | posted by | 0 comments

Interview with Rob Woodward - Leading in the line of fire

A strategy has been put in place to ditch and undo a range of deals which saw the company add businesses which included Pearl and Dean, Virgin Radio and Primesite Outdoor.

The plan is to get back to basics - and put television back at the heart of Scottish Television.

The change of strategy could not have come too soon. For the deals, which included buying Virgin for £225m, were done at the top of the market (some believe it is now only worth £85m).

Meanwhile a cocktail of issues, which include tough trading conditions, the growth of online and increased fragmentation of TV - has meant it is harder then ever to maintain profits in the world of ITV.

The old 'license to print money' is not quite what it once was. Operating profits were down more than a third in 2006 to £15.8m. A downward spiral that was repeated this month when the plc's latest interim results were posted.

The books do not balance and assets such as Primesite are being offloaded to close the gaps. Last year more than 50 redundancies were made as the company looked to save £2.5million.

This month CEO Rob Woodward has announced that another £2.5million is to be clawed back, much of which is thought to come through a fresh jobs cull.

Which is why Woodward, could be forgiven for being sceptical by meeting yet another media hack, the press having been less than kind recently. He admits to feeling a little bewildered by a recent article to run in a Sunday newspaper declaring that the company was six months from bankruptcy.

Hailing from Troon, Woodward may have lived the London lifestyle but his Scottish roots show when it comes to brutal honesty.

He is very clear in discussing the recent piece that he is not interested in what has gone before, stating that his role and the role of the board is to move the company forward and "sort out the legacy issues" of SMG.

Woodward describes the ambition and development of the company under the new board as a "rejuvenation," knowing full-well that there is still a great deal of hard work to be done before any gloss is put back on the ailing media group.

"At a corporate level, the answer is very clear and that is to sort out the balance sheet. At the moment we have a very weak balance sheet but we're doing everything we can to sort it," he says when asked about the financial position of the company.

Indeed the recent interim report released at the end of September reported that SMG made a pre tax profit of only £1million. Without the recent £52million invested from the sale of Primesite, the figures would surely have made for much worse reading.

"We are carrying far too much debt on our balance sheet and we need to address that. The only way we are going to be able to address that is to sell off the assets [with cinema advertising business Pearl & Dean likely to be the next asset sold]. That was our strategy from the beginning and it remains our strategy. The bottom line is, this company is being crippled by the level of debt we're carrying. If we continue like this, ultimately, we will not be able to service that debt. Therefore we need to reduce it, hence the need to sell these good assets."

Woodward admits that the board did not realize fully the mess it was walking into but smiles when asked would he have taken on the job had he known the full details of the bloody battle he would face, simply answering "I'm always up for a challenge."

Before joining the media group, the 47 year old was chief executive of 4Ventures, a Channel 4 multimedia subsidiary, where he implemented a recovery plan for the group's legacy businesses and helped it to diversify into new media and business. He was rewarded for this with a promotion to the role of commercial director of Channel 4, where he moved the division from loss-making to profitable.

It was from this lofty vantage point that he swooped on SMG. Woodward was ushered in by rebellious shareholders, having stalked the company for 15 months prior to his appointment. He arrived in February with radical plans for SMG and clear views on what needed fixed.

"The bottom line is that there are some fantastic, talented people who didn't have a clear sense of what this company is here to do.

"In many ways TV had been slightly neglected and this is about refocusing it as the core of the business.

"Our ambition with content is to be the natural home for Scottish talent and to continue to be a major producer to the ITV network, to use our broadcast window in Scotland to enable us to showcase our own productions, to deepen the relationships that we have with other broadcasters in the UK and to sell our product internationally."

As part of the development of the company's output, a new early evening magazine programme, broadcasting nightly prior to Scotland Today, has been announced, along with Postcode Challenge - a charity lottery - fronted by STV faithful, Carol Smilie.

As a result - and despite the job cuts announced elsewhere in the company - STV has already advertised to bring on board 12 new roles, demonstrating the board's ambition to create new Scottish programming.

Asked about the future of television, Woodward is again quick to point out it is no longer the industry that it once was, stating that Scotland has perhaps lagged behind, but has the "potential to grow."

The loss of audience figures and subsequent drop in advertising revenue has not helped the situation that SMG has faced, something that Woodward is all too aware of.

"TV isn't as strong as it once was and I believe that we have a lot of catching up to do, considering the previous neglect shown to TV in the company.

"We can help reposition STV within the market, though. Beyond that we absolutely need to embrace new media, particularly our online audience, to enable them to use the core strength, which is our ability to reach the whole of the Scottish population.

"The fact that the Scottish population watches 11 hours or more of STV every week is a strong starting point, but what do we do with that and how we better serve our audiences by directing them into the online environment will determine our success."

One of Woodward's first moves on joining the company was to remove Andrew Windsor STV's head of e-commerce - a heavyweight appointment from Lastminute.com.

"The previous online strategy wasn't working. It was based around extracting transaction revenues from audiences. What we're now focused on is providing additional, unique content in an online environment. The online streaming of the closing ceremony of the Edinburgh Festival is exactly the kind of thing that we should be doing, unveiling content that can't be obtained anywhere. We need to ensure that there is the right connection between our onscreen programming and what is happening online."

Such a strategy is necessary for the company, especially when the investment had already been made on the digital side.

Woodward is unwilling to comment on the latest raft of redundancies planned for the company, but is open to the fact that SMG will look to save another £2.5million over the next year.

"This is about ensuring that STV has a chance," he states. "We're not here to take cost out, we're here to grow the business. But the organisation and the cost base of the organisation has to be inline with the revenue forecast and if it's out of kilter as it is, then the prospects will continue to look grim."

Woodward continues: "We’re doing everything we can to make sure that the future looks as promising as possible and the only way we can achieve that is by having appropriate prospects. While we're looking at taking cost out, we're also investing, we're recruiting some very well respected individuals and we will continue to invest in the company going forward. But the start point has to include an organization and structure which we're currently putting in place."

Those individuals that he speaks of include David Connolly [previously vice-chair at Starcom] as commercial director, who will take control of sponsorship and advertising. Meanwhile while the problematic recruitment of Alan Clements from IWC as director of content will move to the High Court in London later this month as Clements looks to extradite himself from his current contract to speed-up his move to STV. Woodward remains confident that the situation will soon be resolved.

"Clearly we would have liked to have had Alan on board, but we're continuing to make good progress in our content division. Derek Thompson and Elizabeth Partyka are both working well. We've gone through a major reorganisation of our content business. It's important that we don't wait for Alan, but when he does come it will be another real positive for the team."

As part of the company's focus on Scotland one of the board's decisions, following a review of each department, was to call a halt to the opening of London production company, Dollshouse despite an office having been set up, staff already in place and being only a couple of weeks from launching.

"Dollshouse didn't fit with our strategy," is how bluntly Woodward explains the decision.

"We would prefer to grow our Scottish base assets rather than starting to grow new businesses from scratch in the London market.

"Right now the clarity of strategy is important. It's important everybody understands that we are focused on serving our nation."

Asked whether the company will need to continue to downsize before investing in new ventures - such as Scottish Radio Holdings, as has been rumoured - Woodward says he cannot comment on specifics.

"Other than potentially looking to invest in content production, which is somewhat different in that we've set an aspiration there to be a major producer within the UK, I expect growth to be underpinned in the Scottish market.

"Still, it's important that we have access to London. Ginger Productions is an integral part of what we do. Part of the future success of SMG Productions is the fact that we have a strong, credible London base.

"There's not going to be a Eureka moment," responds Woodward when asked if he could predict when the company will be in good shape once again. "Our announcement to the city last week contained a lot of positives. We are starting to meet the targets which we set out for ourselves and it will take time for people to trust us. We always said that this would be a three-year turnaround, but equally it is important that we show progress along the way."

It would seem that while a lot of water has already passed under the 'squinty bridge' next to SMG, there is still a long way to go before the company is fully fighting fit, but Woodward is clearly determined to ensure that it will be successful once again. No matter what it takes.

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