Heiress to set IPC course in rough sea

The shock departure IPC’s Mike Matthew leaves a skipper with a contrasting management style to steer a tricky course to flotation.

Publishing company IPC Magazines is rarely out of the headlines – and not always for the right reasons.

After a turbulent 18 months following the &£860m Cinven-backed management buyout in January last year, the “ministry of magazines” has enjoyed a short period of calm. With redundancies and senior-level departures behind it, the IPC management enjoyed a better-than-average round of ABCs in August. At last, the ship appeared to be turning.

But last week the company had to face more upheaval with the surprise exit of chief executive Mike Matthew, who suddenly announced his retirement at the age of 51.

Sly Bailey, the publisher who, at 38, is credited with breathing new life into the TV weeklies division IPC tx as managing director, has stepped into Matthew’s shoes.

Most observers were shocked by the departure, saying: “Matthew was IPC.” But there was no big surprise about his replacement. “The timing was a shock,” says an industry source. “We were expecting him to see the company through to a flotation. But I think we all realised that Sly was the heiress apparent.”

A City source says: “It’s a bit of an odd one. He was supposed to have turned the company round in readiness for the flotation. And it is a very funny time for him to be leaving. Perhaps he has fallen on his sword.”

According to the City source, Matthew realised it was going to be a number of years before the company would be ready to float – amid tough trading conditions. He may not have been prepared to wait.

Other observers believe his departure was inevitable. One source cites his style of tightly controlled management, which may have served him well under the previous owner Reed Elsevier but “is not the way to manage a modern company.

“This will have really hurt him,” says the source. “He was an old school manager who was never happy unless he was in control of everything. I am not sure he had the support of all his board members.”

However chairman David Arculus refuses to accept this, saying: “Mike has the full support of the board and all his colleagues. This is the first time I have heard anything like that.”

Bailey has quite a challenge ahead of her. She will be the hand guiding the company through a crucial period in its history as it heads towards flotation in three years’ time.

Bailey will also have to mastermind IPC’s digital and international strategy – two key features that will determine its long-term success.

And she will need to generate enough profit to keep venture capitalist Cinven happy.

Unhappily for Bailey, the company’s recent half-year results showed an almost 11 per cent fall in operating profit to less than &£30m. A lot of IPC’s profit is taken up in interest payments to Cinven.

Nevertheless, Bailey’s style will stand her in good stead. She is described tactfully by most as “determined”, although others say “ruthless”.

One source says: “Nothing gets in Bailey’s way. You should see the way she operates in board meetings – she is completely on top of the game. A real can-do person, she is right up Arculus’s street: frank and passionately determined. Arculus really responds to that sort of person.”

Jane Ratcliffe, joint managing director of Mediacom TMB, comments: “My experience of Sly is that she has never turned down a challenge. I think she is excellent. She’s good at building relationships and she’s well versed in building partnerships.”

Another source says: “What the company needs is someone who is highly motivated and can build a vision for the company. I think Bailey has that capacity.”

But will it be enough? There are other – fundamental – issues she will need to address.

The last set of ABCs showed a magazine market looking jaded. The weeklies that have been IPC’s cash cow for so many years are still a powerful force, but their influence is about to fade. Weekly magazines are under pressure from daily newspaper titles such as The Mirror’s new M magazine, launched last week. While the average cover price for a woman’s weekly magazine is 60p, The Mirror costs 32p, with M thrown in for free.

Magazine life cycles are getting shorter, and titles are increasingly reliant on covermounts and advertising to bolster their circulation.

Linda Lancaster-Gaye, who has been managing director of women’s weeklies division IPC Connect since 1998 and was appointed to the board last week, says: “You cannot write us off. The women’s magazine market is a powerful force, but clearly we are working in a changing market.

“Digital and international development are core to the business. And with IPC Electric we have already done a lot of work in this area.”

Lancaster-Gaye believes Bailey will have a dynamic effect on the IPC culture: “There is no doubt Bailey has enormous energy and determination, and she also has the power of youth. She will have a very positive effect.”

In the UK, senior female executives are few and far between. But if Bailey can deliver the same kind of results as Pearson chief executive Marjorie Scardino or Go chief executive Barbara Cassani, Cinven will be more than happy.

Paul Richards, media analyst at West LB Panmure, says: “If she can emulate Scardino and deliver double-digit earnings growth, she’ll go down brilliantly.”

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