How the City was spun

In the 1960s there was just John Addey, the founding father of modern financial public relations. In his wake, the likes of Brunswick's Alan Parker have created an industry that every major company buys in to. Chris Blackhurst investigates.

by Chris Blackhurst
Last Updated: 12 Nov 2014

The king of financial public relations has a young man's mop of hair, a gap in his teeth, speaks with a slight lisp and swears a lot.

He also talks 19 to the dozen, has a broad infectious smile and can charm whatever he wants out of just about anyone.

We are sitting down to lunch in Alan Parker's club, the Groucho in Soho - or, rather, I am sitting while Parker bounces up and down, occasionally touching the chair. He is a bundle of relentless energy.

The waitress - who, of course, Parker knows - comes over. After chit-chat, led by Parker, and then one of his winning smiles, she asks if we are drinking. 'I am. What about you, boss?' he asks of me. I'm a journalist.

He runs a fantastically successful business. His Brunswick agency seems to advise anything that moves in the FTSE-100 and much beyond. He's the multi-millionaire, not me. And he calls me boss.

I know, it's all part of the appeal, of course. And I know it shouldn't make a difference, but it does. I can't help being impressed. He tells me he's got all afternoon (as if) and I can't help noticing he's chosen the relaxed back room of his club rather than some showy restaurant. The unspoken message is: 'We're mates, you and me.'

And we are mates. Sort of. In over 10 years of knowing him, he has never failed to return a call, to greet me in a crowded room, to slap me on the back, to listen politely as I ask rude questions about one of his clients. The fact that he's just like that with lots of other people doesn't matter. Journalists, captains of industry, clients, bankers, lawyers and, increasingly these days, government ministers - we all get the boss treatment, the cheeky chappy badinage. And, even though we know we shouldn't, we can't help liking it.

From an idea 'drawn up on the table in my mum's kitchen', Parker has spawned a business that today employs more than 240 people and stretches around the world. What does that add up to? Well, in August this year, a Chicago investment company agreed to pay pounds 40 million for Financial Dynamics, which runs a clear second to Brunswick's top spot in the world of British financial public relations - or FPR, as its protagonists like to call it.

According to Hemington Scott, the corporate research organisation, Brunswick represents stock market clients that between them make profits of pounds 20 billion a year. By contrast, FD's clients can muster pounds 11.3 billion. So if FD can fetch pounds 40 million, Brunswick must be worth pounds 100 million. At FD, the bulk of the money was split three ways between Tony Knox, Nick Miles and Julian Hanson-Smith, with 17 junior colleagues sharing the rest.

At Brunswick, Parker accounts for virtually the lot - only Louise Charlton, his co-founder, has a stake, albeit small.

Although there are persistent rumours that he is about to sell to management services firm Arthur Andersen, Parker gives no indication of wishing to sell. Quite the reverse.

He stops jumping around to talk seriously, and passionately, about having Brunswick emulate his business heroes, whom he names as McKinsey, Lazards, Cazenove and Goldman Sachs. Even for someone who specialises in the art of spin, that is not a bad list. There is, though, a deliberate purpose behind his boast. Method, if you like, in his apparent madness. Their names are bywords for professional service and discretion. They are all global and, unquestionably, at the pinnacle of their industries. Not one of them has been bought by anybody else, nor did they grow by buying anybody else. All four, in a Parker word, are 'class'.

The quest for lustre, for stature far above the run of the mill, is a theme to which Parker warms, likening his model for the development of Brunswick to that of a prestigious law firm. Financial PR is 'a serious business, not a bullshit business for one-offs. Communicating properly is a proper business, not a scam, not a fix'.

There are those, who, on hearing of Parker's desire to take his agency to the lofty heights of Cazenove and Lazards, will put on a mocking smile.

For them, financial PR is exactly what Parker says it is not: a shallow, parvenu, non-essential industry, peopled by poseurs, natural-born liars and fly-by-nights. Tell them, however, just how much financial PR is in demand and how all its main players, not just Brunswick, are booming, and the sneers disappear.

Clearly, company chairmen and chief executives know something these cynics do not. What corporate types increasingly recognise is an industry they cannot do without. PR has become a vital tool in their marketing armoury.

It is cheaper than above-the-line advertising and, if well handled, is more credible and efficient.

As a rule, company chiefs are terrified of the press. They see what the media do to other public figures and they quake. 'The press is way, way more powerful than anything they deal with,' says one leading PR adviser.

'They look at what happened to Lawrence Dallaglio, for example, who many of them would revere as England rugby captain, and they're scared. But they have also got where they have got by control. So, in a similar way, they want to try and control the media. That's where we come in.'

Company bosses also worry about globalisation and the sheer media maze.

One of the most telling arguments made at a pitch by a financial PR firm is that no company on its own, not even the very biggest, is capable of covering all the media bases. Globalisation has upped the stakes to a degree that many companies find overwhelming and baffling. 'Take an international business like Vodafone,' says another public relations adviser. 'Its share price can be driven by the US media, the UK media, the European media. That is where we come in. We tell them, 'Don't worry, we take care of CNN, of Handelsblatt, of Newsnight.''

Speak to them all, persuade them, woo them, and the share price might climb. A favourite ploy at a financial PR pitch is to show a share price chart: where it is now and where, after the agency has gone to work, it could be. They are not kidding. The best companies, says Roland Rudd of Finsbury, the fastest-growing financial PR firm, 'are the ones whose messages are understood. If a company has a clear communications strategy, it is in a strong position in terms of having the support of investors.'

Get the message across, explain the strategy and the City will be appreciative.

The City hates surprises. Whenever a company does something out of left field, the market's reaction is instinctively negative. But, says Rudd, if the company has been getting its message across, 'when the management does something, investors will ask, do I give them the benefit of the doubt?'

When Centrica, the British Gas offshoot, bought the AA, the market's reaction was positive. This, claims Rudd, was thanks to hard work by Finsbury in the build-up to the deal. 'If, 18 months previously, British Gas had done the AA deal, there would have been serious questions asked. But because the market understood Centrica's strategy, investors supported it.'

Similarly, a clear strategy can ensure that the lows are not as low as they might be. When the Prudential wanted to cut back its estate agency business, the PRs paved the way in the Sunday papers ahead of the announcement the next week. When the news came, the City was ready for it, and because the cuts were not as great as the Sunday papers claimed, the share price held firm.

Once there was just the late John Addey. In the 1960s, he was the country's first financial public relations adviser. A former barrister, immaculately groomed and poised, clever and witty, a svelte bachelor, Addey would hold court in his flat, 8 Albany, in the prestigious Piccadilly apartment block. He employed a butler and drove to appointments in a Bentley convertible. He had the ear of Britain's most powerful businessmen, including Charles Forte and Rupert Murdoch, and of City editors and journalists. He exuded charm and trust.

Tim Jackaman of Square Mile Communications says, 'As far as I'm concerned, all the thoroughbred horses in this industry have come from one stallion ... and that stallion is John Addey. He really invented the whole genre of financial PR. He was a very successful chap, as sharp as anything and charming, too. Importantly, he had a good head for figures and ran a line between clients and journalists brilliantly. In his heyday he was a colossus.'

From Addey came Brian Basham. A financial journalist, Basham says he 'bumped into Addey, who asked me to join him. It was the best game in town; we sat in on the board meetings of major companies. Instead of waiting outside the door for a press release to be delivered to us, I was on the inside.'

In the '70s, Basham formed Broad Street Associates. He took the Addey model of proximity to power and built on it. He told chairmen to trust him, to allow him to control the message - and control it he did, banning press conferences for clients ('We were not in the business of providing entertainment for frivolous uninformed time-wasters') and developing close relationships with the most influential City journalists.

Basham insisted on putting Broad Street between the client and the press, and frequently between the client's bankers and the press. This was a departure. Previously, clients were happy for their financial advisers to meet journalists and do their talking for them. But a developing regulatory clampdown on insider trading was making this more and more difficult.

Basham's style of one-to-one chats with selected journalists, often involving a great amount of detail and analysis from Basham, became the norm.

One upside was that Basham and Broad Street gained acceptance among bankers.

The same bankers who briefed him on behalf of one client also acted for others, and his business grew. Basham rode the takeover wave, acting on every notable battle of the 1980s. His deputy was Alan Parker and the agency boomed.

'I taught Alan the lesson of control,' recalls Basham. 'We developed a very powerful position for financial PRs where we came to be seen as controllers of a very valuable commodity: company news.'

Broad Street looked beyond journalists for influence, to anyone who Basham describes as 'a stakeholder' - unions, suppliers and customers. Anyone who could influence financial opinion was a target for a Broad Street briefing. 'We broadened financial PR so that a takeover bid became a full-scale campaign,' says Basham. For any takeover, Basham developed what he calls 'a check list of 140 individual power centres to be mobilised' in his client's favour.

The earnings of Basham and his cohorts went through the roof. 'We were delivering significant value and could charge accordingly,' says Basham. 'I was charging pounds 50,000 a week, and I was worth it. I saw my fees go from five to 10 to 15 to 20 to 25 to 50 thousand.'

Financial PR gained another boost when Tim (now Lord) Bell, Mrs Thatcher's favourite media image-maker, entered the field. Bell went a stage further than Basham, using his connections with the Tory party to contact ministers direct. 'With Tim, financial PR reached new heights of respectability,' says Basham, 'and all the time it was becoming closer to a management science.'

Parker has continued that momentum. According to Bell: 'The key to financial PR these days is to get across the client's positioning strategy rather than just the story, and Parker is good at this.'

Anthony Cardew of Cardew & Co, another leading firm, says, 'The whole basis of the business is changing. It is more of a consultancy business than before, which means broader industrial relationships, which in turn requires higher levels of expertise and a greater depth of knowledge than ever.'

Basham identifies one event as crucial in the rise of financial PR and of Brunswick in particular. 'Alan was always very plugged in because of his father (Sir Peter Parker, the British Rail chief), who was one of the best-connected men in the country,' says Basham, 'and from the outset it was obvious where he was going. But it was when he hired David Brewerton (then the City editor of the Times) that I remember thinking, 'Wow.' It was such a shock, because David had always been rather hostile as a journalist towards the business. It was a star appointment. He knew every chairman, every chief executive. It took Alan to great heights.'

Parker agrees. Brewerton gave financial PR and Brunswick another layer of respectability. City journalists could not mock when one of their own had moved across. And companies could not fail but be impressed that the former City editor of the Times was acting for them.

Coming up fast on Brunswick's heels is Roland Rudd's Finsbury. Himself a former financial journalist, Rudd is in the vanguard of modern financial PR. Basham splits the business in two, between those who run what he calls 'wine bars - they fulfil their task by leaking information to a hungry journalist' - and those who 'study their subject and seek to understand it, to market it in the same way as they would market a tin of baked beans'. The latter are the future, he says, and they include Brunswick and Finsbury.

At Finsbury, which in just five years has amassed a client list that includes Carlton, Centrica, GUS, Hilton, Jefferson Smurfit, Kingfisher, MEPC, Merrill Lynch, Mirror Group, Pilkington, Virgin and Williams, everyone is trained at the London Business School to read accounts. 'They are expected to demonstrate an understanding of the business a client is in,' says Rudd. 'They must understand the company inside out and be part of it.' That way, he claims, when they speak for the company, they do so from a position of confidence; they really do know what they are talking about.

No Finsbury executive is allowed to work on more than five or six accounts.

'They have got to have a feel for the client, for who they are talking to, for the investors. We have a very disciplined approach,' says Rudd.

Three decades after Addey, financial PR is soaring. Its leading practitioners employ hundreds of people in agencies that span the world. Some companies afford them the same respect as bankers, lawyers and accountants. Before a deal is struck, their advice is sought. They are listened to - and paid accordingly.

And yet, they still have a poor image. It is an irony that, for an industry that prides itself on manipulating the images of others, its own is still held in low regard. Partly that is the nebulous nature of the industry.

It is new and has none of the tight regulations or entry requirements governing other professions. But also it is the nature of the job. It can be a shadowy, Machiavellian business, relying on personal contacts, off-the-record chats. Your job is to promote and defend your client at all costs, often to another company's harm - and sometimes at the expense of truth.

Financial PRs have long recognised the value of winning journalists on-side, of handing them stories in return for favourable treatment for clients on their list. Journalists desperate to break stories in Sunday newspapers were ripe for this treatment. It gave birth to the culture of the 'Friday-night drop', of giving an exclusive story once the market has closed for the weekend.

The working of the drop was explored recently in an industrial tribunal claim brought by Patrick Weever, former deputy City editor of the Sunday Telegraph. Though the case proved unsuccessful, what emerged was the hold that PRs have over some financial journalists. Weever showed how journalists are all too willing to take a story here in return for a favour there, often turning a blind eye to Stock Exchange rules on the dissemination of price-sensitive information. Stories that were being hailed as major scoops of journalistic endeavour were often nothing of the sort, involving little more than a phone call from a PR to a friendly, trusted reporter.

The drop has all manner of uses. Poor results will be leaked to Sunday journalists in advance to soften the blow. In takeovers, agencies will dish the dirt on the opposition in a way they could not do in any official document. Speculation about next year's figures, even the private lives of the directors, will all be handed to a favoured journalist. The Sunday papers will be used to smoke out possible bidders, to trash business rivals, to bring about votes of confidence by putting pressure on recalcitrant boards.

Late in the day, the industry is trying to clean up its act. Staff at Brunswick are told: 'Don't trade, don't leak, don't ask favours.' Other agencies have similar rules. The emphasis now is on providing a professional service, like that supplied by the the big accountancy, law and management consultancy firms. The Parkers and Rudds now want to get closer to companies, to be the messenger but also to help formulate the message. After all, it is the message that counts. Ask Marks & Spencer.

THE PLAYERS

BELL POTTINGER FINANCIAL - Lord Bell's company remains a big name, in spite of the change in government.

BRUNSWICK - top of the league, dominated by Alan Parker. Has enviable client list and is expanding into new disciplines and markets.

BURSON-MARSTELLER - global firm, yet to exploit the niche.

CARDEW & CO - old school Anthony Cardew remains persuasive.

CITIGATE DEWE ROGERSON - the newly merged outfit headed by Tony Carlisle. Good reputation and level of professionalism.

COLLEGE HILL - maverick player, varied clients, some international, ambitious for growth.

FINANCIAL DYNAMICS - sold for pounds 40 million. Streetwise and hard-working Premier League player, run by Nick Miles and Tony Knox.

FINSBURY - golden boys, led by former journalist Roland Rudd.

HILL & KNOWLTON - multinational player run by David Wynne-Morgan and part of WPP.

HOLBORN COMMUNICATIONS - David and John Bick's newish arrival represents Man United.

HUDSON SANDLER - Michael Sandler has been around a long time, well-connected.

MAITLAND CONSULTANCY - shrewd, assiduous, analytical. Angus Maitland's firm is never far from the biggest deals, currently working on Vodafone/Mannesmann.

SHANDWICK - Lord Chadlington's outfit, claims to be world's biggest.

SMITHFIELD FINANCIAL - solid start with Orange as a client.

SQUARE MILE - capable, strong relationships with Dixons and Next.

THE PAYOFF

WHO BECOMES A FINANCIAL PR?

Anyone can become one. There is no classic entry-stream. Agencies normally count on having one or two ex-senior financial journalists, and a sprinkling of seasoned former bankers and brokers. Journalists are seen as good for credibility and for having good links with their former media colleagues.

However, they are usually not so good when it comes to knowing would-be clients personally. That is the domain of the experienced ex-bankers and brokers, who are expert at pressing City flesh. The other type of PR is the graduate who joins more or less straight from university and works his or her way up.

WHAT ARE THEY LIKE?

All are personable, charming, well turned out, presentable. They must have a head for figures, know the City, know the business media. They must be prepared to work long hours. Brunswick executives meet early every morning to discuss that day's press coverage and the day ahead. Their day ends with a nightly delivery of the first editions of the following day's papers. Clients are there to be obeyed. One senior financial journalist who quit to go into financial PR was once brought up short by a client who questioned why he had wanted to make the move: 'When you were a journalist I was always worried what you might say; now you work for me and do what I say.'

WHAT DO THEY GET PAID?

Graduate recruits start on around pounds 20,000 a year. Junior account executives are paid around pounds 50,000. Partners or directors at the biggest firms earn around pounds 150,000 a year. On top of the basic salary a few senior individuals may hold equity stakes worth many millions. There are also profit shares.

WHAT ABOUT THE COMPANIES?

For an industry that likes to boast about its upfront approach, financial PR firms are remarkably opaque when it comes to their own earnings. Companies House filings reveal next to nothing about their financial state. Brunswick, for instance, presents only an abbreviated balance sheet. Most shares are owned by The Alan Parker Trust and The Alan Parker Accumulation and Maintenance Trust, both registered in Jersey.

Financial Dynamics' accounts are more instructive, disclosing turnover of pounds 9.8 million in the year ending 31 December 1997 and a profit of pounds 833,000.

Despite their high profile and their growing importance to chairmen and chief executives, financial PRs are still small businesses. Bell Pottinger, for instance, one of the largest agencies, discloses annual feels of pounds 6 million - far behind a large City law firm or accountants. This is because PR remains a relatively low-cost adviser - unlike advertising, say, where clients are buying airtime, or law, where they are paying for specialist professional expertise. A typical public relations retainer with one of the larger financial agencies costs pounds 200,000-pounds 250,000 a year. This will be for regular advice and representation. If the client is involved in a deal requiring extra advice, such as a takeover, the fee will soar.

'Usually, the firm charges pounds 200,000 for advice on the bid and then another pounds 200,000 if it goes through,' says one banker in the takeover business.

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