The MT Interview: Luke Johnson

The multi-talented Luke Johnson shoots from the hip on the City, the BBC, and the evils of red tape...

by Matthew Gwyther
Last Updated: 31 Aug 2010

Luke Johnson: as chairman of Channel 4 battling for its publicly funded future, he confirms his versatility. An FT columnist too, he built his fortune as an irascible loner through a portfolio of big-brand restaurant chains. He's a mellow family man now, but he'll be eyeing business opportunities.

It was nine years ago that MT last sat down to subject Luke Johnson to close questioning. An awful lot of water has flowed under the bridge since then, so it's right we're back to give him another grilling. We left him, back in 2000, a hard-partying, irascible 38-year-old enfant terrible who owned two of the most desirable eateries in London - The Ivy and Le Caprice. He'd made his fortune - then estimated at £80m in the Sunday Times Rich List - by a clever acquisition and exploitation of the Pizza Express chain, which he grew from 12 restaurants to more than 250 by the time he sold out in 1999. (And, no, he still insists, he never shrank the size of the Margherita.)

Johnson was a bright, young, smart loner who'd chucked in his Oxford University career as a doctor to embrace Mammon. A subject of fascination to gossip columns, he was the third son of Paul Johnson, the Daily Mail columnist and ex-editor of the New Statesman, probably the most famous leftie who turned to Thatcher.

Johnson Jnr may have grafted like stink to earn his fortune but he was also a good-time boy. We noted in 2000 that he'd been observed at the Edinburgh Festival, 'dancing the night away with a bevy of Cuban salsa beauties'. Our interviewer found his subject slightly menacing, the conversation being 'a subtle contest. He is quite happy to put you down gently, like a fly on a pin. And then pull your legs off.'

Fast-forward to 2009 and he has become one of the UK's most successful businesspeople, running his own private-equity firm, Risk Capital Partners. Now worth £120m, he has also acquired public prominence as the chairman of Channel 4, receiving a high-profile mauling on Radio 4's Today programme when he failed to pass muster over the Big Brother Shilpa Shetty racism affair in 2007. In the nine years since last we talked, the economy and his investments have gone from bust and recovery, through boom-time Britain to the current grim recession.

The Ivy and Le Caprice have gone to other careful owners, along with the Belgo and Strada restaurant chains, but Johnson retains some attractive jewels in his portfolio. Patisserie Valerie, the upmarket cakerie, is doing well. Family restaurant chain Giraffe seems fine. But he has encountered setbacks - the UK branches of bookshop Borders must have burned a massive hole in his pocket since he bought them in a firesale from their US parent back in 2007. Nobody is hurrying to take the pack of GRA greyhound stadia off his hands, either. But, on the positive side, he has got married to a pharmacist from Great Ormond Street hospital, has had two children (three and a half and two and a half) and, by his own admission, has changed his outlook. There's plenty to talk about.

We meet in his slightly unloved Georgian townhouse office in Bloomsbury and wander down to a tatty meeting room in the basement. He has weathered a bit, but the hair's still there and he looks in good shape. First off, there's no hint of that menace or abrasiveness. He couldn't be more twinkle-in-the-eye accommodating, enjoying a good gossip about who's up and who's down. He talks fluently and frankly, despite having been woken by his children at 5.45am - 'pretty good going for them'.

Johnson is unusual among business folk in that we're already meant to share his innermost thoughts - both about his businesses and the wider economy - as he is one of the FT's most popular columnists. His weekly 'The Entrepreneur' musings are those of a sometimes outrageous rhetorical provocateur. The withering 800 words, for example, on why HR is a corrosive, dead-end discipline was a beauty that had thousands squealing in outrage and thousands more agreeing with every word. Writing is a task he takes very seriously, spending large chunks of his weekends struggling with the laptop. When nothing flows, everyone in his household knows about it - as no doubt occurred when, in Luke's childhood, his father had a bit of writer's block. Like any writer, he loves praise for his scribblings and is especially pleased when his FT editor compliments him on a good column.

So what is his current prognosis for the UK economy? In his columns, he went from moderately bullish to semi-suicidal in a very short time and has been accused, along with many in the media, of talking UK plc down onto the deck.

'On a bad day, I do feel that a sense of pessimism is easy to gather from newspapers, TV, radio and magazines. But, on the other hand, I think you've got to face facts. Being in denial is crazy. And part of the way you deal with problems is to be honest about them and face up to them and manage them in a sense of realism, rather than wild optimism. There's something called the Stockdale Paradox, where in a certain prison camp (the 'Hanoi Hilton' of the Vietnam war) the optimists among the US POWs all died. It was the pessimists who were more realistic who survived, because they were prepared for the agony of it all.'

So where does he sit? 'I think I'm schizophrenic in that, on the one hand, to go into business on your account, you have got to be at heart an optimist. You've got to believe in progress and that we will conquer all. But, on the other hand, these are exceedingly difficult times, unlike anything I've experienced. And are we at the bottom yet? I don't think we are in terms of how painful it's going to get.'

So whose fault is it that we're engulfed in the mire? Is he all for a bit of banker-bashing? Does he approve of the Sun's 'Scumbag Millionaires' headline, about the miscreants from UK banking who had appeared before the Treasury select committee the day before?

'I've sat in front of a few select committees and I was thinking that, actually, being cross- examined by a defence barrister - as I have been - is far worse. I was a witness for the prosecution and it was a pretty unpleasant experience. Whereas, when you go to the select committee, it's all very cordial and polite and, bluntly, they are not sufficiently expert to really rigorously give you a hard time. If a batch of other bankers were there, they would know where the bodies are buried. Then there would have been one or two questions that would have truly made them squirm. But it's all a bit dumbed-down, because they're slightly playing to the cameras.'

But he's no fan of the City. He didn't last five minutes as an analyst at Kleinwort Benson back in the mid-80s - a job into which, he admits, he 'bullshitted' himself. And didn't he once write in his old Maverick column in the Sunday Telegraph that 'success in the City is measured in purely monetary terms - nobody gets a bonus based on professional integrity'?

'The truth is, no-one goes to work in the City except for the money. It's unlike, say, the media industry, where I think there is a lot of psychic satisfaction, a lot of qualitative fulfilment to be gained; whereas if you are dealing just with the money, the City sees things like companies which are bought and sold or invested in as mere bits of paper. In some savage, unvisited place, there's a factory. They don't care about all that.

'I've always known that the closer you are to the money, the more likely some of it is to stick to you. If you actually have to do tedious things like manufacture things, deal with customers and payroll, then it all gets rather harder work, and possibly less rewarding. Genuine entrepreneurs who have run real businesses for decades have always been frustrated that the City slickers seem to do so much better than they do.'

But, bearing in mind that so much wealth was created by financial services over the past 10 years, so much capital from abroad was attracted to our shores, is it fair and reasonable that all our woes are laid at the bankers' doors?

'The answer is probably yes. I don't mean they're to blame for everything, but they have been guilty of recklessness and mismanagement. The scale of the banks' losses is beyond belief and the idea that the taxpayer is having to foot the bill in a very significant way is horrifying. As a free-market capitalist, I think they are seriously letting the side down by this incompetence.'

How about the regulators? Were they asleep on the job? 'We might also blame the regulators but, ultimately, these people were acting as stewards of shareholders' funds and their auditors and others were also acting as checks and balances, and I think, probably, some blame should be apportioned there too.'

And if he were Chancellor of the Exchequer, what would he do about it at the moment? 'There should be very serious tax and legislation breaks for smaller businesses, because they provide a disproportionate amount of growth and of new employment. When you talk to civil servants about how difficult it is to run your own business due to the bureaucracy you face, they airily dismiss it. They say: "Oh, business is self-healing with these things." Well, in the good times, perhaps, but in the really tough times it's different.'

Government interference is clearly something that gets his goat. 'I have a good friend who is faced with a terrible quandary: he needs to let go half his workforce of 10 people if the business is to survive. He is facing the serious prospect of one industrial tribunal, and possibly two. And so he is veering towards shutting down and giving up. He just cannot face the prospect of weeks and months of uncertainty and lawyers' letters and the costs and risks if he loses the actions.

'This is the sort of tough decision in the real world you have to make. Whitehall absolutely fails to understand this. Is it better that the business survives with five workers or do we just shut the whole damn thing down because you can't downsize it by 50%? If we are to maintain our place in the world, then we need to maintain a reasonable level of employment, and that is only going to come from the private sector. Putting more and more jobs on the public purse isn't a sustainable model.'

Talking of the public purse, what about Channel 4, which is also reliant on it? Staff at the broadcaster were uneasy when Johnson's appointment was announced in 2004. His father, after all, had labelled Michael Grade, when he was C4's CEO, 'the UK's pornographer-in-chief'. They have been pleasantly surprised. He has done his homework and fought his corner for he channel very hard in difficult situations, even when it was clearly in the wrong.

Johnson was flattered when approached to do the job, and although he knew he was entering a regulated industry, the scope of interference clearly took him by surprise. And it wound up taking up far more of his time than he bargained for. But he has learned the game of lobbying and dealing with ministers and has grown accustomed to the laboured modus operandi of the public sector.

'I'm not critical of Ofcom,' he says. 'As regulators go, they're pretty good. They're intelligent people who understand what the private sector's about. But the law is somewhat behind the eight ball because, if you look at the internet, which is unregulated to an incredible degree, anything goes; whereas broadcast TV, which is under huge pressure from online rivals and digital advertising, is still very highly regulated.

'And although I believe strongly in the future of television or at least video transmission of long-form programmes and quality content, it requires mass audiences and funding through advertising, unless it's entirely state-subsidised. And that's quite a challenge at this point.'

Such a challenge that C4 finds itself in crisis - it is going quite rapidly broke because its business model doesn't work any more. Ad revenues are drying up. Johnson's preferred option is to milk the BBC and get access to public subsidy. But the BBC is itself a wounded beast at the moment. Reeling under blows over scandals - Daily Mail-manufactured and otherwise - such as Brand/Ross, it is backed into a corner and under constant battering from all sides. It makes it a tricky organisation to negotiate with.

'I have to say I am in two minds about the BBC. I think a lot of its output is extraordinarily good - among the best in the world. It is one of the very few organisations in Britain, along with Channel 4, that we can be truly proud of in terms of cultural output and influencing opinion across the world.

'However, there are many issues surrounding the BBC that irritate a great many people, including me. I am dealing with it vis-a-vis whether it should be the exclusive recipient of direct subsidy as a public-service broadcaster, and my view is it should not. It's inappropriate because it creates a sort of monolithic universe, whereby the BBC is the only provider of certain sorts of quality programming, be it high-quality voice radio output or be it serious drama or be it original comedy or be it hard-hitting news documentaries and factual television. And I would argue that Channel 4 is a necessary part of the universe that should be also helped, because we provide crucial competition to the BBC, we provide diversity, we provide an alternative voice that it can never provide.'

Whether C4's rare cash cow Big Brother qualifies as 'high-quality programming' is open to question. Its recent offering, Boys and Girls Alone, a reality TV version of Lord of the Flies, seems even more dubious. But Johnson's main task before he leaves Channel 4 in December is to sort this problem out. The favoured option is to acquire a slice of the lucrative BBC Worldwide organisation. The worst-case scenario is a merger with the hapless Channel 5, a prospect he regards with horror. Either way, if he cannot find an answer, his tenure will be perceived as a failure.

And what about his own businesses? It was thought curious that he had such a love of restaurants, as he was no great bon viveur. Indeed, he hardly used to take a drink. But he loved their straightforwardness, their lack of technical expertise and their ability to generate loads of cash.

How are they doing? 'Well, I won't go into specifics, but I will give you a general view, which is a lot more honest than most private-equity houses would give. I've seen some ghastly articles about the general leveraged buyout market, particularly the high-end major buyouts, where there's talk that 50% or more deals in current portfolios will default. An awful lot of the acquisitions done in 2006/07 are now looking overpriced, and those that have got four, five, six, even seven times Ebitda in debt, you would think are pretty vulnerable.

'We're obviously at the small end, and we have never tended to do very highly geared deals, partly because it's harder to get the debt in - the bankers are less interested. And, secondly, just the nature. We've done quite a lot of development capital deals, for example, where we subscribe for new cash and put the money in rather than doing a buyout. I would say that areas like retail are finding it generally tough. Food and drink is doing rather better, but still there are pressures. Business services is mixed. Pure B2B business is coping probably best of all, particularly the long-term contractual base. Some areas like recruitment are feeling it.'

As the pain spreads, you can be certain that he will be sniffing around for deals. He has always had a great eye for value, and plenty of sound concerns will be sold off in the next 12 months as their owners feel the squeeze and have to raise cash quickly.

And what about medicine and that long-lost career as a doctor? A state-paid, redundancy-proof consultancy would be nice in the current climate, wouldn't it? He smiles. 'I don't think I would have made a very good doctor, partly because the hierarchy in the medical profession in hospitals would have suffocated me. I would have been very unhappy.

'I think I might have made a reasonable research doctor. I've always been a fantastic admirer of a man called Sir James Black, who worked for Glaxo and was responsible for creating beta blockers and cimetidine. He's the only man, I think, in history to have invented two absolute blockbuster drugs. In terms of value created for UK plc, but also human wellbeing, he has done as much as anyone in the past 50 years. He's a remarkable man. I would love to have been someone like him, to be honest. But I'm not unhappy with how I've spent my life.'

And how long is he likely to carry on? He must have made enough money to hang up his boots and enjoy life. 'I won't retire. My dad, who is past 80, still works every day. I think his work is vital to him. I'm sure I will be the same. And whether my work will be what I'm doing now or slightly different, being productive, contributing, making a difference if possible and having a purpose in life are essential.'

It's clear it's not all about the money for him. When he delivered a speech to a conference of investors last year, he was the only delegate to quote Shakespeare's Measure for Measure - 'If thou art rich, thou'rt poor; For, like an ass whose back with ingots bows, Thou bear'st thy heavy riches but a journey, And Death unloads thee'.

Some may sneer that it's all very well for an individual worth scores of millions to quote Shakespeare thus, but Johnson acknowledges that a change in his personal situation has altered his outlook and mellowed him a little.

'I was just ambitious and impatient in those days, and I'm still ambitious and I'm still impatient, but I'm slightly better at handling it. I think having a family forces you to be somewhat less selfish, and perhaps I've slightly improved my abilities in terms of managing people. I would not say I'm one of the world's great managers, but I keep trying.

'I look at myself then and think if I had just carried on remaining single and with no children, I would have started to get seriously bored, because work was mostly what I did.'

The hot money is on his taking another sizable public job once the Channel 4 stint finishes. Johnson's type - people with a sound sense of public service but who understand commerce, tight management and the meaning of the bottom line - will be in high demand in the UK over the next few years as we try to extricate ourselves from the mire. He won't be a soft touch, though - his website is still sub-titled 'An Unrepentant Capitalist'.


1. To ensure his portfolio of businesses battens down the hatches and rides out the economic storm

2. To leave Channel 4 at the end of 2009 with the organisation on a sound financial footing

3. To find another satisfying public-sector job to stretch his mind and his abilities


1962: Born 2 February in Iver, Bucks. Educated Langley Grammar School and Magdalen College, Oxford

1983: Account executive, BMP, later joining Jonathan Aitken as executive assistant

1984: Media analyst, Kleinwort Benson

1989: Self-employed

1992: Chairman, Pizza Express

1997: Joins Belgo as chairman

2000: Forms investment specialists Risk Capital Partners

2004: Chairman, Channel 4

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