Starry Sky outshines the rest

Our youngest ever winner, BSkyB has defied the troubles besetting its industry and the wider economy...

by Andrew Saunders
Last Updated: 09 Oct 2013

It has been a year of surprises for UK plc, by no means all of them good. At the end of last year's Most Admired feature, we expressed the fervent hope that by the time it came to pen this year's write-up, the recession would be over. It's now clear that we hoped in vain; things may not be getting worse anything like as rapidly as they were, but unemployment and the national debt continue to rise alarmingly. Recovery - for the UK at least - still seems to be a way off.


And yet, for all the doom and gloom, there have been bright spots visible for those with the eyes to see them: those businesses with the chutzpah to regard this downturn as an opportunity as much as a threat. Rather than battening down the hatches and waiting for the worst to pass, they don their heavy-weather gear and venture out to face down the storm.

Britain's Most Admired Company 2009 is one such gutsy operation. Not only is BSkyB a first-time winner of this coveted title, it is also - at a mere 20 - one of the youngest firms ever to scoop the award. Its achievement is all the more remarkable for the extent to which it has bucked the market - the media industry has been having a pretty torrid time recently, and many of Sky's biggest rivals are flat on their backs.

As author of the research for Britain's Most Admired Companies, professor Mike Brown, head of corporate reputation and strategy at Birmingham City Business School, says: 'One of the fundamental aims of the BMAC survey is to celebrate the skills and successes of the management of the best British companies. Never have these skills been as important and as sternly tested as during the past 18 months.

'Companies must become leaner, fitter, more flexible and more able to respond to the unpredictable challenges presented by the external environment. At the same time, they must position themselves to gain the best results. Some will spot the big waves coming and find new markets and new customers, others may not see the waves until it is too late.'

The UK's favourite satellite TV operator clearly saw the waves coming in its own market, topping the table with a winning score of 72.25, the highest since the heady days of 2007. BSkyB's commercial success has been one of the most striking corporate parables of the downturn: proof that a class-leading product, well marketed and slickly delivered, can continue to grow and prosper, even in the depths of the most frigid economic climate.

According to conventional wisdom, pay TV should have been one of the first casualties of declining consumer confidence and increasing public thrift - why pay upwards of £50 a month for something you can get free (or at least for the price of a licence fee) from the terrestrial broadcasters? But as we head towards 2010, Sky has some 9.5 million subscribers - over 500,000 more than this time last year - and profits for the three months to 30 September are up £50m to £180m. It is well on the way to its target of 10 million subscribers for next year.

What's even more remarkable, Sky's average revenues per user are now heading towards £500 per annum. Where other TV companies - ITV and C4, to name but two - have staggered under the double blow of ad budgets cut to the bone and the increasingly rapid migration of what cash is left onto online media, Sky's direct-to-consumer business model and cornering of the market in rights to air major-league sporting events have proved extremely robust.

Adding extra services to its offering, such as broadband, HD TV, the ability to watch the big match on your iPhone - and its soon-to-launch digital music service, Sky Songs - has also helped BSkyB to keep ahead of the curve.

There may be a recession on, but Sky's punters seem prepared to make sacrifices almost anywhere else in their household budgets in order to hang onto their treasured Sky+ boxes. When the going gets tough, the tough get going - but it seems that the rest of us like to stay in and watch the telly.

BSkyB's commercial performance is not the whole story, however, for these are Britain's Most Admired Companies we are talking about. The winners are chosen by a jury of the sternest critics - their greatest rivals - and mere respect is not enough. Organisations have to be genuinely admired if they are to get to the top.

In many ways, this is BSkyB's greatest achievement. Founded in 1989 after the merger of Rupert Murdoch's Sky TV and British Satellite Broadcasting (remember the Squariel?), it is barely more than a stripling upstart among the great names of UK business, some of which have been around for centuries in one form or another.

But Sky has managed to become Most Admired company of 2009, nonetheless. And it has done so despite the ruthless way in which it outflanks competitors and its utter refusal to play to the gallery or curry favour with the establishment.

When, a couple of years ago, MT interviewed previous CEO James Murdoch, son of Dirty Digger Rupert himself, he made much of BSkyB's outsider status and 'challenger' culture. BSkyB was bristly, angular and unclubbable, and its top people revelled in not being part of the 'meeja' crowd. And yet under current CEO Jeremy Darroch, BSkyB has rapidly emerged as a more mature, considered and thoughtful organisation, and one increasingly ready to take its rightful place at the industry's top table.

BSkyB is even prepared to go cuddly, and is about to tweak its logo to present a warmer image. It has also set itself a new mission - to replace the BBC as the 'UK's most loved and respected source of entertainment'. Whether you think that's a laudable aim or not, you have to acknowledge the scale of the ambition.

BSkyB's fortunes make an interesting contrast to those of Ryanair, whose commercial performance has been equally impressive but which hasn't made it any higher than 103th in our league table. Ryanair's rivals may envy its figures, but they don't seem to admire outspoken boss Michael O'Leary's way of doing things quite so much.

Elsewhere in the rankings, results continue to show that the firms that engage head-on with the new economic reality are the ones that garner plaudits from their peers. There are five new entrants into the top 10, compared to last year: Cadbury, GSK, BP, BG Group and Cobham. Three of them - Cadbury, GSK and BP - are former overall winners, and all of them have steered a steady course through the downturn.

Cadbury, in particular, has been trading well under chief exec Todd Stitzer, who since the firm's demerger from Schweppes last year has turned Cadbury into a thoroughly modern multinational confectionery business - without abandoning its Quaker roots and principles. Cadbury's Dairy Milk was the first big high street brand to go Fairtrade earlier this year, a factor that may have helped Cadbury come top of this year's Community & Environmental Responsibility table.

Unfortunately for Stitzer, he has been so successful that he has attracted the attention of US processed food giant Kraft. Kraft is so keen to get its hands on Cadbury's sweet business that it tabled a hostile £9.8bn bid last month.

The bid was rejected, but Kraft CEO Irene Rosenfeld seems prepared to be patient. And now other would-be suitors are eyeing it hungrily - including the unlikely international pairing of Italy's Ferrero and Hershey from the US. Cadbury's Creme Eggs may yet be the order of the day at the Ambassador's dinner party.

Either way, the hedge funds are closing in, upping their stakes and betting on a deal of some sort. If they're right, Cadbury's 185-year history as an independent business may be drawing to a close.

No analysis of Britain's Most Admired Companies would be complete without a look at the fortunes of Tesco, winner of the top award a record six times. After slipping to fifth place last year, the UK's favourite supermarket (and the third-largest chain in the world) is back on form at number two. It's the only one of the big four stores in the top 10, less than one point adrift of overall winner BSkyB.

Having lost a few points of market share to the likes of Asda and Sainsbury's early in the downturn, Tesco has come out battling. A revamp of its class-leading Clubcard loyalty programme, aggressive product promotion and diversification into new markets such as personal banking have all helped Tesco fight back. It continues to deserve its unofficial sobriquet of Britain's best-managed company, winning the Quality of Management award outright. Quiet man CEO Sir Terry Leahy also takes home the Most Admired Leader trophy yet again, polling almost one in three of all votes cast.

Last year's overall winner Diageo just makes it into the top 10 this year at 9th. It has been a tough time for the maker of the Smirnoff, Guinness and Johnnie Walker booze brands: flagging sales have led to cost-cutting, which will result in 900 job losses. And there has been increasing pressure from health campaigners to reduce alcohol consumption by raising retail prices.

It may be a grisly trade but thanks to the continuing unrest in Afghanistan and Iraq there's no doubt that 2009 has been a good time to be in the defence business. Aero and Defence Engineering is the highest-scoring and thus most confident sector at present, and some of this year's biggest risers have been defence companies. Cobham, BAE and Ultra Electronics have risen 37, 40 and 38 places to 10th, 12th and 13th respectively.

In-flight refuelling and avionics specialist Cobham celebrates its 75th anniversary this year, with interim profits up 53% to £162m. Not a bad note for chief exec Allan Cook to step down on - he retires this month, to be replaced by current COO Andy Stephens.

Engineering & Machinery is another haven of industrial optimism this year - the sector's total score is up five points on 2008's showing. A modest increase, but an increase all the same. Strong demand from the oil and gas business has helped boost orders for the pumps, valves and control systems made by Rotork and Weir Group, for example.

It has also been a solid year for the utilities - steady-as-she-goes businesses like Centrica (up from 154th to 14th) and Severn Trent (up from 194th to 83rd) may not be fashionable in the boom years, but when things get tough, selling essential services such as gas, water and electricity suddenly seems a lot more attractive.

But we have to admit that, across the board, optimism is in short supply this year, with some two-thirds of sectors showing lower levels of confidence this year than last.

A look at the sector scores for the banking industry over the past couple of years shows just how badly the reputation of the financial sector, for one, has been hit. In 2007, banking was riding high, with a sector score of some 550 points. A year later in December 2008, that was down nearly 50 points to 505.6. But the worst was still to come. This year, banking could only manage a total score of 458.

The highest-placed bank, HSBC at 33rd, is also the UK's biggest. It has managed to avoid the worst effects of the financial crisis and has been buoyed by its substantial dealings in Hong Kong and the emerging Asian markets. Chief exec Michael Geoghegan (who has decamped to HK) has said that HSBC expects Q3 profits to be ahead of last year, although the bank has cut 3,400 jobs since last December.

Other big high street finance names have fared less well. How about RBS at 224th, down from an already-lowly 91st in 2008? Or Lloyd's at 216, down from 114th the year before? The ignominy of having to be bailed out by the taxpayer after what now look like years of illusory and self-serving 'success' has damaged terribly the good name of these firms.

Although there are signs from the investment banking sector that things may be on the up again, commercial recovery is only one side of the coin. Unless there are some pretty fundamental changes to the way our financial sector behaves, reputational recovery for some of these firms will take a great deal longer, if it comes at all.

Turning to the nine criteria by which performance in Most Admired is judged, overall winner BskyB comes top in three: Quality of Goods & Services, Capacity to Innovate and Quality of Marketing. Which is a pretty fair assessment of its modus operandi - encompassing great products, plenty of new ideas, and strong marketing to keep the punters signing up.

But there's a strong showing from Tesco too, which adds the Value as a Long-term Investment crown to the Quality of Management title mentioned above. Meanwhile, drugs giant GlaxoSmithKline picks up the prizes for Financial Soundness and Ability to Attract, Retain & Develop Talent. CEO Andrew Witty has been busy reworking the business model to reduce its reliance on blockbuster drugs and to introduce flexible pricing for developing countries. It seems to be working - GSK's fourth place overall is its best result since 2006.

Success in the boom years was an industry-wide phenomenon - rampant demand and overweening confidence can make the most moth-eaten sow's ear look like a silk purse, after all. What Britain's Most Admired Companies teaches us this year is that thriving in hard times is a solo effort. It calls for the strength of character to abandon the herd and go it alone.

The outstanding results come from firms that haven't just beaten their rivals, but left them for dead. House-builder Berkeley Group for example. Despite being in one of the most depressed of industries, it beat its nearest rival Persimmon by a whopping 11 points, coming 21st overall to Persimmon's 135th. Similarly, heavy-construction outfit Balfour Beatty manages 19th overall, compared to second-in-sector Keir Group, which could manage only 68th.

Our overall winner, BskyB, also trounces its nearest rival, 30th-placed Thomson Reuters, by 11 points. This ability to take the downturn on the chin and still come up smiling is what sorts the winners from the also-rans in Britain's Most Admired companies 2009. We suspect that, having been thus tested, these businesses will be in pole position when the long-awaited recovery finally gets into gear.


1. BSkyB - Jeremy Darroch CEO

Under the auspices of former finance director Jeremy Darroch, this year's winner, BSkyB, has put in a performance that would have been impressive even if the current recession hadn't taken hold. Adding over 500,000 subscriptions this year so far, BSkyB is well on course to hit its target of securing 10 million subscribers by 2010. Even more striking, average revenues per user are up £39 to £469, thanks to rising demand for HD TV, phone and broadband services. Next target - the BBC licence fee, on which Darroch's bosses Rupert and James Murdoch have renewed their attack recently.

2. Tesco - Sir Terry Leahy chief executive

The irresistible force of nature that is Tesco under Sir Terry Leahy has shown little sign of flagging, even in this toughest of retail climates. A revamp of its hugely successful Clubcard loyalty scheme and the launch of a Tesco bank account by 2011 are Leahy's latest wheezes. Sales growth has dipped slightly but profits remain stable, and continuing innovation has helped keep Tesco on top of the superstore pile - if only just. Expect a full-blown price war for Christmas.

3. Johnson Matthey - Neil Carson chief executive

It may be nearly 200 years old, but former gold assayer Johnson Matthey is more than a match for its younger rivals - sweeping the board this year in the chemicals sector. Under CEO Neil Carson, the precious-metal specialist has built a 24-carat reputation in catalytic converters. The current crisis in the global car trade may have taken some of the shine off; but having secured its place at the cutting edge of green technologies, the company is looking at a glittering future.

4. Cadbury - Todd Stitzer CEO

Leading Britain's fourth most admired company, US-born CEO Todd Stitzer is busy fighting off bids, from Kraft and others. Clearly they value the attractiveness of such a rare recessionary winner. Stitzer led the demerger between Cadbury and Schweppes, and has since spearheaded a successful transition into a truly multinational confectioner, perfectly placed to take advantage of both emerging markets and the insatiable British appetite for chocolate.

5. GlaxoSmithKline - Andrew Witty CEO

Witty took over as GSK's boss two years ago, and has been busy reshaping the pharma giant to take better advantage of emerging markets. To that end, he is shifting focus away from traditional high-margin blockbuster drugs to a lower-margin but more diverse and less risky product portfolio. He has also relaxed the firm's notoriously rigid pricing policy to bring much-needed medicines within the budgets of the developing world. The shift seems to be working - Q3 sales are up 15% to £6.8bn.

6. Rolls-Royce - Sir John Rose chief executive

Rose has piloted Rolls-Royce - a top 10 regular for the past four years - through the downturn with aplomb so far, thanks to long-term commitments to market-leading products such as the Trent 700 aero engine, and big-ticket defence deals in both Europe and the US. Rose has pursued business in the emerging markets and looked to support and maintenance deals to insulate the firm from the chilly economic climate in the West. He joined the firm in 1984 and has been chief exec since 1996.

7. BP - Tony Hayward group chief executive

Two and a half years into his stint at the helm of the BP supertanker, Hayward's root-and-branch 'reinvention' of the firm seems to be bearing fruit. Q3 output is up 7% year-on-year, a figure that even its most gung-ho rivals struggle to match. And BP's three-billion-barrel discovery in the Gulf of Mexico is one of the biggest recent oil finds. But a record £52m fine for the 2005 Texas City refinery explosion suggests he has work to do.

8. BG Group - Frank Chapman chief executive

Chapman trousered a whopping £11m pay packet in 2008, after BG's share price rose 240% over three years. This year has proved rather more challenging, with Q3 profits down 44% to £484m and output hit by delays at its new Tunisian gas-processing plant. But Chapman is still managing to stay ahead of City expectations. Already a market leader in liquefied natural gas (LNG), BG is also developing the three huge Brazilian oil fields that it has found in the past two years.

9. Diageo - Paul Walsh CEO

Diageo has lost its crown as Britain's Most Admired Company, dropping from first to ninth position. Paul Walsh, at the drinks company for more than nine years, led the company through the great times; now he faces the tough times. Sales at Diageo are flat at £9.3bn, so cost-cutting is top priority. More than 900 jobs will be lost at the maker of Guinness, Smirnoff and Johnnie Walker, news that went down with the workforce like a luke-warm pint of the black stuff.

10. Cobham - Allan Cook chief executive

The defence group has shot up the ranks this year, from 47th to 10th, and was beaten only by the mighty Rolls-Royce in the aero and defence engineering sector. Chief exec Allan Cook has steered the group to a pre-tax profit of £280m for the year, with revenue up 13% on 2008. He steps down next month (January) after eight years on the board, passing command over to his COO, Andy Stevens, who inherits an order book worth a bullet-proof £2.5bn.

'Most Admired' Top 20 2009
(last year's position in brackets)

1 (4) BSkyB 72.25
2 (5) Tesco 71.38
3 (2) Johnson Matthey 71.00
4 (18) Cadbury 70.40
5 (19) GlaxoSmithKline 70.00
6 (7) Rolls-Royce 69.96
7 (26) BP 67.08
8 (11) BG Group 67.03
9 (1) Diageo 65.83
10 (47) Cobham 65.75
11 (3) Unilever 65.0
12 (52) BAE Systems 64.9
13 (51) Ultra Electronics 64.7
=14 (154) Centrica 64.4
=14 (24) Royal Dutch Shell 64.4
=16 (81) Admiral 63.9
=16 (17) Capita Group 63.9
18 (27) J Sainsbury 63.8
19 (55) Balfour Beatty 63.1
20 (29) Marks & Spencer 62.9

Full list at


In conjunction with Birmingham City Business School, MT asked Britain's largest public companies in 25 sectors to evaluate their peers. Each sector comprises up to 10 companies. Using nine criteria, participants rated their sector rivals on a scale of 0 to 10 (0 = poor, 5 = average, 10 = excellent). Analysts at leading City investment firms were also polled. On the basis of these scores, three rankings were arrived at: all 236 companies; top 10 overall on each criterion (p39); and league tables in each sector (pp43, 45, 47). In sectors where there are insufficient qualifying 'pure' UK companies, selected international businesses with significant operational presence and revenues in the UK were included. Respondents were also asked to name the leader they most admired (pp43-45). Research by Professor D Michael Brown, Birmingham City Business School, and Stuart Laverick.


Company performances were judged against a set of benchmarks. Here are the highest-scoring contenders ranked by each of these criteria:

Quality of management
1 Tesco 8.42
=2 GlaxoSmithKline 8.33
=2 Tullow Oil 8.33
4 Capita Group 8.13
=5 Johnson Matthey 8.00
=5 Rolls-Royce 8.00
=5 Weir Group 8.00
=8 BAE Systems 7.89
=8 BSkyB 7.89
10 Rotork 7.83

Ability to attract, develop and retain top talent
1 GlaxoSmithKline 8.50
2 Johnson Matthey 8.20
3 Vodafone 8.10
4 Tesco 8.08
5 BSkyB 8.00
6 AstraZeneca 7.80
7 BAE Systems 7.78
=8 Centrica 7.75
=8 Cobham 7.75
=8 Diageo 7.75

Financial soundness
1 GlaxoSmithKline 9.17
2 Tesco 9.00
3 Johnson Matthey 8.60
4 Unilever 8.38
5 BAE Systems 8.22
6 Vodafone 8.20
=7 Aveva Group 8.00
=7 Centrica 8.00
9 Berkeley Group 7.92
10 BSkyB 7.89

Quality of goods & services
1 BSkyB 8.89
2 Johnson Matthey 8.40
3 Rolls-Royce 8.37
4 Inmarsat 8.22
=5 Abcam 8.00
=5 BP 8.00
=5 Cadbury 8.00
=5 Cobham 8.00
=5 Royal Dutch Shell 8.00
10 Thomson Reuters 7.89

Value as a long-term investment
1 Tesco 8.42
=2 BP 8.00
=2 Cadbury 8.00
4 Johnson Matthey 7.80
5 Serco Group 7.75
6 BAE Systems 7.74
=7 BG Group 7.67
=7 BSkyB 7.67
=7 Tullow Oil 7.67
10 Capita Group 7.58

Use of corporate assets
1 BP 8.25
2 BG Group 8.20
3 Tesco 7.83
4 Rio Tinto 7.75
5 Johnson Matthey 7.60
6 BSkyB 7.56
=7 BHP Billiton 7.50
=7 Rotork 7.50
=7 Tullow Oil 7.50
10 Capita Group 7.38

Quality of marketing
1 BSkyB 8.56
2 GlaxoSmithKline 8.50
3 Cadbury 8.43
4 AstraZeneca 8.20
5 Rolls-Royce 8.19
6 Diageo 7.88
7 Tesco 7.71
8 Admiral 7.67
9 Marks & Spencer 7.63
10 Shire 7.57

Community & environmental responsibility
1 Cadbury 7.71
2 Marks & Spencer 7.48
3 Rolls-Royce 7.44
4 Co-operative Bank 7.38
=5 BSkyB 7.25
=5 Unilever 7.25
=7 BG Group 7.00
=7 Johnson Matthey 7.00
=7 J Sainsbury 7.00
=7 Tesco 7.00

Capacity to innovate
1 BSkyB 8.56
2 Johnson Matthey 8.20
3 Rolls-Royce 8.04
4 Autonomy 7.89
5 Cadbury 7.86
6 Tesco 7.83
7 Admiral 7.80
8 BP 7.67
9 Cobham 7.63
10 Carphone Warehouse 7.53

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