Capital Economy, Business and Finance
Back in the day, the Savoy Grill was the place to go for lunch if you wanted to see the wheels of the City of London being oiled. You wouldn’t find the classiest people there, of course. The likes of Cazenove and Rothschild had their own, much superior, dining arrangements for their favoured clients. And the Warburgs people were famously indifferent about lunch, despite the fact that they were becoming annoyingly successful. But pretty much everyone else who was anyone would be there sooner or later, whispering and being seen. And three or four of the great City editors might also be in view, listening and nodding. Nothing vulgar like taking notes. But shaping in their minds the material for their next column. It’s the late 1960s, and over there in the corner is Pat Hutber, the punchy Thatcherite editor of the Sunday Telegraph city pages. In another part of the room, the Daily Telegraph’s suave City editor Kenneth Fleet is dining with the chairman of one of the big clearing banks. And if you are lucky, you might also see the grandest of them all, the Daily Mail’s Patrick Sergeant, sipping his champagne and holding court.
All three of them had access to anyone who counted in the financial world. All three could be trusted to use that access, most of the time, in a respectful manner. And all three, but especially Sergeant, simply had to be read by everyone before the markets opened in the morning. Their insights moved prices. Their smiles, or occasional frowns, could make or break business heroes. And the death last week of Sir Patrick Sergeant at the age of 100 is a moment to reflect on the marked change in tone of financial journalism over the past 50 years, shifting as it has from a culture of access, often of a rather cosy kind, to one of aggression.
When Lionel Barber, the former FT editor, signed up as a young reporter on the Sunday Times decades ago, he was to his surprise told by his boss to identify a group of business leaders and go out for lunch with them. He must go to their houses, become their friends, even go on holiday with them.
Today, the media is seeking to expose shortcomings in business life at least as much as it is trying to build friendly relations with the people running large companies. Whatever happened to Sergeant’s world?
City editor of the Daily Mail from 1966 to 1984, he was a formidable figure. Always impeccably dressed in pin stripes and a bowler hat, except in Ascot week when his picture byline would show him in a topper. The story was told that he had once been left behind by a Russian driver on a trip to Moscow: he’d been mistaken for the butler. He would travel to the US on the Queen Elizabeth and – so it was said – take a junior reporter along as his assistant.
He had great personal charm which came across in his columns, and he regarded himself as at least the equal of the business leaders who were his friends – which indeed he was. He spotted an opportunity when the new Eurodollar markets started to open in London, and helped to found the magazine Euromoney from which he made a decent fortune.
He was lucky in his timing. A post-war slumber in the City was coming to an end, with takeover barons like Jim Slater, Jimmy Goldsmith, Owen Green and James Hanson appearing over the horizon. City houses which had until now run themselves on the lines of a gentleman’s club – paying no attention to the outside world, dedicated to confidentiality and secrecy – slowly began to realise that good relations with the press in this new world were not just advisable, but essential. These new clients wanted their story told.
But regulation and communications systems were lagging well behind. The Stock Exchange fiercely defended the idea of self-regulation and regarded itself more as a private institution than as a public utility. Insider dealing didn’t become a crime until 1980. There was no central source of share prices – papers like the FT had to collect this information manually. Company results were published in a haphazard manner through the day, and no one got too fussed if the figures were released a little early to trusted friends. A company’s annual report might run to 50 pages, rather than today’s 500-page jumbos. And very few investment analysts were employed to crawl through the numbers.
All this meant there was exclusive information to be found, and journalists like Sergeant were very good at finding it. In his book, Return to Go, Jim Slater gives a snapshot of the great man at work. He describes a lunch in his office at which the two men are discussing share prices. Slater says he thinks they are too high. The next morning, the Mail’s city page splashes with “Jim Slater says shares are still too high.” In Slater’s words: “I had not asked Patrick to keep my views confidential, and therefore there was no breach of etiquette on his part, but if either of us had known the storm that would be created by his article we would have thought twice about it.”
Sergeant played a part in promoting the image of Slater and his peers. And if it became necessary, he also knocked them down. By 1975 Slater’s empire was crumbling. Sergeant attacked, and four days later, Slater resigned.
But the world was changing as Sergeant retired. The growing power of institutional investors was leading to fundamental changes in the relationships between companies and their shareholders. Armies of investment analysts were crunching corporate performance. The Big Bang reforms of 1986 brought competition to the Stock Exchange and share prices were now published in real time. Regulation became more robust: the old club rules no longer seemed to work.
You can date with some precision the moment it became clear that the game was over.
In 1991, Lord Hanson made a takeover run at ICI, then one of the UK’s leading industrial companies. From the start, things did not go well for him. A man who had been used to adulatory press coverage found himself being criticised for all kinds of things, including some impertinent comments about the lifestyle of his colleague Lord White (whose string of racehorses was partly funded by the company). That August, he expressed his frustration in a letter to his public relations adviser, Sir Tim (later Lord) Bell, and to show how things had changed his letter was immediately leaked in full.
“Since we reduced the direct approach (from us) to editors et al, we have had lots of advice from you, most of which seems to address how best we should keep the institutional investors informed about Hanson. I think you are missing the point.”
The letter goes on with many harsh comments, and reaches a climax when it turns to a hostile article that had recently been published in the Mail on Sunday. “Can’t you dispel all this garbage in advance?” Hanson had never even heard of the journalist responsible, let alone met him. Apart from a few favoured columnists to whom he spoke directly, “everyone else seems to have drifted against Hanson, and comment is deteriorating. This letter is intended to show our unhappiness”.
It certainly did that. And things were only going to get worse. In the following years, business news became available free online in real time to everyone. The same happened to access, as companies broadcast their news by webcast and conference calls to anyone who wanted it. They might still give private interviews to specially favoured journalists, but woe betide them if they disclosed any price sensitive material that had not already been disclosed to a wide audience.
And weighed down by increasingly demanding corporate governance rules, business leaders themselves became more bureaucratic, less entertaining copy. Robert Maxwell fell off his yacht, Jimmy Goldsmith succumbed to cancer, Richard Branson scooted off to a tax haven, the swashbuckling chief executives all but disappeared and the business world became a much more sober place.
How can city editors differentiate themselves when privileged access to information providers – the business leaders themselves – has all but disappeared? Their ability to move markets has contracted in line with their ability to secure exclusive access. The temptation is to become more aggressive. To see if two and two can be made to add up to something more than four, or to be the first person to suggest that a particular boss is obviously hopeless and has to go.
And here’s the worst thing. Times have got a lot tougher in the media world. Jobs have been cut. And rather than sliding in their copy in time for the evening deadline, financial journalists now have to file through day and night and in multiple formats. The idea of chewing an Omelette Arnold Bennett for a couple of hours in a nice place just off the Strand has become sheer fantasy even for the grandest of their number. And Patrick Sergeant and a Pret a Manger sandwich are simply not words that can easily be fitted together.
