Profile: Chris Stibbs, FD of The Economist Group

Founded in 1843 to campaign against the corn laws, the agricultural
protectionism of the early nineteenth century, The Economist, and the group to
which it has given its name, has come a long way. Chris Stibbs is the latest to
take the finance director’s seat at the group, still famous for its belief in
free markets.

It’s a history, and a brand, of which Stibbs is as proud as anyone in the
building. ‘It really is one of the premium publishing brands in the world.’ With
a circulation of well over a million, which in itself has doubled in the last
ten years, The Economist is the proof, perhaps, that print publishing is still
very much alive and well despite the gradual haemorrhaging of national newspaper
circulations.

It’s also, you might say, a great British export. ‘There is something
quintessentially British about it, about the way it’s written. It has a British
sense of irony about it. At the same time its raison d’etre is really about the
whole globe,’ Stibbs says.

Sitting on the top of the group’s wholly owned 1960s tower just off St James’
Street in London, The Economist could also be said to be at the centre of the
British establishment.

Owned 50% by Pearson and by 800 other shareholders, including some of the
major British financial names of the last 200 years (there is a Rothschild on
the shareholder register), it couldn’t be more British, while being
international at the same time.

His love for the brand is not just hot air: ‘I am a reader and subscriber’ he
says, and has been for some time – not just the 18 months or so that he has been
there.

The shareholder base is in itself one of the group’s interesting
peculiarities. With 800 shareholders it is quite a large private shareholder
register, and Stibbs says that the group likes to treat itself as a public
company.

In fact, looking through the accounts you occasionally get the feeling that
it discloses rather more than many public companies. Its breakdown of the tax it
pays is far more enlightening than that provided by many FTSE 100 giants.

Publishing experience

Stibbs has been in the hotseat for 18 months. He joined from Incisive media,
the publisher of trade magazines, where he was a part of a management buy-out
and subsequent flotation, which, you have to suspect, would have made him
financially comfortable.

He enjoyed the practice of working in a financially leveraged company, as
well as the fact that, as the saying goes, his interests were ‘aligned’ with the
performance of the business.

‘It’s different to being just a boring PAYE corporate employee,’ he says, not
that he seems too bothered by taking on the role again at The Economist Group.
‘They were great times,’ he adds.

Stibbs has a commercial head on him. ‘One theme that has run through my
career from about the age of 26 or 27 is that my direct line boss has been a
non-financial person.’

After training at Ernst & Whinney, Stibbs joined chemicals giant ICI, and
after his tour of duty in the head office, was sent off to Runcorn, as he puts
it, ‘to get my boots dirty’.

Working as the financial brains at a heavy chemicals business there, the
experience was a ‘sink or swim’ moment, he says: ‘It knocked the edges off me.’

After ICI he joined Pearson, and he has never looked back from publishing
since.

The commercial background means several things. For one, he has held
non-financial positions, so he knows what is expected of a finance function from
the other side as much as from the finance side.

When he worked for Pearson at the Oxford University Press he was given an
opportunity to actually run part of the business.

‘That was one thing that taught me a lot about managing people, and it also
taught me what it meant to own a profit & loss account, not just to produce
one,’ he says.

His commercial background, and the fact that he has always worked in growing
businesses, is in part the reason he was recruited at the group, where growth
expectations are currently high. ‘It’s no coincidence. We’re looking to grow
this business.’

The premium brand is looking to do even better than it has done in the last
ten years. The phrase the group is using is that it is looking for
‘disproportionate growth,’ compared to the past decade. ‘There’s plenty of scope
to increase the circulation, particularly in North America.’

Currently North America is the bedrock of The Economist’s circulation. A
glance at the figures would not necessarily reveal that growth, however.

The company publishes a five year overview of its figures in its accounts
filed at Companies House. Its turnover was, for the years 2002 to 2006, £227m,
£192m, £191m, £197m and £218m respectively.

That disguises steadily increasing profitability, which read £15m, £24m,
£25m, £28m and £31m for the same years.

There’s more. ‘The history is that we had, going back into the 1990s, made a
couple of poor acquisitions. You wouldn’t see the same dip in the underlying
numbers,’ Stibbs says.

Not only that, but the group suffered from the post-dotcom boom advertising
recession in the same way other publishers have done. ‘That was the first time
in over 20 years The Economist advertising had gone backwards,’ Stibbs says.

There are, he says, some very significant increases this year, following
continuing investment behind the circulation, the real secret to the success of
the brand.

The brand is strengthened, perhaps, by the strong sense of editorial
independence. The editor cannot be removed by the company, but only by a group
of trustees to whom the current editor, John Micklethwaite, answers.

‘Editorial integrity is enshrined in a legal framework,’ Stibbs says.

Trans-Atlantic success

The magazine has scarcely any obvious rivals in its field (he mentions Forbes
in the US and the FT in Europe, but neither could be said to be strong
cross-Atlantic brands.

‘Who are our competitors? It would be difficult to say. There are very few
genuine global brands,’ he says.

So what worries him? ‘Not a lot,’ is his blunt answer. ‘The worry here is we
don’t make the most of what we have. In the finance function I inherited, in my
eyes, a very strong control environment.

‘There’s a very strong ethos and processes, and systems. The numbers have
great integrity, the processes and systems are very well developed. That enables
me to sleep soundly at night.’

The company does have a pension deficit of £35m, but he’s not too concerned.

‘The defined benefit scheme is closed to new members, and we have a track
record of treating it very, very seriously. We have spent a lot of time looking
at the pension scheme. But with that deficit we have around £40m/£45m on the
balance sheet. In the context of the strong financial covenant it’s very
manageable in our eyes.’

Stibbs is a strong believer in the finance function supporting the company.
One thing he says he looks for in hiring employees is not just whether or not
people have the technical expertise but whether they can also make things
happen.

‘Technical skills are the base requirement, they are necessary, but you’re
looking for more than that.’

It’s a vision of finance as a strategic partner rather than a
number-cruncher. Our interview in itself was arranged at short notice after it
was suggested to Stibbs that it would be a good idea.

‘That,’ he jokes, ‘is finance supporting the business in action.’

The internet and the future

One thing that might be in the Economist Group concerning for investors is
the company’s internet strategy. With advertising migrating to the web
increasingly, there are fears across the publishing industry that the brands
they own could be one too many clicks away from making any money.

‘Like many publishers our previous strategy was to support the printed
version and give a combined offering. That helped support the growth of the
print copy but it’s true to say that that is a strategy we are currently
revisiting with an open mind.’

What advice would he offer to young accountants aspiring to a role as a
finance director? ‘I wouldn’t go anywhere if I wasn’t going to throw my heart
and soul into it. The one other thing I’ve learnt is don’t map out a career.
There’s no point. It’s a bit twentieth century, mapping out your career.
Whatever role you do make sure it is one you enjoy doing and it excites you.’

You need to buy into the role, he argues, more than anything else.

And his emphasis on not planning too much has paid off for him, he feels. ‘I
have had a really interesting career, and I didn’t know what I was going to do
when I started. The big thing when deciding what to do is to look at the role,
look at the culture, where you are going to. Don’t shoehorn yourself into
something.’