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Tom Bower
Monday December 12, 2005
The Guardian
The Virgin pioneer could do with a lottery victory to protect his fortune, and to reverse the crushing humiliation he suffered
Conjuring a fortune from thin air has been Richard Branson's genius since the early 1970s. By chasing fashion and juggling options, Britain's most popular businessman has turned investments in music, airlines, radio and now mobile telephones into mega-million-pound windfalls to be neatly deposited in his family's tax-free offshore trusts.
His latest coup, transforming Virgin Mobile from a mere idea in 1999 to a company valued at over £800m, is certainly remarkable. Incredibly, Virgin Mobile owns nothing more than a sales force and a customer base, allegedly, of 4 million subscribers. The telephone network and the company's headquarters are rented. The ace is the Virgin brand name and Branson himself, posing as the People's Capitalist.
Article continues
In common with everything connected to Branson, the headline announcement last week that NTL, a cable company, wants to buy Virgin Mobile triggered much babble but little illumination. After rejecting an opening bid, Branson, with his customary cool, is waiting for the inevitable new offer and a top price.
NTL is not paying with cash but with NTL shares, and the hype of combining NTL, Telewest and Virgin into a seamless company to rival Sky exemplifies Branson's permanent lust to play in the big league. Challenging Rupert Murdoch has become a virility symbol for British tycoons irritated by their pygmy status on the world stage. Jargon about "quadruple play", meaning one server providing telephones, internet and TV, sounds good until you examine the parentage. NTL is criticised as unreliable, while Branson is the master of hype, often followed by failure.
Since he started Student magazine in 1967, Branson's searing ambition and personality has lured friends, entrepreneurs and established corporations to believe they can always earn fortunes by their attachment to him. Fuelled by the self-made tycoon's incessant self-glorification and ferocious publicity campaigns, the headline successes over the years have sustained the myth of invincibility.
Virgin Music - started amid a sophisticated purchase-tax fraud that Branson admitted in 1971 - was sold in 1992 for a record £560m. That money sustained Virgin Atlantic, the airline started in 1984 with a single, old Boeing 747. In 1999, when Branson sold a 49% stake of the airline to Singapore Airlines to relieve a financial squeeze, he valued the business at £1.2bn.
But beyond those two outstanding successes is a history of failed enterprises, which might have cautioned NTL. Virgin Cola, hailed by Branson in 1994 as the inevitable successor to Coca-Cola, has practically disappeared. Virgin Clothes, launched on the stock exchange in 1996, folded with losses to shareholders. Virgin Money was launched with a glitzy advertisement of Branson emerging naked from the sea, but did not deliver the expected big financial rewards. Then came Virgin Vie, Virgin Vision, Virgin Vodka, Virgin Wine, Virgin Jeans, Virgin Brides, Virgin Cosmetics and Virgin Cars - none fulfilling their creator's inflated dreams.
Other disappointments were truly painful. Virgin Express, an airline based in Brussels, was intended to rival easyJet, but the original investors on the stock market lost money. Similarly, the McCarthy brothers, who invested over £30m in V2, Branson's second music company, lost all their money and, unable even to pay the milkman, faced personal bankruptcy. Australians who invested in the 2003 flotation of Virgin Blue, an audacious, no-frills airline, rewarded Branson with over £200m for a stake of his original investment. Initially the airline was successful, but soon after Branson pocketed the money, shareholders watched the share price fall.
His ventures have also included two catastrophes. Virgin Rail was Branson's big dream. For years he had campaigned in Westminster about the advantages of privatising the rail network. Branson posed as the socially acceptable capitalist, able to offer cheap, modern and reliable rail travel without government subsidies. His promises were not fulfilled. Virgin Rail remains dependent on state money, aggressively protects its monopoly, and is subject to innumerable passenger complaints. The company's history damaged the Virgin brand and Branson's reputation as a reliable entrepreneur, the capitalist with a social conscience.
Tom Bower
Monday December 12, 2005
The Guardian
The Virgin pioneer could do with a lottery victory to protect his fortune, and to reverse the crushing humiliation he suffered
Conjuring a fortune from thin air has been Richard Branson's genius since the early 1970s. By chasing fashion and juggling options, Britain's most popular businessman has turned investments in music, airlines, radio and now mobile telephones into mega-million-pound windfalls to be neatly deposited in his family's tax-free offshore trusts.
His latest coup, transforming Virgin Mobile from a mere idea in 1999 to a company valued at over £800m, is certainly remarkable. Incredibly, Virgin Mobile owns nothing more than a sales force and a customer base, allegedly, of 4 million subscribers. The telephone network and the company's headquarters are rented. The ace is the Virgin brand name and Branson himself, posing as the People's Capitalist.
Article continues
In common with everything connected to Branson, the headline announcement last week that NTL, a cable company, wants to buy Virgin Mobile triggered much babble but little illumination. After rejecting an opening bid, Branson, with his customary cool, is waiting for the inevitable new offer and a top price.
NTL is not paying with cash but with NTL shares, and the hype of combining NTL, Telewest and Virgin into a seamless company to rival Sky exemplifies Branson's permanent lust to play in the big league. Challenging Rupert Murdoch has become a virility symbol for British tycoons irritated by their pygmy status on the world stage. Jargon about "quadruple play", meaning one server providing telephones, internet and TV, sounds good until you examine the parentage. NTL is criticised as unreliable, while Branson is the master of hype, often followed by failure.
Since he started Student magazine in 1967, Branson's searing ambition and personality has lured friends, entrepreneurs and established corporations to believe they can always earn fortunes by their attachment to him. Fuelled by the self-made tycoon's incessant self-glorification and ferocious publicity campaigns, the headline successes over the years have sustained the myth of invincibility.
Virgin Music - started amid a sophisticated purchase-tax fraud that Branson admitted in 1971 - was sold in 1992 for a record £560m. That money sustained Virgin Atlantic, the airline started in 1984 with a single, old Boeing 747. In 1999, when Branson sold a 49% stake of the airline to Singapore Airlines to relieve a financial squeeze, he valued the business at £1.2bn.
But beyond those two outstanding successes is a history of failed enterprises, which might have cautioned NTL. Virgin Cola, hailed by Branson in 1994 as the inevitable successor to Coca-Cola, has practically disappeared. Virgin Clothes, launched on the stock exchange in 1996, folded with losses to shareholders. Virgin Money was launched with a glitzy advertisement of Branson emerging naked from the sea, but did not deliver the expected big financial rewards. Then came Virgin Vie, Virgin Vision, Virgin Vodka, Virgin Wine, Virgin Jeans, Virgin Brides, Virgin Cosmetics and Virgin Cars - none fulfilling their creator's inflated dreams.
Other disappointments were truly painful. Virgin Express, an airline based in Brussels, was intended to rival easyJet, but the original investors on the stock market lost money. Similarly, the McCarthy brothers, who invested over £30m in V2, Branson's second music company, lost all their money and, unable even to pay the milkman, faced personal bankruptcy. Australians who invested in the 2003 flotation of Virgin Blue, an audacious, no-frills airline, rewarded Branson with over £200m for a stake of his original investment. Initially the airline was successful, but soon after Branson pocketed the money, shareholders watched the share price fall.
His ventures have also included two catastrophes. Virgin Rail was Branson's big dream. For years he had campaigned in Westminster about the advantages of privatising the rail network. Branson posed as the socially acceptable capitalist, able to offer cheap, modern and reliable rail travel without government subsidies. His promises were not fulfilled. Virgin Rail remains dependent on state money, aggressively protects its monopoly, and is subject to innumerable passenger complaints. The company's history damaged the Virgin brand and Branson's reputation as a reliable entrepreneur, the capitalist with a social conscience.
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