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Ireland's political and cultural magazine
62 — village July - August 2012
T
HERE have been scores of high profile
personal dramas and falls from grace
during the sad and sorry Irish business
sagas of the last five years, but by far
the most unreported has been the fall and fall of
Independent News and Media (INM) and crum-
bling reputation of Tony O’Reilly, or Sir Anthony
as he liked to be known in recent times. Once
the unquestioned ‘Golden Boy’ of Irish business,
O’Reilly, now in his mid-seventies, has been
allowed to slink into relative obscurity while the
greater part of his fortune, which was so much
part of the business discourse for three decades,
has gone sailing off into the wide blue yonder, a
phenomenon only too familiar to holders of bank
shares.
But he has not just lost a rep-
utation; he has also lost a media
empire stretching from Dublin’s
Talbot Street to the southern tip of
the Cape of Good Hope and along
to more remote reaches of tropical
Queensland. Denis O’Brien’s heft is
now blocking the frame of the INM
doorway with just under 30 per cent
of the stock and he looks to be geared
to protect his control of the company
in precisely the way O’Reilly did from
the time he first arrived on the scene
in 1973.
Curiously, or perhaps not so curi-
ously, the slump in the O’Reilly fame
and prestige has been largely ignored
by the Irish media. O’Reilly, during
the 35 years in which he controlled a sizeable part
of the Irish newspaper sector, never really got a
hard time from the non-O’Reilly press and now,
rather than break the habit of a lifetime, the same
non-INM media has tended to rally around him
in his time of woe. All the Irish papers trumpeted
the growth in his wealth and influence, his inter-
national standing, and the glamour that he tried
to carry into his business life. But in the last
four years when the value of his personal stake
in Independent News and Media alone fell from
just under €900m to a current €16m, and when
his investment in Waterford Glass crashed into
smithereens, the papers have been oddly mute
about the spectacular fall.
The spates of sensational ‘where-did-it-all-
go-wrong’ stories that have plagued most other
failed billionaires have mostly been missing in
the case of O’Reilly.
It is hard to avoid the word hubris in dealing
with the life and times of Tony O’Reilly. His success
came early in every aspect of his life.
On the rugby football field at eight-
een he was appearing for the British
Lions at Ellis Park in South Africa in
front of 105,000 screaming fans;
good fortune came early in business
too; at twenty-five he was launching
Kerrygold the ‘game-changer’ for
the Irish dairy sector. Even while he
was holding down the post of chief
executive in one of America’s great
global food corporations, HJ Heinz,
he was simultaneously taking con-
trol of what was then Independent
Newspapers - and he wasn’t yet thir-
ty-seven. He never ever shied away
from telling the public what a singu-
larly amazing fellow he was.
O’Reilly’s career as a newspaper
proprietor can be broken down into a couple of
phases. The early phase was the slow build-up
to what, in the old ‘hot metal’ days, was called
‘the new technology’. The arrival of the computer
would change everything in the print industry and
O’Reilly was extremely patient in his planning to
ensure that this change would be achieved with
minimum pain. However, he knew that, once
achieved, the great bulwark against revolution-
ary change in the industry, the print unions, would
lose power and the removal of that barrier would
make the sector easy pickings from then on. That
calculation was inspired, precise and profitably
accurate.
O’Reilly had irons in other fires too. In the early
1970s he was a major part of what was called the
‘shell company boom’ through his acquisition-ve-
hicle, Crowe Wilson and eventually Fitzwilton.
This second business front, or perhaps a third
business front, foundered on the rocks of the
‘First Oil Shock’ in 1974. Undeterred, O’Reilly
was also prepared to take up the challenge of the
next speculative boom when he helped master-
mind the money-spinning Atlantic Resources in
the early 1980s.
This was the key company which raised, but
mostly dashed, hopes that offshore Ireland would
become an oil province. He showed rare energy
and skill in holding down his Heinz job and being
part of these other ventures even if not all were
successful.
î
When he took
control in 1973,
paying £1m,
it had seven
titles - but by
the height of
the Celtic Tiger
boom, INM
had some 170
titles
¨
O’Brien can’t
be worse than
O’Reilly
Somehow failed billionaire O’Reilly – who lost INM
and Waterford Glass - escaped media derision
ÃÙã®Ä¥®ãþÖãÙ®»
63
The Indo was his pride and joy. When he
took control of the Independent in 1973, pay-
ing £1m, it had seven titles - but by the height of
the Celtic Tiger boom, INM had some 170-odd
titles under its belt and a string of other media-
related companies in five different countries. In
the meantime Tony had accepted a knighthood
and the patient, sympathetic O’Reilly, empathetic
with the industry he served, gave rise to a much
more hard-nosed proprietor with a continuing
soft spot for personal self-aggrandisement. The
Independent newspaper in London had been
acquired and O’Reilly declared that the balance of
his newspaper interests were to be made ‘congru-
ent’ with this high-profile title. In the midst of this
editorial colonialism what tended to be forgotten
was that the London Indie was losing a fortune.
To disguise this, O’Reilly decided to acquire the
highly profitable Belfast Telegraph and the Indie
losses were masked by the Bel Tel profits in a so-
called UK profit and loss account. It did not alter
any reality but the optics looked better.
Meanwhile yet another ‘boom’ had arrived
on the scene in the shape of the ‘dot com’ bub-
ble and INM was yet again uncomfortably late for
this, resulting in investments in the sector that
were just about perfectly timed to fall to the ‘dot
com’ bust.
At the same time O’Reilly had shed his Heinz
responsibilities in 2000, become a tax exile in
the Bahamas, embarked on some tricky ventures
that alienated him from the domestic Irish sup-
porter base who were not already alienated (in
an especially Irish way) from a bloke whom they
once knew as ‘Tony’, but who was now insisting
that he be called ‘Sir Anthony.’
O’Reilly’s decision to join with George Soros,
the billionaire currency speculator and others
in an asset-stripping exercise at Eircom which
enabled him to pocket an estimated €40m was
something that tarnished the carefully-man-
icured O’Reilly image. So much of the public’s
money had been lost in the great Eircom public
flotation and share splurge in 1999, that anyone
who would profit from the telecoms provider in
such an overtly opportunist way was regarded as
being singularly suspect. That this should be per-
petrated by a former Irish ‘Golden Boy’ who now
hid behind an English ‘title,’ was simply taking
things too far.
Back at INM, a number of important things
were happening. The phenomenal growth in titles
and in the geographical spread of the company
was being achieved by leveraging great heaps of
debt. It was becoming clear to the markets that
this level of indebtedness could not possibly be
sustained. The arrival of Denis O’Brien on the
INM share register in the mid-noughties turned
from an annoyance at the outset into a major prob-
lem for Tony and his
heir apparent, son
Gavin. O’Brien began
to criticise operational
matters like the scan-
dalous waste of money
on the Indie; the sub-
sidisation of the other
major loss-making title,
the Sunday Tribune
and the cost to the INM
shareholders of the
O’Reilly lifestyle, with
its big parties, lavish
entertaining of figure-
heads from the world
of politics and main-
tenance of committees
that served only to
make Tony look important.
Just at this time, the company rhetoric began to
adopt phrases like “INM must become the Ryanair
of the newspaper sector”. The consequences of
this philosophy were predictable. Agreements
with the unions were torn up and significant job
losses ensued. One particular change was the
out-sourcing of the sub-editing function at the
Independent titles to a third party. The danger
here was that because sub-editing is a significant
item of quality control in newspapers, the inter-
ests of the customers were being downgraded for
an accounting manoeuvre. Only a very exceptional
amount of cost-cutting was going to change the
special problem that was apparent at INM which
was its phenomenal debt. By the late 2000s the
supporting banks took the initiative themselves
and forced the company to come up with a pro-
posal that would turn debt into equity. O’Reilly
was diluted and while O’Brien too suffered some
dilution, he at least had the cash resources from
his mobile-phone activities to restore his holding
and now he has effectively wrested the dominant
shareholding position at the company. He can
change the company and explore more digital
ways of turning a profit. But it won’t be easy. It
is hard to know if the O’Brien motivation was to
take out an especially pompous rival and rub his
nose in it. If that was all that was required, Denis
O’Brien has hit the target. The task of securing
INM with a sustainable debt and an income stream
that will satisfy the markets is daunting and the
first signal that O’Brien is making progress in this
endeavour will be in the share price. As of now
the share price is about 96 per cent lower than it
was in 2007.
Securing
INM with a
sustainable
debt and
income stream
is a daunting
task and the
share price
will be the
first signal of
progress
¨
O’Reilly playing for the
Lions in New Zealand in 1959
