After two earlier decades of boom and bust, it’s now been almost nine years since the UK-based Future Plc provided any shock headlines. Since 2014, CEO Zillah Byng-Thorne has led the digital transformation of a magazine-centric group which is now worth some 50x its stockmarket value when she was appointed. But the unrivalled performance was overshadowed this week by news that she will be leaving the company sometime next year. That would be dramatic news enough, of course. But the way the story seeped out will have worried investors and employees alike.
It all started with the announcement that Byng-Thorne would become non-executive deputy chair of Trustpilot Plc (on the way, it is assumed, to succeeding long-time chair Tim Weller). Oddly, the eye-catching appointment had been omitted from trading updates two days earlier both by Trustpilot and Future. But so too was Future’s appointment of The Guardian’s international CEO Claire Blunt as chief operating officer, announced the following day.
The editor of Shares magazine promptly Tweeted that the Trustpilot appoinment suggested Byng-Thorne would soon be leaving Future. It was followed three days later – at 5am UK time on Sunday, no less – by a Sky News TV “scoop” that the company would be searching for a new CEO. A Future spokesperson refused to comment on mere “speculation”.
By Monday, with a 17% fall in its share price, Future was reminded by the London stock exchange of the obligation to announce price sensitive information. It rushed out a “Response to press speculation and share price movement”, saying – ungrammatically – that Byng-Thorne “remains committed to the business, and has not resigned, however she has informally indicated that she would like to step down by the end of 2023.” No comment at all from the CEO, just an assertion that the board had reported an “ongoing focus” on succession planning in its 2021 annual report.
You can join the dots. But what will happen to the high-performance media company so carefully reconstructed by Byng-Thorne? She has been CEO for eight years, after being originally appointed as CFO in 2013 when Future had a market capitalisation of just £30m. At the time of her appointment, Future had reported a £30m half-year loss which led to a 40% reduction in headcount.
That was the low point for a company whose market cap is now £1.7bn, despite a 65% fall in the share price so far this year.
Before this week’s disclosure of her “by the end of 2023” departure, the CEO forecast that operating profit for the year ended Sept. 30 2022 will be at the top end of market expectations: “We are pleased to be reporting another period of good progress. Against the backdrop of a challenging macro environment, our continued strong performance is a testament to the diversified nature of valuable audiences, specialist content verticals and monetisation routes coupled with a relentless focus on execution.”
Those results – due on November 30 – may now be a swansong for the company’s most successful leader who was voted “CEO of the Year” by the London Stock Exchange in March.
Future has increased revenue 7x in the past five years:
£m | 2022* | 2021 | 2020 | 2019 | 2018 |
| Revenue | 818.8 | 606.8 | 339.6 | 221.5 | 124.6 |
| EBITA | 270.2 | 195.8 | 93.4 | 52.2 | 18.5 |
| Margin | 33% | 32% | 28% | 24% | 14% |
| Market cap | £1.9bn | £1.8bn | £1.7bn | £867m |
The 37-year-old company has spent some £1.4bn on 16 acquisitions in the past six years. It generates 62% of revenue in the UK and 38% in the US and claims to reach some 1 in 3 of online audiences in the two countries, with a total audience of almost 450m, 75% online. Its fast-growing video production is delivering more than 2.5bn views each month.
Future’s 250 print and digital brands include: The Week, GoCompare, TechRadar, Kiplinger, Marie Claire, Country Life, Wallpaper, Decanter, Golf Monthly, Homes & Gardens, PC Gamer, Tom’s Guide and Who What Wear.
The recent profit performance and portfolio growth are stand-out achievements in the eventful history of Future. And what a history…
It is 24 years since founder Chris Anderson joined with APAX private equity to buy-back the specialist consumer magazine publisher he had sold to Pearson just four years earlier. The price was almost three times what Anderson had pocketed from the 1994 sale, but the numbers were to get even wilder. Within 18 months, Future (swollen by startups and acquisitions across Europe and in the US) had taken the London stock-market by storm. An IPO valuation of £577m bounced to £1bn within a few weeks.
The publisher had built its reputation on premium-priced computer games magazines including “official” publications on behalf of Sony, Microsoft and Nintendo. It capitalised on the boom in computer games and in newststand sales and the worldwide licensing of specialist magazines. It seemed like nothing less than a media company for the digital age.
Anderson, had started it after graduating from Oxford University and becoming passionate about 1980s computer games and technology. He launched his first magazine in 1985 from his parents’ kitchen table in picturesque Somerset in the UK’s south-west, with a £15k bank loan. For the next seven years, the fledgling company doubled its revenue, profit and number of employees every single year. In pre-internet days, the magazines were “interactive” with cover-mounted CDs and computer games demo disks. Future described itself as “media with passion”.
In 1993, along came the gilt-edged Pearson (then publisher of the Financial Times, Penguin books and much else) to buy the magazine company for £52.5m as part of a stretchy ambition to be a major player in the worldwide computer games market. The enriched Anderson left his colleagues to it, flew west and set about cloning Future in San Francisco. By 1998, Pearson had lost its passion for Future and sold it to APAX private equity, Chris Anderson, and long-time CEO Greg Ingham. The US and UK companies were brought together and IPOd in 1999, as media stocks limbered up for the first dotcom boom.
Investors were euphoric about “Future Network Plc” which seemed to symbolise the technological promise of the new millennium and the whizzy world of the internet and computer games. It was, momentarily, all about revenue growth – not profits – as the UK company launched and acquired in France, Germany, Italy, Netherlands and the US. It was a global pop-up.
In that phase of its life, Future peaked at 101 tech-driven magazines in six countries selling 5m copies every month, with some 2,000 employees. Turnover hit £250m as the Playstation generation made the company and its founder rich – on paper. But it was all too good to be true. At the height of the boom, APAX escaped with its winnings – and left Anderson to face the bust.
No sooner had the fog cleared on the ‘millennium bug’ (remember that?) than investors turned angrily on the dotcom “growth-is-more-important-than-profit” companies they had once eulogised. Future’s share price collapsed, along with magazine sales and investor confidence. Only debt was rising as its stock-market value crashed to a mere £25m.
The company was saved by a last-ditch share issue and (just in time) the $68m sale of Business 2.0 magazine to Time Inc. That single magazine seemed to epitomise Future’s boom and bust. Business 2.0 was for the ‘new digital economy’ and briefly became one of the fastest-growing magazines in the US, notching up 2,000 pages of advertising in its first year. In two years, copy sales doubled to 210,000 which propelled a 575% increase in advertising pages from March 1999 to March 2000, as the country’s most talked-about magazine increased its frequency from monthly to fortnightly. It was rocket fuel for Future’s IPO in 1999. But Anderson’s dream of Business 2.0 editions all over the world came crashing down, although not before Time Inc’s eleventh-hour rescue which saved Future from bankruptcy.
The founder completed the rescue of his company before making an emotional exit. He left Future armed with the fledgling Imagine Gamers Network and the little-known TED conference which his board colleagues were relieved to offload for 40% of what they had so recently paid for it. Chris Anderson was left to rue the day he had befriended private equity and the voracious stock market.
But nothing could disguise the woeful lack of investment in Future as a listed company. It was a tech publisher with weak systems and the sugar-rush of newsstand sales camouflaged the dearth of subscriptions. But things change quickly and – in the year after being saved by the sale of Business 2.0 – it was powering forward again with profits of £18.5m.
Four years later, CEO Greg Ingham (who had been with Future almost since the start) became the next casualty as 2005 profits fell by 47% to £12.5m. He was succeeded by Stevie Spring whose optimistic five-year spell ended abruptly, in 2011, when profits crashed by 55% to £3.7m. Former TV news executive Mark Wood became CEO for three years until – another profits crash. On-script, the next CEO was the company’s CFO Zillah Byng-Thorne. The accounting background of the fourth CEO in nine years seemed like a gift to Future’s stressed investors.
Eight years later, that’s exactly what it’s been.
In 2017, Future increased revenue by 43% to £84m, with EBITDA profit doubled to £11m and three times that of 2015. The results highlighted digital revenue including £9m from something new to media investors – e-commerce. Another striking feature was the growth of print magazine revenues which increased by 43%, principally through the 2016 acquisition of tech publisher Imagine. It had been able to squeeze profit growth from micro-managing print even while pushing on with its headlining digital strategy.
That’s how the transformation began.
Brits will understand just how reassuring Future’s investors found the Scottish cadences of Zillah Byng-Thorne. The Scots founders of modern retail banking have left their prudent mark on the UK psyche, and the Future CEO fills investor presentations with calm commitment to continual change, reinvention and the restless search for new markets and opportunities. Even her big claims sound reassuringly under-stated.
The keys to the strategy came from the CEO’s experience at AutoTrader, still one of the UK standouts as a print business that successfully flipped to all-digital. The Future highlights have been:
Technology: In 2021, the company (which is still most easily characterised by its 130 or so magazines) generated almost 40% of its revenue from affiliate e-commerce, with 30% from digital and print advertising, and 22% from readers. That shift to e-commerce retail sales (almost 3x the 2020 figure) came from the re-casting of Future as a tech company. Not because it doesn’t still print all those publications which employ the largest slice of its 2,800 people. But because it has invested in a whole suite of proprietary systems that are effective, scaleable and relatively low-cost. It has the technology it needs and owns it. While the capabilities of its Hawk e-commerce software, developed in 2014, do not sound too special, Future’s emphasis on a stack of bespoke systems that can be speedily rolled-out to new businesses is highly strategic.
Future’s e-commerce revenues are generated via Hawk which identifies products and vendors and embeds links in product reviews. First-party data reveals “where a user enters our ecosystem,” such as what search terms brought users to a Future site, which content they clicked on, and whether or not they clicked on an affiliate link. Future, therefore, gets to understand a user’s journey, across all its sites. The data informs coverage, by determining which articles motivate people to buy and which don’t. The early success came from Future’s 12-year-old TechRadar site. But, although tech, video gaming and computing continue to dominate the company’s e-commerce revenue, it is also making major strides in the homecare, lifestyle and financial sectors delivered by its increasing ambitious acquisitions.
Virtually all magazine-centric groups compete for e-commerce revenues. But Future has used data to industrialise the process by producing content (lists, recommendations and practical coverage) that encourage reader-users to buy. It’s a powerful machine from the magazine business with technology at its heart.
Management: The inability of incumbents in any market to respond adequately to digital disruption is often in the hearts and minds of long-standing executives. New-style companies need new skills, experience and the ability to see things differently and to challenge legacy business. Future’s senior executive team has a blend of skills and relatively few are from magazines. Further, most are relatively recent recruits to Future with experienced executives from across the media industry and beyond.
Acquisitions: Future’s six-year spending spree has culminated in its largest deals: TI Media in 2020 (£140m), Dennis Publishing (£300m) and GoCompare (£594m) in 2021, and Who What Wear ($100m) in 2022. Beyond merely choosing its targets carefully, Future’s acquisition success has reflected its technology focus, not least because it has enabled major cost savings and rapid integration.
Byng-Thorne, the former Nestlé graduate trainee and CFO / interim-CEO of AutoTrader, is not the first Future CEO to recognise the enduring strength of specialist consumer media and its “evergreen content”. But she has built the systems and team and done the deals that have shifted the centre of gravity from print towards e-commerce and digital advertising. In declaring the ambition to reach 1in 2 of online people in the US (as it does in the UK), she identifies as a hard-driving, energetic CEO who has turned the once so flakey Future into a formidable media machine. That’s why it is now so often compared with US digital warriors Dotdash/ IAC and Red Ventures, rather than the magazine companies it has raced past.
There was a time (only a few years ago) when the Future CEO felt compelled to allay the fears of investment analysts by (sort of) telling them not to expect many more acquisitions. It was a calming response to Future’s messy financial history. The CEO’s track record has since given her all the cred she needs to make strategic acquisitions whenever possible.
But this week’s news may slow down the deals, especially if the board finds itself in a race to find the next CEO rather than back the plans of the incumbent. Awkward.
Who knows what will happen to Byng-Thorne’s ambitions to grow Future rapidly in personal finance, health and US women’s lifestyle and to continue to ramp-up the production of video and audio? For all the claims that Future is a “specialist” media company, it is now much more than that. Having started out by publishing “narrow but deep” magazines and web sites for computer gamers, guitarists and techies – it is now engaged in a headlong fight for women’s interest media both in the US and UK. It no longer seems unlikely that Future could get into broadcasting or even daily news brands, all of which could provide the platforms and market power to sell its range of “specialist” products and services. Everything has become possible. Until now.
However “informal” the conversation between chair and CEO about the 2023 “retirement” of Future’s CEO of the Year, Byng-Thorne’s power may quickly drain away both in the company and in the boardroom. The plans are no longer informal. Can she carry on as if nothing has happened?
The two urgent choices for the Future board may be:
Either turn the clock back and persuade (and incentivise) the high-flying CEO to stay for, say, two more years. (Despite successive shareholder controversies about Byng-Thorne’s remuneration, this week’s falling share price implies strong investor support for extending her contract).
Or accelerate CEO recruitment plans with a view to making a relatively quick change. The headhunting firm retained by Future in recent years is known to have produced some early possibilities. The choices may include a few internal candidates and established multimedia executives like Hearst’s Jonny Wright or Christian Baesler, of BuzzFeed Inc.
Both options come with a price, of course.
But the safe options may be to formalise Byng-Thorne’s 12 months’ notice and plan a smooth transition either to her longtime colleague (at Autotrader as well as Future) the highly-rated CFO Penny Ladkin-Brand, or Claire Blunt (ex Hearst) the company’s newly-appointed COO. Either could go down well with investors.
Meanwhile, Future’s shell-shocked directors may inevitably start to focus on the jitters that may have helped to slash the share price this year, despite the high-growth financials. They might start to wonder (like some investors) whether the increasing dependance on affiliate e-commerce via Amazon and Google makes Future vulnerable in the medium-term, not least to cuts in commission. They might also worry about the great unknown: how e-commerce will perform in a possible recession. Something new to worry about.
Future can hope to sustain its e-commerce earnings growth by helping to generate many more free-spending “specialist” customers than the digital behemoths can do on their own. But it must also keep building connected audiences and data, and growing alternative revenues including from product licensing – and strategic acquisitions. Revenue diversification is what Zillah Byng-Thorne has been doing so effectively, of course. Any hiatus could be costly.
