Interview: Gavin O'Reilly

O'Reilly junior proves passion for print is in the genes

But Gavin insists Independent News & Media is not a family heirloom

This article appeared in the Observer on Sunday January 27 2008 on p10 of the Business news & features section. It was last updated at 09:50 on January 28 2008.

As a 41-year-old Irishman who spent part of his childhood in Pittsburgh, attended Georgetown University business school and worked as a trader in Hong Kong before entering the family firm, Gavin O'Reilly is hardly a typical Independent reader.

The garrulous millionaire is unlikely to feel a pang of guilt about his carbon footprint, or attend an anti-war demo, but since he was installed as chief operating officer at Independent News & Media in 2002, the Irish media group that owns the title, it has been widely assumed he will succeed his flamboyant father Tony O'Reilly at the helm of the company.

So it's little wonder his views on the iconic paper are keenly sought, particularly at a time when it is pooling resources with its Sunday sister title and rumours abound that the daily might even launch a free edition. There is no truth in that, O'Reilly says, and he is also eager to play down speculation that his septuagenarian father is about to retire from the fray.

'He's a very young 71 years of age. You only have to try to beat him at tennis to see he's no plans to step down. He's taken it from a tiny Irish company to a global media concern. He loves the business. Intellectually, it's very stimulating, but it's not a family heirloom. There are no dynastic ambitions.'

Others claim that O'Reilly senior would love to hand over the business to his son, one of triplets, with another three older siblings, although since IN&M is a quoted company and the family owns a stake, others may have the final say on that. 'There is succession planning, but it's a matter for the board.'

As the smallest of the 'quality' newspapers in one of the most competitive markets in the world, there is constant speculation about the Independent's future, especially as it has yet to turn a profit, but O'Reilly insists it is in safe hands. 'The point about the Independent's losses is it allows for extremely efficient tax-planning,' he says. 'It is cash-neutral.'

IN&M, which owns more than 100 papers worldwide, as well as advertising businesses and a radio arm, made pre-tax profits of €250.1m (£187m) last year, but in any case, he says, the true value of the flagship title is incalculable.

'There are people who don't want to listen, but the Indie is the epicentre of the group,' O'Reilly says.

O'Reilly was the first to spot the potential of emerging markets, many of which are slowly dismantling strict rules preventing foreigners from owning media assets. The IN&M empire now encompasses papers in South Africa, Australia and India, and the Independent gives the group kudos and acts as a 'calling card' when O'Reilly travels overseas, opening doors that might otherwise stay shut. The company is thought to be in negotiations to take minority stakes in newspaper groups in Singapore and Indonesia.

The fact the Independent rarely reflects the family's beliefs also helps to persuade cautious governments in the developing world that the group will respect the editorial independence of the titles it acquires, O'Reilly says.

That probably won't worry the 280,000 or so people that hand over their 80p each day to buy the Indie, a newspaper that inspires huge loyalty in its readers, and perhaps it shouldn't. Billionaire newspapermen need not share the views of their readers to value their custom.

A brave decision to go tabloid, and its subsequent reinvention as a campaigning 'viewspaper' paid off, even if it prompted Tony Blair to single it out for special criticism in his infamous 'feral beasts' speech attacking the media.

'We were slightly bewildered that the Prime Minister would chose to single out one media outlet,' O'Reilly says. 'We are not looking for notoriety here.'

Neither he nor his father covet the power and influence bestowed on proprietors, he insists.

'It's a business. There is no desire for editorial control. We're not trying to plant flags of influence around the world.' His father has an unsentimental view of the company, just as he did when he ran Heinz, the American group where he made his name, and his fortune.

'He was Mr Heinz for 30 years and he had far more equity in Heinz than he's ever had in IN&M. He has been photographed with more ketchup bottles than he has newspapers.'

Tony O'Reilly used the millions he made from stock options at Heinz to invest in newspapers in his native Ireland, taking control of the Independent in the early Nineties, after a bitter boardroom battle with former Mirror editor David Montgomery.

A similar tussle recently broke out at IN&M, and it could prevent O'Reilly following in his father's footsteps. Denis O'Brien, another Irish millionaire, who made his money from telecoms, has built a 16.4 per cent share in the group, and is engaged in a very public battle with the family, using his shareholding to criticise the company's performance and strategy, demanding it sells off under-performing assets - including the Independent - and seeking the support of other investors in an attempt to oust O'Reilly.

'He has fired off so many letters I felt like calling him up and saying, "If you're looking for a pen pal we can put you in touch with someone",' O'Reilly jokes.

O'Brien's campaign, he says, is prompted by his failure to buy businesses that were acquired by his father, and a bitter dispute with IN&M's Irish titles over its coverage of his business dealings. 'I don't know what O'Brien's up to, you'd have to ask him,' O'Reilly says, refusing to be riled by suggestions that O'Brien could bid for the company.

'We've got to continue running our business to the best of our ability. If O'Brien's going to do something, let him do something. All Denis is doing is casually throwing around a couple of hand grenades and then hiding. It's a good story. It's got all the ingredients; intrigue, personalities and all the rest.'

Add the fact that Gavin and Denis were friends, going on group skiing holidays together when they were younger, and it makes for an even more compelling tale. The chances of a reconciliation seem remote.

Tall with a full head of thick, greying hair, O'Reilly cuts a commanding figure and it is not difficult to picture him as a youthful bon vivant. On a press trip to South Africa a few years ago, he spent far more time with journalists than his PR handlers demanded, enjoying a drink and smoking enthusiastically.

He married actress Alison Doody, with whom he has two children, but they are now separated, and O'Reilly seems to have taken to his new role as newspaper industry bigwig with aplomb, becoming president of the World Association of Newspapers ('I didn't say no quickly enough,' he jokes), an industry body that sounds rather stuffy but has done much to promote the medium.

He has since become an evangelist for print, pointing out that although internet readership, and advertising revenue, is growing rapidly, it remains a relatively small part of industry revenues. Rival groups make much of their internet investment to please the City analysts that cover them, he contends.

'The teenage scribblers out there are rather unsophisticated in that regard.' He seeks to puncture another myth about the Independent, claiming it has spent 'millions' on the internet, even if he is more sceptical than many about the money to be made online.

The internet advertising market is worth around $21bn, he says, only around 6 per cent of the total, and 60 per cent of that belongs to Google and Yahoo. Dozens of media groups are fighting it out for the rest.

It remains to be seen if the Independent will stay in family hands, but there is little doubt O'Reilly is a chip off the old block. When pressed, he even admits, with characteristic candour, that delivering speeches at newspapers conferences may be important, 'but it's not as much fun as running around chasing girls, it's true'.

Family fortunes

Gavin O'Reilly's father Tony, a rugby player who won 29 Ireland caps, made his fortune running Heinz. He joined the firm in 1969, running its UK division before becoming chief executive in 1979. By the time he left in 1988, the year after becoming chairman, he was the company's largest investor, and had used his money to invest in Irish newspapers.

He took control of Independent News & Media in 1973, and has built it into a media empire spanning four continents. The group, quoted in Dublin, now owns more than 200 publications, including the Independent and Irish Independent newspapers, with a combined audience of more than 100 million.

Gavin O'Reilly, born in Dublin, is one of six children, and moved to Pittsburgh, where Heinz was based, as a child, returning to Europe to attend Harrow and, later, Clongowes Wood College in Co Kildare. He worked at London advertising agency Doyle Dane Bernbach and as a banker in Hong Kong before joining IN&M in 1992, becoming managing director of the company's Irish operation in 1998. He has been CEO since 2001, and many expect him to succeed his father as chief executive. IN&M has said Tony O'Reilly will remain in the post until 2009, at least, but there is speculation he could be forced to step down if Denis O'Brien, a rival businessman, persuades fellow investors that the company is being run badly. There appears little chance of a wider shareholder rebellion taking root, however. The O'Reilly family's long association with the company seems unlikely to end soon.


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