Business Movers: Episode Summary - "The Missing Mogul | Man in the Mirror | 3"

Release Date: October 31, 2024
Host: Wondery (Lindsey Graham)

1. Introduction

In the third installment of the four-part series "The Missing Mogul" from the Business Movers podcast by Wondery, the spotlight remains on Robert Maxwell, a towering yet controversial figure in the media industry. This episode delves deep into Maxwell's ambitious acquisition strategies, his fraught rivalry with Rupert Murdoch, unethical financial maneuvers, and the eventual spiraling of his business empire into debt and deception.

2. Robert Maxwell's Acquisition of the Daily Mirror

The story unfolds in July 1984 when Robert Maxwell, a seasoned entrepreneur with diverse business interests, successfully acquires the Daily Mirror. Despite spending over £100 million (approximately half a billion USD today) and incurring an additional £7 million in debt, Maxwell was determined to transform the newspaper into a profitable venture.

Key Moments:

• Initial Meeting: Maxwell meets with Mike Malloy, the editor of the Daily Mirror. At [00:00], Maxwell asserts his plans to boost readership by a million within a year and make the paper the country's best-selling newspaper.

  "We’ll have a million new readers. On top of that, the Daily Mirror will be the country's best selling paper." — Robert Maxwell [07:45]

• "Who Dares Wins?" Campaign: Inspired by Rupert Murdoch’s The Sun's bingo game, Maxwell introduces "Who Dares Wins?" offering a £1 million prize. Although initially successful in boosting sales, Maxwell manipulated the competition by denying early winners and handpicking a suitable victor, Maudie Barrett, to maintain circulation levels.

  "To the Daily Mirror and a prosperous future for all of us." — Robert Maxwell [15:30]

• Micromanagement: Maxwell's hands-on approach extended to editorial decisions, often aligning content to favor his other business interests, thereby straining relationships within the newsroom.

3. Rivalry with Rupert Murdoch

Maxwell's aggressive expansion sets him on a collision course with Rupert Murdoch, his long-standing adversary in the media landscape.

Key Moments:

• Attempted Acquisition of Today Newspaper: In mid-1987, Maxwell aims to purchase the Today newspaper. However, Murdoch swiftly intervenes, leveraging his financial prowess to undercut Maxwell’s bid. Despite Maxwell's attempts to gain a board position, he fails to block Murdoch's takeover, adding to the tensions between the two magnates.

  "I'll be sure to make the numbers work." — Robert Maxwell [38:20]

• Failed Takeover Tactics: Maxwell's inability to outmaneuver Murdoch in securing Today highlights the limitations of his financial strategies and foreshadows the challenges ahead.

4. Expansion into New Industries and Israel

Undeterred by setbacks, Maxwell ambitiously diversifies his portfolio, venturing into the music industry with Nimbus Records, television with MTV’s European subsidiary, and significant investments in Israel.

Key Moments:

• Investment in Israel: A pivotal moment occurs when Maxwell embraces his Jewish heritage, leading to substantial investments in Israeli businesses and attempting to acquire football clubs. This move marks a significant shift in his personal and professional life.

  "Now that I've made it as a businessman, I can finally embrace my Jewish roots." — Robert Maxwell [51:10]

5. Ethical Missteps and Pension Fund Misuse

Maxwell's relentless pursuit of growth leads him down unethical paths, notably the misuse of the Mirror Group pension fund to finance acquisitions.

Key Moments:

• Misappropriating Pension Funds: Maxwell repurposes the pension fund's £300 million (approximately £1 billion today) to secure loans for his ventures. He borrows from the fund under the guise of temporary loans, intending to repay them once deals prosper. This risky maneuver exposes his disregard for employee welfare.

  "It would only be temporary. Once the deals pay off, I'll transfer the money back." — Robert Maxwell [65:45]

• Creating Shell Entities: To conceal his financial manipulations, Maxwell merges pension funds into companies like Bishopsgate Investment Management and the Maxwell Charitable Trust in Liechtenstein, leveraging the country's strict privacy laws to obscure transactions.

6. Financial Mismanagement and Collapse

Maxwell's empire teeters on the brink as debts mount due to his overambitious acquisitions and deceptive financial practices.

Key Moments:

• Bidding Wars and Debt Accumulation: Maxwell ventures into colossal acquisitions, including the American publishing house Macmillan for $2.6 billion and the Official Aviation Guide for $750 million. These deals significantly strain his financial resources.

  "I'm the chairman. I do the deals. Your job is to make the numbers work." — Robert Maxwell [72:15]

• Accounting Trickery: To mask his deteriorating financial health, Maxwell engages in dubious accounting practices, such as transferring funds between businesses and forcing accountants to issue misleading dividends to maintain the illusion of profitability.

• Unsustainable Debt: With liabilities surpassing assets, Maxwell's strategies fail to generate sufficient returns, leading to a precarious financial situation where he continually borrows from the pension fund to cover debts, increasingly endangering his employees' futures.

7. Conclusion

By the summer of 1988, Robert Maxwell's relentless and unethical business tactics culminate in an unsustainable debt crisis. His empire, once poised to rival Rupert Murdoch's, begins to crumble under the weight of financial mismanagement and deceit. The episode sets the stage for the impending downfall and mysterious disappearance of Maxwell, which will be explored in the subsequent episode.

"I'm taking everything to the edge and hoping one big win will wipe out the losses." — Narrator [83:50]

Looking Ahead

The next episode promises to unravel the intricate web of deception and dubious dealings that ultimately lead to Robert Maxwell's enigmatic disappearance, offering listeners a comprehensive understanding of how a once-prominent mogul's hubris and unethical decisions led to his downfall.

Recommended Resources

For those interested in delving deeper into Robert Maxwell's life and business practices, the podcast recommends the following books:

• The Mystery of Robert Maxwell by John Preston
• Maxwell's Fall by Roy Greenslade
• The Outsider by Tom Bower

Business Movers continues to explore the complex narratives behind influential business figures, shedding light on the triumphs and tragedies that shape our economic landscape.