Gary Allen,Managing Director of media conglomerate, RJR Group took over from the doyen of Jamaican television and radio Lester Spaulding in October 2008 and within a year reshaped the organisation,and reported stellar profits while media companies both at home and abroad found their revenues and audiences dwindling. 

Spaulding left a big footprint for Allen to step into, and his reputation as perhaps the best media manager on the island must have been a daunting prospect to follow. Add to that a global recession not seen since the Great Depression of the thirties, a local economy that flatlined and then a media house beset by all manner of competition, reduced advertising dollars and operating costs strangling the life out of the bottom line are some of the obstacles Allen overcame and triumphed in 2009 . And let’s not forget that 2008 was perhaps one of the worst-performing years in RJR’s history. It is this Herculean effort that sees Gary Allen chosen as Caribbean Business Report’s Business Personality of 2009.

Allen is unique in that he began as a journalist back in 1987 (a freelance reporter at the Gleaner) and then became the boss of Jamaica’s largest media entity thus giving him perspicacious insight into the dynamics and practices of a media operation, not to mention a certain empathy with those that drive the business.

He served for two years as Deputy Managing Director before the Board gave him the top job in 2008. It was a baptism of fire with the company haemorrhaging and facing challenges on all fronts, hardly the most auspicious of times to step up to the plate.

Speaking with Caribbean Business Report from RJR’s Kingston headquarters this week, Allen said:”Yes, it was a challenging start. Obviously as deputy managing director for two years I would have been involved and integrated into RJR’s operations. But when your managing director is stepping down and you have to deal with the most unflattering financial results, you have to find a way to go up from that.”

One can liken his path to success to that of Jeff Immelt who succeeded the great Jack Welch at the American powerhouse General Electric (GE), leaving his own mark on a corporate leviathan. Allen too is carving his image into his company and may have already displaced the shadow cast by Lester Spaulding. 

He says his management style is not flamboyant and his approach is more deliberate and workmanlike. He puts in the hours and looks to think outside of the box while at the same time position the company for what lies down the road.

Putting a plan in place

Case in point – with the oncoming recession at the end of last year he did not follow the Minister of Finance’s lead in dismissing it as something inimical to Jamaica. He set about putting a plan in place, getting in touch with the Jamaica Chamber of Commerce (JCC) , Jamaica Tourist Board (JTB) and other heads of associations and outlining that indications were that there was likely to be a significant economic slowdown and this was not the time to have their businesses go on the retreat. Therefore if they were already advertising with RJR , special credit terms would be put in place for them that would not put too much strain on their cash flow. Packages would be tailor-made and low-cost production would be made available.

“The last thing you want to see is companies cutting back on non-essentials and the first thing to go is advertising spend. So in October 2008, we put those initiatives on the table,” said Allen.

The first step was to make RJR a leaner machine and to do so in a phased way. The next was to position RJR as both a reliable and credible media house in the marketplace so that when things got rough, people opted for reliability and credibility.Allen set about pursuing those twin objectives. 

” We took cost management very seriously and re-evaluated our entire operations before going about reducing expenditure. We identified energy conservation and set up monitors in all the departments to try to turn off power when it was appropriate to do so because our electricity bill is the second highest cost we run in the organisation. You see, we run more than 30 transmitter sites and here at Broadcasting House we have equipment that draws a lot of power, so reducing electricity consumption was critical. We managed to reduce our electricity costs by 10 per cent while cutting back considerably on our printing and stationary.” 

Restructuring

The new managing director then cast his eyes upon making his transportation fleet more efficient. Up to March 2009, RJR spent almost J$120 million on special events (mainly sporting) and Allen quickly concluded that the market would be unable to sustain that. Cuts had to made and made fast. Tough programming decisions would have to be executed and a number of contracts were cut. January 2009 saw Allen going before his staff and informing them that though certain cuts had been made, senior management would have to look at the entire structure of RJR with a view to changing it. This saw the elimination of some positions and the merger of departments. Changes were also made to the supervisory structure. If the target numbers were not met the next move would be the rationalisation of staff.

Allen then sought to sensitise the Board of Directors to all the issues and the options available as well as having a number of consultations with all stakeholders. Come March he had a picture of just where RJR was and crafted structural changes that saw a mix of early retirement, voluntary redundancy and then involuntary separation.

“You get more savings from the management level than you do at the rank and file, and unlike some other companies we had a better buy-in. We ended cutting about 30 per cent of management and 12 per cent of staff workers. Six people took voluntary redundancy and eight took early retirement which meant I could cut fourteen less.

“We then considered whether we could utilise these skill sets in another way.We then offered individual contracts which gave some of our household names more flexibility which I must say helped with morale.In the end we managed our costs down without putting people out on the streets. Our expenditure as at the end of the September quarter was ten per cent below that of the prior year. Now that comes against the background of increased inflation, currency devaluation and a contracting economy,” said Allen.

Bumper profits

Approaching the end of the calendar year, RJR saw a bounce in revenues helped by the competitiveness in the telecoms sector which saw an advertising frenzy, particularly with Claro joining the party. Revenues up to the last quarter came in at doubledigit ahead of revenues for the entire previous year. Up to the end of September ,the group’s profits had surpassed profits for the entire prior fiscal year. As it currently stands, RJR’s pre-tax profit is running at over 100 per cent of last year’s number for the same period.

According to its audited financial statement for the year ended March 2008, RJR generated revenues of J$1.51 billion producing a net profit of just $42 million. The following year saw revenues of $1.60 billion and a net loss of $140 million. Allen succeeded in turning that around and returning the group to profitability within a year.