less than affectionate summary. But he was correct. His savvy outclassed his friend’s.
The unresolved issue was the value of Powell’s 40 per cent share of what Branson called a ‘busted company’. In the final act of severance, even with his oldest friend, Branson wanted to feel that he was the winner.
Under Branson’s and Powell’s direction to reduce taxes, the accountants had minimised Virgin’s profits and had accumulated huge losses which were, for outsiders, as unquantifiable as the group’s assets. Not included under the rules of accountancy was the value of Virgin’s music catalogue and the rights to the music and records owned by Virgin. Those rights, Branson realised, were worth unquantified millions. Additionally, there was the secret accumulation of money in their offshore trusts which remained unmentioned in Virgin’s accounts. Under Branson’s guidance, it was finally agreed that Powell would receive £1 million in cash and some assets. Branson’s problem was producing £1 million in a way which his accountants would find acceptable.
Until 1973, Branson had been officially earning just £20 per week. Thereafter, his annual salary had been about £2,000. Producing £1 million from his own resources as declared to the Inland Revenue was impossible. So instead he borrowed money guaranteed by the trusts for a transaction which was senseless without Branson’s private knowledge of Virgin’s true value.
The divorce was finalised on the Duende. The two school friends sat across a round table. Between them was Heimi Lehrer, a solicitor employed by Virgin since 1973 as their property specialist. Barely a word was spoken as the signatures were scribbled. For Branson it was an unemotional moment. The division of the business, he believed, was a limited risk. His demeanour was a disorienting blend of innocence and cunning. Branson did not appear sad about the divorce from his childhood friend. Powell would be airbrushed into oblivion. The gap-toothed grin, suggesting a heart of gold, was replaced by a hard-fixed stare. ‘We’ll trade out of trouble,’ the thirty-one-year-old quipped. Embracing his gambler’s gospel, every crisis was an opportunity and Powell’s departure left Branson with total ownership.
One of the few relationships he worked hard to protect was with Mike Oldfield. That was endangered by Tom Newman’s incitement for separation. ‘You’ve got a lousy contract,’ the disgruntled producer of Tubular Bells advised Oldfield. ‘You should break from Virgin.’ Oldfield’s ultimatum terrified Branson. The musician was once again Virgin’s major source of income. ‘We’ll give you a better deal,’ pleaded Branson with the graceless recluse, ‘even though we’re nearly bust.’ Eventually, Oldfield succumbed. The continuing income from Tubular Bells was Branson’s lifeline.
Just one year later, in 1981, Branson’s risk paid off. Thanks to Simon Draper and Steve Lewis, Virgin Music produced nine hits to repay all the company’s debts. In a decade of honeymoons, divorces and crisis, he could reflect, the Big Ones had provided singular lifelines until the good times returned. Fortunately, his friendly manner had disguised his rough tactics. Browbeating the New Musical Express about his financial crisis, he smiled, was justified by his survival.
‘I can’t find the bathroom,’ explained Richard Branson. ‘Could you come to my bedroom and help me find it?’ At about 2 a.m. in early February 1982 in the Hotel Esmeralda in Paris, Branson had just telephoned the nearby bedroom occupied by Suzie McKenzie. The married journalist was puzzled. After all, Branson had occupied the same room for two nights and over dinner at Juliens, a fish restaurant, he had boasted, while noisily slurping a bowl of mussels, ‘I’ve never lost a night’s sleep in my life.’ She paused. Branson’s breathing was suggestive. He had not been as much fun as she had imagined. Certainly he was exceptional – levering each mussel out of its shell with a soup spoon was bizarre – but he remained enigmatic rather than engaging. ‘I’ll be right over,’ she said.
‘Here it is,’ she announced. ‘It’s behind this door.’ McKenzie smiled. Branson, she decided, was certainly not her type. She walked out. Branson was irked. Poaching McKenzie, he had thought, would be no different from the capture of Kristen and Joan. But attracting intelligent women, he regretted, was difficult. Sophisticated women like McKenzie castigated him as unimpressive and sexually unenticing. ‘A vacuum,’ she later declared. Branson found McKenzie’s disdain inexplicable since admiring secretaries and rock groupies swooned about ‘Richard’s genius’, and more journalists than ever were calling for interviews.
Branson had spotted McKenzie at a party which he hosted in early 1981 at his parents’ new house in Surrey. His guests were the staff of Event, a new London listings magazine which he had launched to compete with Time Out. Ignoring Joan’s reprimands about eating with his fingers, drinking other people’s wine and pulling cigarettes from guests for a puff, he tried especially hard to ingratiate himself with his new employees. Dressed elegantly, McKenzie had been standing near the pool. Branson manoeuvred himself nearby. Her splash was loud and his laughter was electrifying. Pulling her outstretched hand, he helped his victim on to the side. Fiercely, he rubbed the woman dry. Some would even swear that he screamed, ‘Oh you are saucy!’ as he joyfully rubbed her breasts and thighs.
Ignoring her embarrassment, Branson had invited the journalist to co-host business lunches on the houseboat. As she served lumpy minced meat and warm Hock, Branson encouraged his visitors dressed in suits to believe that McKenzie was his girlfriend, if only to deflect attention from their demands for money and their complaints about his business ethics. Branson had received writs from Mike Oldfield and Sting, and was embroiled in an acrimonious dispute with Carol Wilson, Virgin’s successful director of a music company, who accused Branson of not signing an agreed employment contract. ‘I don’t like this Sting litigation,’ Branson confessed to McKenzie. ‘I feel bad about it.’ He was baffled, he continued, why Dire Straits, the Boomtown Rats and Bob Geldof had all rejected Virgin’s contracts. Surely, he asked rhetorically, they should have been susceptible because he was the amiable alternative to the dull suits. But if Branson’s admissions of failure were designed to inspire McKenzie’s sympathy he was to be disappointed. McKenzie felt she was the target of Branson’s manipulation. But she had misjudged the man. Despite the setbacks, Branson could still conjure success.
Branson’s rejection of Nik Powell’s arguments one year earlier had proved justified. Virgin’s profits in 1981, after selling over two million albums of Phil Collins and the Human League, were £1.5 million compared to the previous year’s £900,000 loss. His reviving fortunes encouraged the very self-confidence which alienated many of the journalists whom he had hired for Event.
‘You’re all bluster, and you don’t listen,’ Pearce Marchbank accused Branson. The anger of Event’s editor caused the Duende to pitch on the motionless canal. ‘You’re a rock and roll egomaniac who doesn’t understand that magazines take time.’ Six weeks after the launch of the new London listings magazine, Event’s circulation was declining. Branson’s reductions of the budget had reduced the magazine’s size and consequently advertisers were deserting. Branson was unwilling to concede defeat. ‘You’re bringing Virgin down,’ Branson griped to Marchbank. ‘Fire forty staff. Now.’ His second attempt to publish a magazine as a prelude to becoming a media tycoon was souring.
Like so many publicity-seeking businessmen, Branson had hoped that Event would bestow glamour, status and influence. Money, he believed, could buy power. A vicious strike in 1981 at Time Out, a unique London listings magazine owned and edited by Tony Elliott, a former friend, had prompted Branson to launch Event to both improve his fortune and social status.
Tony Elliott’s staff, anti-Establishment journalists resentful of the proprietor’s right to manage, had for weeks in early 1981 successfully prevented Time Out’s publication. Branson, still irritated by the failure of Student magazine, welcomed Elliott’s predicament as his good fortune. Elliott had been invited to lunch at Mill End, Branson’s new country home near the manor in Oxfordshire. As the lunch drifted into the afternoon and then into the evening, Branson tried to