The FD Interview: Andrew Griffith, BSkyB

An almost childlike enthusiasm for all things technological is not normally something you might associate with the chief financial officer of a FTSE-100 company. Yet Andrew Griffith, CFO of British Sky Broadcasting (BSkyB), has a natural enthusiasm for the digital world that is infectious. Sitting in Sky’s head office in Osterley, greater London, Griffith has a style that is as fluent and friendly as you would expect for a company that has to appeal to all. But his fresh-faced appeal – at 39 he is the youngest FD in the FTSE-100 – doesn’t hide the steel that lies beneath.

When it comes to questions about News Corporation’s £7.5bn plan to buy the 61 percent of BSkyB it does not already own, Griffith won’t be drawn on the subject. With Rupert Murdoch agreeing to spin off Sky News to get the go-ahead for the deal from culture secretary Jeremy Hunt, it is a particularly sensitive subject.

At the end of 2010, television watchdog Ofcom advised that the bid should be referred to the Competition Commission because of the combination of one of the UK’s main providers of TV news with the UK’s largest newspaper publisher. This was addressed by distancing Sky News from the merged entity (see box on page 30 for timeline of the deal). Griffith deals with questions about how the takeover might affect the organisation with a straight bat.

He appears much happier talking about his real passion – technology – and, more pertinently, the contribution he says finance has made, taking Sky into areas of mobile technology, broadband and high-definition television. It’s not long before he whips out his iPad and begins extolling the benefits of Sky’s multitude of apps.

“Who would have said two years ago that we would have been the largest entertainment provider on the iPad,” Griffith tells Financial Director, scrolling through the Sky TV Guide app. “This is a great example of what we have done. I can actually press a button, whizz that off and record it.”

Unorthodox approach

Griffith says that finance has been at the heart of Sky’s digital growth story because of its ability to analyse the viability of new products such as Sky Anywhere, Sky HD and Sky 3D. A large part of Sky’s success is the growth in customers and the number of customers taking multiple products, allowing Sky to grow in a mature market. Take high definition: in 2007 only five percent of Sky customers bought it. By 2010 that figure had risen to 35 percent.

“Finance was at the lead in analysing the opportunity for HD because we saw that this was a product that added incremental revenue. Every customer who also takes HD pays us £10 more,” he says.

“Our business model is around investing up front to get the customer, then making higher returns as a result. Finance was at the heart of the strategy of pushing hard for HD. That has been very profitable and has contributed to the 15 percent topline growth we have seen.”

Griffith attributes finance’s ability to take the lead on the organisation’s growth strategy, and in making the business more efficient, to having the broadest possible sphere of influence and control across the company – but not in the way you would expect.

When joining any large finance team – Sky’s finance department stands at around 400 – one would expect to experience working in treasury, tax or investment relations functions as part and parcel of the job. Spending time meeting customers, hitting the road with engineers and attending television screenings in Los Angeles would probably not feature very highly, if at all, on that list.

But these are precisely the areas that Griffith wants his finance team to experience. While the financial skillset remains as important as ever, Griffith believes that having a commercial finance team is just as essential to the business.

“Our finance team is very close to the business and that provides a diversity of finance roles. I will send somebody to LA screenings with studio executives to pick what programmes to buy,” he reveals. At the same time, I have people looking after the broadband infrastructure and the different kit you need to put in different exchanges to run a broadband network,” he says.

“I encourage my finance colleagues to get out of the office, visit customers in their homes, sit on the phone lines and listen to customers calling us; and – obviously – spend time with the programming departments,” he adds.

How does flying finance to Hollywood screenings benefit the business and, more importantly, how does the CFO add to this process? According to Griffith, by giving the finance team the chance to look at processes from different perspectives, finance can drive cost savings and efficiencies throughout their business.

“Somebody who goes out [on a job] with an engineer might gain an insight on how our set-top boxes work and how we can make them more reliable, taking that back into the manufacturing process,” Griffith says. “One of our big wins over time has been reducing cost and finance is a big part of that. They have got the analytical skills and the whole-company perspective, rather than somebody who spends all their life working in one particular silo of the business.”

This approach has certainly paid dividends since Griffith became CFO. Since 2008, total customers and products increased from 15.6 million to 23.8 million, while in the six months to 31 December 2010 Sky recorded its highest-ever first-half operating profit of £530m.

Impressive figures, but how much of this can actually be attributed to finance?

First-hand experience

According to Griffith, these improved results have been achieved by finance taking the lead in acquisitions and driving efficiencies – something that would have been much harder to deliver if the finance team had not gained firsthand experience of the nuts and bolts of the business in the unorthodox way Griffith has pushed through.

“The big cost in our business is the way we support customers. The processes around that really lend themselves to finance using good analysis, looking at where customers see value and where they don’t, then taking cost out,” Griffith says. “We used to send three leads out with every box, but we discovered that, increasingly, customers were only using the HD one, so we just removed the wastage. The environment is better off, cost is cheaper and the customers are no worse off.”

Another big win for the finance team, albeit one that came before Griffith became CFO in April 2008, was the standardisation of Sky’s set-top boxes. Here finance, more than any other part of the business, took the lead in pushing through the acquisition of Amstrad in 2004.

“Amstrad was just one of many suppliers. All of our set-top boxes are now made in-house. As a result we have driven cost out because we have removed the margin that third parties were making,” Griffith says. “We have standardised around a single set-top box, so everyone gets the same box rather than dealing with four or five as they did before. So it is much simpler for us to support and maintain, and to deploy more box sets. We can be faster, we can be innovative, but we can also reduce cost.”

One company man

Griffith is the embodiment of the importance of having career progression programmes in place for the finance function. Apart from an early stint advising on tech and media deals at investment bank Rothschild after qualifying with PwC, he has spent his entire career at Sky – 11-and-a-half years, joining at entry level – culminating in landing the top finance job.

Asked how he managed to get to such a lofty position at such a young age, Griffith is happy to attribute part of his success to luck, but also to the ethos of the company.

“It is mainly that Sky is a young company. It is only 21 years old and we are a bit of an interloper challenging perceived wisdom,” he says. “We have been really good at retaining talent and that is partly because we are able to offer new challenges. We have also been good at attracting talent and in truth you need a mix.”

Griffith’s progression through the ranks has seen him become one of the company’s two executive directors along with chief executive Jeremy Darroch who was his predecessor in the finance role (and he shares the board with another former FD, Tesco’s Andrew Higginson). Naturally, that puts a lot of tension in terms of what balance of his time is spent participating in meetings for the top 400 managers at Sky, versus time spent with his own finance team.

“You need that longevity of experience and it’s great to be able to bring talent up through the ranks,” Griffith says. “One of my directors of finance joined us on a graduate programme fresh from university. Sky is the only place he has worked, yet he has probably had a richer finance career in terms of the different experiences than many of his age group.”

At only 39 it is hard to believe Griffith has already gone as far as he can. Where do you go from being a FTSE-100 CFO? The chief executive job perhaps?

“I guess the not so glib reply is that having been the youngest FTSE-100 CFO, I don’t want to become the youngest FTSE-100 ex-CFO,” he says. “My ultimate aspiration here is to be succeeded by one of my own finance team so my legacy would be to give the board a great home-grown choice of talented CFOs.”

Read Griffith’s thoughts on the role and benefits to finance in the sustainability agenda here