FROM DEPRESSION TO EXPRESSION AND SUCCESS

THE STORY OF THE LIVING CHANNEL AND FOOD TV

On June 1^st 2002 The Living Channel was launched on Sky Channel 8. FOOD TV was launched November 2005 on Sky Channel 9

This is the story behind the creation of these two successful television channels.

A memoir from John McCready

John McCready and JT Taylor at a Sky TV function late 90's

DEPRESSION AND RESIGNATION FROM SKY TV.

2000 had turned into the worst year of my life.

As Sky TV's Director of Programming and Marketing I was an integral part of a team that had successfully moved Sky’s offering from a few analogue channels into an exciting digital multi-channel service with subscriber numbers soaring. Around me were a fantastic team of people, particularly my top departmental heads, Travis Dunbar and Megan King; I had at least three exciting programme buying trips to Cannes and LA each year and I was well remunerated.

Others looking at me probably saw a successful and happy guy. However, all of my adult life I had been prone to depressions, but none like the one I was in now and which had been with me for several months. A depression so deep I felt I was in a huge black hole with no light and no future. Only my wife JT was aware of my state.

I had to get out of Sky to save myself. So at 60 years of age and with little backup cash to assist a transition to a new job or career, I resigned. When I told Sky CEO Nate Smith my decision and of my depression he was totally surprised and, like all my immediate work colleagues, just had no idea this was going on with me; apparently to the world at large my depression was well hidden.

Nate Smith decided that should I recover from my depressive state he didn’t want me free and available to be hired by opposition companies, so he offered me a two-year deal (at about half my then salary) to stay out of the TV job market in New Zealand and consult to Sky. In doing this Nate not only enabled JT and I to survive financially but had also given me the time and opportunity to address my condition without stress.

JT and I lived in an apartment in York Street, Parnell and it was there I set up office. Whilst I was on call to Nate for any advice he needed, the reality was I had very little work to do. I was simply being paid not to work for the opposition. My time in the office was little and time on the golf course, a lot.

After a while my conscience got the better of me and I felt guilty receiving Sky’s money for not actually working; this got me motivated to seriously research ideas for new channel formats and to make presentations of these to Nate. Additionally, Sky had decided to start a Pay Per View (PPV) movie service and I was given the job of programming the monthly schedules. I was now reasonably busy with genuine work, but not too busy that I couldn’t still get in a few games of golf weekly.

Nate Smith, Sky TV CEO

In November 2000, Nate Smith resigned from Sky to move to Hawaii as head of Warner’s Pay TV business and John Fellet, then Sky's COO, was appointed as his successor. Whilst Nate and I had worked well together, John was a man I respected and my good relationship with Sky continued.

John Fellet, appointed Sky TV CEO 2000

On looking at available channel formats I noticed that doing well for Foxtel in Australia was LIFESTYLE and among the top cable channels in the USA were HOME AND GARDEN CHANNEL and FOOD CHANNEL. The content on these channels were primarily Housing, Home, Garden, Cooking, Design and DIY. On looking at the top rated shows each week on the major TV networks in Australia and New Zealand, nearly half the programmes were in this “lifestyle” genre. Home design and real estate are among my hobby passions so it seemed to me “lifestyle” was a format that could make a successful channel for Sky.

My wife JT is an enthusiast for food, cooking and health, all programming genres that would appeal to women: she had been encouraging me for sometime to look at starting a radio station that would have “lifestyle” as its core format. JT and I were in agreement that a “lifestyle” TV channel on Sky could be a real winner.

The idea for this type of channel was presented to the Sky programming team; they also saw its possibilities and agreed to add the genre to their short list to be considered for the next introduction of new channels.

OUR FINANCES: A MIRACLE IS NEEDED

It was now mid 2001 and my Sky consultancy had been going for about a year. Whilst my new lowered income was enough to pay our mortgage and for us to live well, JT and I were concerned. Retirement age for me was certainly in this decade and we were not sufficiently cashed up to afford to retire. For the first time in my life I was forced to step back, take a good look at our financial position and to evaluate what would be needed for us to continue enjoying somewhere near the standard of living we had grown used to.

Money, even though we were never short of it, was not something I ever thought about or worked for. I had always taken a task or company appointment because of my interest and love for the product and because it was something that I wanted to do; monetary reward came as a result of success. Likewise I was not careful with our earnings and, if we had the cash, I spent on what I desired. So now at 61 this was a serious issue.

To sum up our financial position, a miracle was needed.

Getting another highly paid corporate position would not suffice as our equity in our home was only a third of its cost and we had very little cash in the bank. We needed to start a business of our own, a business that we could grow and eventually sell at a good capital gain.

JT: “LET’S DO A LIFESTYLE CHANNEL OURSELVES”

JT came up with the solution. “Let’s do a lifestyle TV Channel ourselves”.

With our enthusiasm for this genre and our knowledge of the TV business (JT had worked in production and sales) this was something we would love to create and manage. I started researching programme availability and prices plus the costs of technically creating such a channel and providing it to Sky. It was soon very obvious that the capital needed was beyond what we had or could raise. We decided to pitch our proposal to Sky anyway and if we were fortunate enough to get a contract, then worry about raising money.

Travis Dunbar, Sky TV Director of Programmes

Whilst Sky agreed that the channel genre was a go for them and they respected our proposal, there was really no need for them to have such a new channel created locally; they could easily do a deal with sister company Foxtel for the Australian LIFESTYLE CHANNEL. I kept in contact with the key management people at Sky, CEO John Fellet, Programme Director Travis Dunbar and Business Manager, Megan King. My view was that we could provide a channel every bit as good as LIFESTYLE AUSTRALIA and that our schedule would be aimed to maximise viewing ratings by clever programming that took into account what the other channels were doing here. This was something they wouldn’t get from an Australian programmed channel. I also sold the involvement of our channel with the local community, again something an Australian based channel would ignore.

Months went by and late 2001 we were advised that Sky were about to make a decision on what new channels they would add for 2002. We waited anxiously.

Megan King, Sky TV Business Manager

SKY DECIDE

In the last working week of 2001 I received a phone call from Megan King. Sky had decided to go with our proposal and wanted the channel created and on screen before mid 2002. It was now up to me to negotiate a monetary deal with Megan: if that was successful we were “GO”.

Sky executives were extremely brave to take a risk on a yet to be produced local channel when they could easily have taken the safer option of bringing in Lifestyle Channel from Australia.

The formula for making a profit on providing Sky with a channel was simple; just make sure your income from Sky plus any revenue from advertising (which we would sell) was higher than the combined costs of programming, staff and producing the channel to deliver to Sky. The negotiation with Megan King on the fee Sky would pay us to provide the channel was absolutely critical.

The way it works is that you get x cents per Sky subscriber per month. If x is too low you go broke. Megan had worked with me as my business manager at Sky and we had been a great team in keeping Sky’s programme costs controlled; she had been a tough negotiator previously on my behalf and Megan now turned out to be a real tough negotiator on the other side of the table.

After several intense sessions we arrived at an agreement we could both live with and the deal was done. Our company Intermedia Productions Limited now had a contract to supply Sky with a “lifestyle” channel.

Working from our tiny home office we had about five months to create and provide the channel for a June 1 2002 launch.

We changed our company name to Lifestyle Television New Zealand Limited with JT and me each holding a 50% share.

Where it all began; our home office York Street, Parnell

That was the good news. The bad news was we had little cash and no idea how to physically provide and deliver the channel or how much it would really cost. Creating the channel brand, imagery and programming would be normal work for me; however, the technical side and costs was an area of television in which I was at best, a novice. For my negotiations with Sky I had done a “best guess” on these costs.

My plan was to look at organisations with play-out facilities that could possibly add our channel at no capital cost to us, but charge us a monthly fee. Juice TV, already supplying two channels to Sky, was my first thought and I approached the owner and friend Dale Wrightson. After several discussions, whilst I was sure they could take on our business, I just didn’t feel comfortable that we would be a good working fit in their music environment. I decided to look at other options.

Daughter Leigh and her husband Greg Heathcote came over for dinner one evening; Greg was then Production Manager at Julie Christie’s Touchdown and technically he was highly knowledgeable. I started asking him questions about how to set up a channel play-out facility and what would be the general costing. It became apparent that Greg had a total grasp on what was needed and how to do it. He became very excited and indicated that Touchdown could be interested in being involved in supplying play-out for us.

Greg Heathcote, Touchdown/Eyeworks Head of Television

NEW PARTNERS AND A CASH INJECTION

In 1991 I was Director of Programmes at TVNZ and Julie Christie had just formed her company TOUCHDOWN PRODUCTIONS: Julie had pitched a show to me called “The Paradise Picture Show”. I was immediately impressed with this dynamic and creative woman and gave her the commission to produce this lifestyle magazine show for TV2. The show was a success and was soon followed by a sports magazine show “Sports Extra”. Julie and Touchdown soon became important programme makers for TVNZ and later to TV3. Now in 2002 she was one of TV’s most important players. JT had worked at Touchdown in the early days and whilst we were not close friends, Julie and I had mutual respect and stayed in touch regularly.

I phoned Julie Christie and inquired if they would be interested in doing our play-out for us on a fee basis, with Touchdown supplying all the equipment needed.

Not only was Julie interested in her company providing the technical facility she was interested in buying a share of our new venture. This made sense to us: we needed both capital and Greg’s expertise. Later that day, in true Julie Christie style, I received a letter proposing Touchdown buy 49% of our new venture with a cash offer and a deadline of 24 hours to respond before the offer was void. It took JT and me all of ten seconds to decide YES.

As our company was capitalised at only $1000 it was agreed that both Touchdown and us would loan the new venture $200,000 each at no interest for a two-year period as start up funding. We believed more capital input would be required as we went along.

Greg came back with a proposal for an annual fee for providing us with play-out: this I accepted and we were underway.

The start up of the new channel actually cost JT and I none of our own cash as we used part of the money Touchdown paid for their 49% share as our $200,000 loan to Living. Sky had agreed to continue my consultant fee until the end of the contract in October so I decided not to take a salary from Living until then: this would assist Living's tight finances.

Julie Christie, CEO Touchdown/Eyeworks

“LIFESTYLE CHANNEL” TO “LIVING CHANNEL”

It was about this time I had conversations with LIFESTYLE CHANNEL in Australia: I was interested in doing joint buying with them. They were keen on that idea and also indicated they might like to “buy in” to our venture. After several discussions they thought our proposed programme costs were laughingly low and not achievable: they wanted to supply us programming at more than twice my budgeted figure. We agreed to disagree and I decided to continue without them.

LIFESTYLE then informed us they had now registered their logo in New Zealand as a trademark and advised that we would have a problem getting any Lifestyle TV logo registered. Our trademark lawyer agreed with them. Bugger them I thought. We came up with The Living Channel as an alternative name and quickly changed our company registration.

To me the design of a company logo is all-important and like the design of the 89FM logo years ago I would be a difficult client for the designers and micro manage the task until I was completely satisfied with the result. In the end Steve Thomson at BRANDSPANK came up with a logo I really liked and I had it trademarked just as fast as the system would allow.

The next task for me was to complete a desired channel schedule and approach programme distributors to see if I could purchase my desired programming. Now, knowing the play-out costs and income level from Sky, I was able to complete a more realistic budget for programming and other costs, including staff.

The New Zealand Dollar had fallen back in recent times against the UK Pound and the US Dollar, so where possible I did our deals with payment in Australian Dollars. However, as many important distributors would only work in UK Pounds and US Dollars, my budgeting was conservative and took in account the worst possible exchange rate scenario.

PROGRAMME BUYING

I began a series of tough negotiations with programme distributers. Not only was our proposed price per hour probably a record low, I was seeking payment terms of no deposit up front and four quarterly payments from the license start date. In other words I was seeking the distributors to give us credit and they wouldn’t get full payment for a show until a year after the contract start date.

With about seven weeks before our first schedule was due at Sky for inclusion in Skywatch magazine I just had to get my negotiations for our first programming concluded. It was here that my experience over the past 10 years of being Director of Programmes at TVNZ, Director of Programmes at Sky and VP Programming for the SBS group in Europe, paid off.

The Worldwide TV programme selling and buying business works like a small exclusive club; for new buyers it is hard to get recognition and it takes time to get to know the players and win their confidence. Once you are known and accepted as a trustworthy buyer, deals are done in a friendly one on one negotiation; each party will do their best to fulfill the others needs. Sometimes, as a buyer, you have to help the seller by taking something you don't need but they need to sell; in exchange the seller will give you a break on something you really want. Over time, sellers and buyers get to know each other and if there is trust between the negotiators things can go smoothly. The buyer who has bad relations with suppliers can find life very tough.

Programmers are known to be emotive about shows and not usually the best price negotiators. Bigger companies, like TVNZ and Sky, have a business manager who works alongside the programmer and once the target programme is identified the business manager negotiates final terms with the seller. I had been fortunate at TVNZ to have Paul Ridley and at Sky Megan King working alongside me; these two were negotiators supreme. But at Living I was buying solo and knew I had to be enthusiastic about programmes I wanted, but still be able to negotiate hard to achieve our budgeted price.

John McCready and Paul Ridley at MIP TV Market for TVNZ mid 90's

Freemantle and Scripps Networks were two very important distributors for lifestyle and cooking programmes and these two I just had to have on board. Paul Ridley, my former colleague at TVNZ, was Freemantle's Asia Pacific Manager and together we negotiated a strong programme package that included shows from Jamie Oliver. Paul had given Living a kick-start.

I had never met, Anna Alvord representing Scripps Networks USA, owners of Food TV and Home and Garden Television, but right from our first contact Anna was just a delight to work with. Because we were unknown to Scripps we had to adhere to tough payment terms but negotiated a Scripps programme package that was full of excellent lifestyle and cooking shows.

The Canadian government has a great subsidy scheme for supporting the making of Canadian Television programmes and as a consequence there are dozens of Canadian producers. The good news for me was that because lifestyle and cooking shows sold well internationally, the Canadians produced a wide range of shows in this genre and I managed to pick up an excellent package.

A wonderful thing for me was being able to bring to New Zealand Television specialist programmes that had never been seen on any other channel. Programmes about quilting, knitting, scrapbooks, yoga and serious home design and renovation shows.

Whilst I couldn’t get all my A list at my proposed price, our initial schedule was good and we achieved the overall pricing and payment terms we needed.

PREPARING FOR “GOING LIVE”

We hired staff for promotion production and computer input; they would work from Touchdown’s office and studio whilst JT and I would continue to work from home. I was doing all the programme buying, programme schedules, promotion allocation and scheduling, financial management, legal, imagery design supervision and liaison with Sky. JT concentrated on working with our overseas suppliers for delivery of programme tapes and publicity material plus working with local companies to do deals for competition prizes.

Touchdown had their own graphic design department and we contracted them to supply promotion graphics and, a little later, website design. Tony Palm took our logo and created a brilliant on screen ID. Jacob Slack was also doing great work on our promotion graphics and when Tony Palm left Touchdown Jacob was appointed Graphics Manager and created more wonderful ID's for us.

Claudia Gunn, Promotions and Jacob Slack, Touchdown Graphics

As a former music man, organising the composing and production of music themes for the channel ID’s and generic channel promotions was something that was a real pleasure for me. I did most of the work with North Shore based composer/producer Dean Kerr, who met my brief perfectly.

Meanwhile Greg Heathcote was very busy building a play-out studio and promotion production suites from scratch, a huge task. Greg decided to go all digital, I think a first for a New Zealand channel. Without Greg’s work we certainly would never have got Living to air in the short lead time and certainly we would never have achieved the quality of look without the outstanding work from the Touchdown graphics team, also reporting to Greg. They were making us sophisticated channel ID’s at a reasonable contract charge. These would had cost us in the hundreds of thousand dollars range from outside production companies. Tony Palm and later Jacob Slack were just fantastic designers and have my respect and thanks for their work.

Traditionally “watermarks”, the little channel identifying logos you see on screen during actual programmes are monochrome. I wanted The Living Channel “watermark” to be in colour, as I believed colour would make us stand out and look more important, but warm. After a lot of adjustments we got it right and went to screen with a colour “watermark”.

The hours we were all putting in were massive so food and sleep were secondary.

Sky and I went into another tough negotiation, this time for the allocation of our channel number. I wanted it below 10 and near the BIG channels like TV ONE, TV2 and TV3 but Sky saw us belonging in what I call the no-zone away up in the 60’s and 70’s. I wanted to make the channel look more important by association with the big guys and also I saw our channel as an entertainment channel, not a factual channel. With huge relief I managed to persuade the key Sky executives and we were alocated button 8. There is no doubt in my mind that getting button 8 played a big part in the channel being able to get viewer sampling.

THE LIVING CHANNEL IS LAUNCHED

Two weeks from launch date things started to come together; we had master tapes for the launch programming, converted them to digital and were testing the play-out server. On screen promotions were being made and channel imagery, with music, completed. The server was driven by software, which Greg had organised, but all data input was manual, as was the placement of advertising and promotions in the schedule.

June 1 2002 arrived and at 3pm we watched with slight panic as Greg pushed the server go button: it all worked and The Living Channel was launched and broadcasting live. The signal went from Touchdown, Graham Street Auckland City by Telecom line to Sky Headquarters at Mt Wellington who re-directed it to their satellite. We watched the channel on our studio monitors and celebrated. But the long hours of work continued: a channel broadcasting 24-hours, 7 days a week is a hungry beast that has to be feed programming and promotions.

Greg Heathcote, THE LIVING CHANNEL is live.

As promised in my pitch to Sky, the Living Channel programme schedule would be done with care, playing our strongest shows against rival channels weakest. Where possible we would seek alternate demographics to main opposition shows to give Living a chance to find an audience in this multi channel market. I fortunately had experience of working with a new channel in a multi channel market in Belgium. My programming of Flemish language VT4 had taken the audience share from 2% to 10% in six months.

The first task is to get people viewing; the second is to get them to view more often and the third to get them to view for a longer time. Stripping is a term for placing the same show in the same slot 5 days a week. By stripping strong programmes, like Ready Steady Cook and Antiques Roadshow, one can build a loyal audience. I decided to strip key programmes over most of the schedule and only have non-stripping between 7.30pm and 10.30pm.

This programming strategy was successful and we very quickly established an audience. This coupled with well made and well-scheduled promotions saw this audience grow. My brief to our promotion producers was that I didn’t want hard sell, but a friendly invitation to viewers to “come to Living and enjoy our programmes”. The channel had to be free of arrogance, a trait I believed was prevalent at most major channels.

The start up Living Channel Team

Kevin Hartley (presentation) Greg Heathcote, Jacob Slack (graphics), John McCready, JT Taylor, Claudia Gunn (promotion producer)

JULIE AND JOHN DISAGREE

About three months after launch I thought it was time to up-date my fellow Shareholders/Company Directors of our progress to date. Sky seemed generally pleased with the channel; our viewer numbers were good, as was viewer feedback. We were also cash flow positive, primarily because of the agreements I had negotiated with Sky to pay us monthly in advance and with Programme Distributors to pay them over a year.

So I went into the meeting pleased and excited with our new venture start up and keen to pass on the good news to my fellow owners. At the appointed time for the meeting, me, JT, Mike Malloy (Julie Christie’s brother and Touchdown Finance Director) were all seated and waiting for Julie Christie to arrive. In then bustled Julie who sat down and before I could formally open the board meeting, aggressively launched a verbal attack at me. “My friends hate the channel and think it’s shit”, said Julie.

Well, that really pissed me off and I immediately attacked back by advising Julie that the channel was not aimed at her trendy wanker friends but aimed at a broad based 18-54 audience of real people, primarily women. After further heated verbal exchange the meeting disintegrated and so ended our first and last Living Channel Limited formal board meeting. In fairness to Julie I must point out that over the next five years she became a non-interfering and most supportive partner and without her, Greg, Michael and Touchdown’s support, success for the business would have been far more difficult to acheive.

AN IMPORTANT DECISION IS MADE

My conservative budget was paying off as the NZ Dollar started to rise against the UK Pound and the US Dollar: as a result our programmes were costing less against our P & L. I started to re-invest the programme budget surplus into more costly but stronger programmes and our schedule started to look better with each passing month. Our Sky contract had a penalty clause in which our income would be reduced if certain viewer rating targets were not met. We were meeting these targets and getting maximum revenue.

However, we getting only a little revenue from advertising. We had employed a full time sales representative and despite his good credentials and plenty of effort he was not successful. JT simultaneously was doing wonders with some major companies and getting competition prizes of big value. These viewer competitions were bringing in higher channel participation and assisting in growing viewing numbers. The suppliers of prizes (F&P among them) were excited about the exposure they were getting for their products.

JT had fallen in love with the SMART CAR and not only was she determined to own one but wanted to get one as a give away prize on The Living Channel. Determined that this was going to happen, JT got an appointment with the SMART CAR management team and came back with a car to give away. The competition was a huge success for SMART CAR and they reported a significant sales increase of the model over the promotion period. So whilst we were not selling any advertising, I knew that once we exposed good products on the channel, we could motivate consumer sales.

The Living Channel SMART CAR

Dealing with advertising sales and our sales rep was taking me away from programming. We had no accountant on staff and I was also doing full accounts, including GST and overseas payments. I decided we needed to re-think how we went about gaining revenue from advertising.

My view was that Sky could sell our channel better than us. We had the ratings and Sky had a sales team selling a range of channels to both agencies and retail. I decided to try and sell Sky back our advertising space as part of our overall contract in return for a higher fee per sub per month. Again Megan King and I negotiated and finally came up with what we both believed was a good deal for our respective companies. This turned out to be one of the best decisions I ever made.

After the channel had been running for a year we had a cash flow surplus.

WE CONTRACT POPULAR BRITISH PROGRAMMES

Twice yearly I attended the programme market in Cannes. To the outsider this may seem like a perk job but in reality, as beautiful as Cannes is and no matter how good the restaurants and social time, it was bloody hard and exhausting work. The majority of the business was done inside at Palais des Festivals and this entailed an appointment with a different seller each half hour from 9 to 5 for 4 days. Additionally, there were cocktail parties and dinners with major sellers each evening. In my TVNZ and Sky days, as a buyer for a major, I was fêted and courted. Now as an owner of a small independent channel our very survival depended on me coming home with some new exciting and successful programmes. I had to persuade distributors to sell to us at a price far below what they were used to achieving and not to hold the programmes in anticipation of a higher price elsewhere.

After attending a few markets my persistence and our good record of paying our accounts on time started to win through. I had built up a wide range of programme suppliers, mainly from the UK, USA, Canada and Australia. I was starting to get programming that was not only made specifically for lifestyle and food channels but I was able to get lifestyle programming made for major networks and which were rating successes. TVNZ and TV3 had not realised the strength of this genre of programming and were passing on some programmes that, in my view, were hits. Four such programmes were GRAND DESIGNS, A PLACE IN THE SUN, A PLACE IN THE COUNTRY and SARAH BEENY’S PROPERTY LADDER. The networks had passed on buying these and I managed to pick them up for The Living Channel at a reasonable price. All four programmes became huge successes for us.

Sarah Beeny, Property Ladder

Kevin McCloud, Grand Designs

GRAND DESIGNS was one that nearly got away. Tony Iffland, who managed UKTV in Australia and New Zealand, had made an offer to distributors Freemantle before I did. Paul Ridley, the Freemantle boss and formally my programme buyer at TVNZ, was in a dilemma. Like me, Paul believed the programme was more in Living’s genre than UKTV’s but Tony wanted it badly, had made the first offer and Paul’s company were part owners of UKTV. After I had appealed to Paul, Tony and my Sky contacts, Tony was unbending and insisted the show went to UKTV. Sky CEO John Fellet was called in to adjudicate and made the decision that the show sat more comfortably on Living.

Because exchange rates were far more favourable to us now than on start up we were able to pay a little more for programmes and as a consequence were could obtain even stronger shows. Success leads to success and over time programme suppliers came to see The Living Channel as a valid and worthwhile customer. Freemantle and Scripps Networks from the USA, owners of Food TV and Home and Garden Channels, were very important to us and I spent a lot of effort building good business relationships with their sales people and their management.

BBC had one of the best range of food and lifestyle programmes and commanded high prices. Initially we could only afford to purchase absolutely essential shows from them. Now the more favourable exchange rates allowed us to increase our buying from them and over time BBC became one of our top three suppliers. David Vine, the BBC Manager for Asia Pacific and Julie Dowding, his New Zealand representative, were terrific people and gave us excellent service.

By this time Living had not only paid the $400,000 in loans to the lending shareholders but the business was showing a small profit.

MY MOVING BLUNDER

One Saturday JT and I went out to our golf club at Huapai only to find it closed. Desperate for some golf we decided to try Gulf Harbour and managed to get a game there. I saw this terrific townhouse for sale overlooking the 9^th green: I just had to have it and within a very short time, against JT’s instinct and her obvious lack of enthusiasm, we (I) had purchased it, leased out our York Street apartment and moved home and office to Gulf Harbour.

It was very quickly apparent that moving both our office and we to Gulf Harbour was a huge mistake. We had to journey into the city almost every day and the traffic was just awful; we were losing valuable working time. Not only that, other than the golf course Gulf Harbour just didn’t suit our lifestyle. So we leased a small apartment at The Beaumont Quarter in the city with an office downstairs and a bedroom upstairs. We stayed in the city most of the time and went to Gulf Harbour only on the occasional weekend.

We needed help with our day-to-day work to allow me more time for programming and accounting, so I hired and trained a young lady to work in our office to do promotion scheduling (the other staff were located at Touchdown). This made it inconvenient to have a bedroom upstairs and now having sold our York Street apartment, we purchased a town house in which to live, also in the Beaumont Quarter. Gulf Harbour became just an expensive overhead. So within a few months I had managed to move us out of a beautiful Parnell Penthouse that we loved, to end up in a very average townhouse and added the cost of a weekend place we didn’t use much. Not one of my better schemes!

Our Gulf Harbour Townhouse (My Big Blunder)

TIME TO LOOK TO THE FUTURE

By the time we had been up and running successfully for about two years I was beginning to look towards creating a second channel for Sky. To get more planning time for this I needed to get mine and JT's main tasks down to finance, prize negotiations, liaison with Sky advertising sales, programming and programme buying. We decided to re-negotiate the contract with Touchdown and outsource to them all other day-to-day tasks. After concluding the new contract Greg and I hired a potentially excellent Operations Manager in Marcel Van Drongerlen: Marcel would have a dual reporting role to Greg and me.

The Living Channel had entered a new phase.

The Living Channel Team mid 2005

Food programming was one of our most popular programming genres and stand-alone Food Channels were successful in the UK, USA, Canada and more recently Australia. I believed there were enough excellent non-food programmes to broaden The Living Channel and continue its success and that there were sufficient good food programmes available to make a dedicated channel viable. JT and I agreed we needed a Food Channel.

The only problem was neither Sky nor Julie Christie agreed with us and believed taking away the food content would weaken Living. My instinct told me we were right and if I could convince Sky, I knew that Julie would have no option but to support us. The end result, in my view, was a no-brainer. We could almost double our income with the right deal with Sky but not double our costs. A second channel could make our business solid and more profitable.

So I started researching the availability of additional food programming and its costs plus looking at the success of stand-alone lifestyle and food channels in other markets. After several months I was ready to pitch to Sky and did so to their executive team with a power point presentation and a mass of genuine enthusiasm. The Sky team liked the pitch but was still not convinced.

I kept on at the Sky team at every opportunity and by early 2005 at least had them agreeing to put it on their short list of channels to be considered for 2006, although I was warned it was just an outside chance.

Based on my past experience in starting up Living, I knew that Sky would probably give the winning channel bidder short notice of a go and that getting a new channel to screen in a short time line would be hell. I decided to take a risk and began to purchase and warehouse both more food and general lifestyle programming. It would mean increasing our programme stock and drain our finances, but I believed if we didn’t get the go for Food we could just buy less programming next year and take a short term financial hit. In my heart I really believed the move to a stand alone Food Channel was logical and had to happen at some time, even if not right now.

August came along and I was still pitching to anyone at Sky who would listen. Then out of the blue Megan King calls me and says that if we can agree fees we have a Food Channel. That was excellent news, but Sky wanted to introduce the new channel on November 1, an almost impossible timeline.

Megan and I met and some of the toughest negotiations I had ever experienced took place. We finally agreed terms and as usual I thought we were not getting paid enough and Megan thought Sky was paying too much. However, I believed we could make good profits with two channels provided we kept programme and other overhead costs contained.

THE HARDEST TWO MONTHS EVER

The time line of just over two months for getting the new channel made and on-screen was just too short. We had to get new staff hired and trained, Food Channel imagery designed and completed, the production and play-out facilities up-graded, more new programming contracted and tapes delivered, a complete new Food Channel schedule, a different Living Channel scheduled, a new web site designed and operating plus a doubling of our promotion production.

JT and I went through the hardest and toughest two months of work we had ever experienced and no doubt Greg, Marcel and the staff at Living/Touchdown were under equally huge pressure. By doubling our programme acquisition we doubled the amount of all other work, including in my case, the financial paperwork and accounting.

Whilst all this was going on I was in a battle with Sky Marketing who wanted Food TV to have a channel button away up in the numbers near Discovery and the other factual channels. Channel 9, next to Living on 8, was free and that was the button I wanted. My view is that the nearer your channel is to the BIG channels, like TV ONE, TV2, TV3, Prime, The Box and UKTV, the better the chance new viewers will find you. I had been through this battle before to get Living on the favourable channel 8 and thought it crucial to persuade Sky to give us button 8 for Food TV.

I needed the button number decided urgently for our promotions, but just didn’t want to accept what looked like being Sky’s decision to place us in the no-zone. At the very last moment, near our promotion absolute deadline, I got the good news; Travis Dunbar, Sky Programme Director, had pulled some weight and we were given button 9. This was huge for us and I’m forever grateful and believe it gave Food TV an excellent initial and on-going audience exposure: additionally we were able to cross promote Living and Food as sister channels sitting side by side on 8 and 9.

Scripps Networks, because they owned FOOD TV in the USA and Canada, became an even more important supplier to us. As always, Anna Alvord from Scripps worked hard to assist us in increasing our range of food programming.

Anna Alvord, VP International Scripps Networks

At that time what I knew about food and cooking was absolutely nothing. In my TVNZ days my lack of enthusiasm for this type of programming had, in retrospect, lead me to ignore and mishandle some very good programming. But pleasing the public with programming was one of my joys and since my late introduction to Television in 1989, after a 33-year career in Music and Radio, I had learned a lot and just loved the challenge of working with a new genre.

Because I’m not a food addict, my look at this type of programming is from a wider viewer perspective and if I liked a food programme chances are so would others who were not food addicts. JT was a food and cooking enthusiast and so it was she became my guide on the merits of the more specialised food programmes.

FOOD TV IS LAUNCHED

All those working on the channel responded to the excessive workload and on November 1^st 2005 Food Television was successfully launched.

We never expected Food TV to get the same level of audience numbers as the broader appealing Living Channel but we were delighted with how quickly the channel grew a loyal audience and how there was a genuine “buzz” about the channel. Food and cooking enthusiasts are really passionate about it and they quickly became loyal viewers to the channel.

It was obvious that the decision to spin off food programming as a stand alone channel had been the right one and Food TV filled a void in Sky’s channel offering.

From a financial perspective Food TV was a less expensive channel to buy programmes for than Living. Food programming does not date and is able to be repeated many more times than almost any other genre. So, whilst Sky would pay us less for the channel than Living, our operating costs were also far lower.

With The Living Channel we had worked hard to involve viewers with contests, by providing a public service with the screening of community notices and with short vignettes featuring New Zealand Artists and their art. We took this further with Food TV by making KIWI FOODIES, vignettes of original recipes sent in by viewers. Our friend, cook extraordinary and Food TV enthusiast, Gillian Wrightson, would cook the actual viewer recipe and JT would photograph the dishes in the various stages of preparation and write up the recipes and procedure. These elements were then produced by JT into the vignettes, which would screen on the channel and the recipes published on our web site.

About this time we had sold and moved out of our townhouse at The Beaumont Quarter to try the experience of living at The Viaduct, where we rented a very nice Penthouse Apartment. We also moved our office to an apartment next to Touchdown in Graham Street. Shortly after, we finally sold my Gulf Harbour mistake and were planning, if we liked the Viaduct lifestyle, to purchase an apartment in the area.

The workload on both JT and myself had increased with the introduction of Food TV and over time we were both getting a little worn and tired. We continued to work on improving both the channels’ look and programming and, with the team based at Touchdown, improved our two web sites and promotions. Both channels were now established as a solid part of Sky’s offering and we continued to get good viewer numbers and feedback.

The business was now making a profit and paid a dividend to shareholders.

TIME TO EXIT

Towards the middle of 2006 I started to think about taking a break. Now 66, I was not contemplating retirement but just felt it was time to enjoy some longer leisure hours. Both JT and I began to delegate more work to other staff, particularly to Operations Manager, Marcel Van Drongerlen. Marcel was doing an excellent job; he was ambitious and hungry for responsibility. With the delegation, things continued to run smoothly and time became more available for us to give serious thought to our future. The business was in excellent shape.

One day I came to the conclusion that maybe now was a good time to sell our majority share of the business. I was concerned about the economic state of the world and it seemed to me a crisis could be on the horizon. Whilst not under immediate threat from the Internet, the TV business was, in my view, going to change. The time to sell a business is when it is strong and the future looks bright: maybe this is that time. After mulling it over for a few weeks my mind was made up: JT agreed, it was time for us to exit.

Whilst our Sky contract still had some time to run before re-negotiation, the business would be more saleable if a long-term contract was in place. I decided to be open and up-front with Sky about my intention to sell and to seek a new agreement. A key part of JT’s and my agreement with Julie Christie was that her company would have first option to purchase our shares of the business, provided we could agree on the price. If Julie didn’t like the price we could solicit other offers and she would have to meet the highest offer or we would be free to take that higher offer. Sky though, had the right to approve any ownership change.

Julie Christie had sold Touchdown to Dutch production company Eyeworks, but the shareholding in Living and Food was not part of the deal. Julie, her brother Michael and our son-in-law Greg Heathcote, under the banner JGM, were now our partners. Sky executives, as was I, were adamant that any sale of control in our company must result in the new owner being someone they had faith in and could work with. Julie, Michael and Greg certainly would be good new owners and as Sky had a veto over the sale, selling to JGM was our first choice.

Negotiations with Sky were completed and a new long-term deal was in place. It was now time to approach Julie and get a sale process underway.

Julie and Michael proposed to bring in an independent valuation expert and wanted JT and I to agree to bide by the price valuation. We didn’t like the idea but we agreed to go along with it. However after several meetings with the valuation expert I came to the conclusion the guy just had no idea about the TV business and I was just being an unpaid teacher. To me it was simple; the business had cash in the bank, was profitable, was paying dividends to shareholders, had a new supply contract with Sky and had premium channel placing on buttons 8 and 9. The future looked bright. In the end it was just a matter of what multiple of profit JGM was prepared to pay or we accept. I advised Julie that we would not pay for that valuation process and we had a figure we wanted for the sale of our 51% controlling interest. Julie was not happy.

After a year living in The Viaduct in a rented penthouse and loving it, we decided to purchase a property in the area. We found a beauty and took possession in December 2006.

Our Viaduct Apartment 2007

Negotiations with JGM continued, but Julie became less and less commutative and finally silent. One evening towards Christmas, when out walking from our new apartment, JT and I spotted Julie at a bar at The Viaduct and over a wine we talked about the proposed sale. An emotional Julie thought I was putting her under too much pressure to make a firm offer and that I was in too much of a hurry. From my point of view I was tired of the lack of response. So, I advised Julie we would look at selling our 51% to other parties and JGM would have to meet the highest price or pass. We left each other that night with less than a warm feeling between us.

A few days later Julie made contact and made an offer. JT thought the offer was too low but I felt it was reasonable, whilst a lower price than I would like. My view was that whilst we could probably get a higher price from some other party, Julie had been an excellent partner and we owed her, Michael and Greg gratitude and consideration for their part in the success of the business: additionally JGM was approved by Sky. After discussion we decided to accept the sale price and advised Julie.

Sale agreements were signed in January 2007 and JGM found two people to jointly take over our main management and programming roles with the accounts moving to their accounting department. The new management team arrived in February and I worked along side them until JGM officially took control of The Living Channel and Food TV in April 2007.

So ended six hard working but very fulfilling years. JT and I are proud of what we created and count the years working on The Living Channel and Food TV as one of the most exciting and creative periods of our working lives. Today we view the channels with the satisfaction of knowing they are our creations and that they have funded our retirement.

I no longer suffer depression.

John McCready and JT Taylor 2011