Todd Corp

"Smart’s quick synopsis is that the company started with Jarvis and Heatley as shareholders, spent all their money, brought in TVNZ and spent its money, brought in Gibbs and Farmer and spent their money, then did the same with Todd Corp. The cash burn rate was high. Smart’s forecasts were tracking how quickly Sky would run out of money—one month, two months, three months. Heatley did not always want to know. ‘I remember once saying to him, “Jesus, Craig, you make me feel like I’m responsible for Sky running out of money,” and he looked at me and said, “Good,” and walked out of my office.’ There was occasional professional tension around how to keep Sky going with limited funds without breaking any laws or breaching any accounting standards. ‘We never went over the line but we did occasionally skate along it,’ Smart says. ‘I’d characterise it by saying that in a start-up where you are constantly running out of money, you are challenged to use every means at your disposal to fund the company.’ He sees Heatley as driven and complex, hard to like but someone who commands respect. ‘He started a business from nothing, gave us all jobs, created all that and it wasn’t easy. He might be New Zealand royalty now, but he wasn’t always.’"

"‘Craig sees things over the horizon that other people do not see,’ Bryden says. ‘He also has a powerful personality and is an outstanding salesman, which is reflected in the fact that he managed to achieve the Sky start-up. He had all the building blocks in place, but it was operationally that it was hard.’ Todd Corp was still confident their investment would pay off if the risks could be managed properly. Nevertheless, as the months of struggle went on, Bryden faced difficult questions from his own board about Sky’s performance. ‘There were quite a few conversations that went, “When are you going to make things come right, because you’re not performing to the business plan.” But the reality is that start-up businesses are tough, and because of the lack of operating experience it was all learning from doing and trying to follow what other people had done overseas.’"

"Heatley recollects that TVNZ and Todd Corp said they would put more money in, but in exchange they would require a share dilution of 1:3. In other words, for every share TVNZ and Todd had, they now wanted three. These terms reflected the company’s poor performance against the business plan that Heatley had promoted and, related to that, the company’s risk of failure now being greater than the investors had believed it to be when they signed up. Heatley was aghast at the dilution prospect. He had thought that he and the shareholders were close, but this was the difference between business and friendship. ‘I thought, Oh shit, would they really do that?’ There was no way he would agree to the proposal, but he understood why they were suggesting it. Before TVNZ had become a shareholder, Mounter had warned Heatley that Sky had underestimated the running costs and underestimated how much capital the business would need. Mounter had been right, Heatley had been wrong and the business was now at crisis point."