From Scratch

by Allen Salkin

  The production team for Bobby and Jack’s show came up with a name: Grillin’ and Chillin’. TVFN made forty-two episodes in seven days with a budget of about $1,800 an episode. Jack and Bobby took home $200 each per show. After the week of shooting down in Florida, the grills, tables, and everything else on the set was auctioned off to the local crew. In March 1996, Grillin’ and Chillin’, amateurish but cheerful and full of tips about rubs and recipes for grilling lobster, grouper, and lamb, went into heavy rotation on TVFN. Soon after its debut, a trickle of previously non-foodnik customers who’d seen Bobby on TV began showing up at Mesa Grill.

  —

  By the time Grillin’ and Chillin’ was on, TVFN was finally being shown full-time in Manhattan on Time Warner Cable. It had happened because Reese had recognized an opportunity in channel 50, the original slot TVFN had shared with the New Jersey public affairs station. Why did New Jersey need Manhattan distribution? Reese began working every New Jersey political connection he could muster, managing to get an offer in to the bureaucrats who oversaw WNJN. He offered to pay the state, an entity always strapped for cash, $4.3 million for doing nothing other than giving up rights to reach a bunch of homes outside its jurisdiction. WNJN would stay on channel 50 in New Jersey, but in New York it would carry TVFN.

  New Jersey went for the deal, as did Time Warner, since it gained the right to sell a few minutes per hour of advertising space on TVFN in New York. From then on, TVFN ad salesmen would have meetings on Madison Avenue with people likely to have the network at home, a major relief to the sales team.

  It was one of Reese’s best deals, showcasing his strengths—high-level connections, big thinking, and decisiveness. But it was not enough to overcome the weaknesses—temper, short attention span, occasionally irrational frugality, and overcontrol—that were fraying his relationship with ProJo and, particularly, Jack Clifford.

  Among his gripes, Jack did not like some of Reese’s staff, especially George Babick, the head of advertising. At one TVFN end-of-year executive meeting, Jack berated George over what Jack saw as a lack of recent sales productivity that no carriage problems could excuse. “Are your salesmen making calls?” Jack asked him. “No orders for the last couple weeks?”

  George thought Jack was a bumpkin who understood only how ad sales worked at local channels where sales people could call used car dealers and pawnshops anytime with some hope of a buy. Big national buyers like Procter & Gamble placed the bulk of their ad buys only once or twice a year. “The national buys are in,” George replied stiffly to Jack’s query. “These guys have spent their money, and we have a lot of it. They’re not buying in December. They don’t buy at our convenience.”

  On the programming side, Jack, far more of a foodie than Reese, heard from Sue Huffman that Reese wouldn’t allow recipe testing, leading to numerous on-air mishaps. Others argued that a few more reruns would bring down production costs.

  Throughout Reese’s second year running the network in 1995, Tryg withstood Jack’s carping. Jack wanted someone in control of the network who would listen to him and obey.

  Tryg also endured grumblings from the ProJo board. He had to go back more than once to ask for millions to keep TVFN going. Tryg told them he had seen a lot of network start-ups, including ESPN, MTV, and E! “They all went through hell at first,” he said. “What you are seeing with Television Food Network is exactly what happens when you have the right idea.”

  A member of the ProJo board, Nick Thorndike, pointed out that CBS Cable went broke. “Why is this different?” he asked.

  “Our run rate is dramatically smaller than CBS Cable,” Tryg replied. It was normal to miss cost projections, but Reese was doing his utmost to stem spending. As long as the network could stay alive, Tryg argued, even if it was slowly burning a bit of ProJo’s ample cash reserves, it stood a chance of catching on and picking up speed. Tryg could point to signs of Reese’s effectiveness. TVFN was available in 12 million households in 1995, roughly double what it had at launch. More people were writing in for recipes: in the fourth quarter of 1994, the network was getting 2,500 requests a week; by the first quarter of 1995, it was up to 10,000 requests a week. When the first Nielsen ratings had come in May 1995, they showed the network was averaging 36,000 viewers at any given time—a 0.3 rating in Nielsen terms—77 percent of them women. Reese had boasted about the numbers in the press as good news for a network so young, especially the fact that 51 percent of viewers were working women, a good demographic to sell advertisers.

  The ProJo board approved the infusions, but Tryg knew the company named after its newspaper remained skeptical of all cable investments. The board had never completely given itself over to Tryg’s vision of turning ProJo into an industry-leading communications giant, gobbling up other companies and generating its own programming. In 1992, as TVFN was being fitfully born, ProJo had had the chance to buy a competitor, King Broadcasting, a cable operator and owner of five broadcast stations, at the recession price of $550 million. ProJo had had enough cash, but the board had insisted on finding a partner to share the risk, a leveraged buyout firm with a short-term view that clashed with Tryg’s.

  Tryg had steadfastly continued to explore the market for cable systems, eager to expand Colony to compete with other growing operators like Comcast and his former company, Time Warner Cable. But there were few opportunities to buy systems easily combined with Colony’s existing regional holdings. As prices for cable systems increased, he finally accepted that Colony was never going to grow big enough to thrive. The best strategy for ProJo shareholders was to sell. And so, a year after the launch of TVFN, ProJo sold its Colony cable operations to Continental Cablevision in Boston, one of the TVFN investors, in a $1.4 billion deal. ProJo kept its controlling share of TVFN and a cable health network and was able to buy out the leveraged buyout firm and take full control of the broadcast stations.

  With Colony gone, Jack, who oversaw all of ProJo’s television properties, became more intensely focused on TVFN. For Tryg, the year following the Colony sale deepened his longing for his beloved Colorado. His wife hated Providence. The board’s resistance to deeper investments in cable programming made the job increasingly uninteresting to him. East Coast skiing could not compare to the Rockies, and by the fall of 1995 he knew he was soon to announce his resignation. To keep Jack happily in harness through the coming transition, Tryg decided he had no choice but to give in and let Reese go.

  They waited until the deal to deliver TVFN in Manhattan was done. Reese’s contract with ProJo allowed him to spend 20 percent of his week on other projects. He had begun working a few hours a week with the BBC to bring a 24-hour-a-day news channel to American cable to compete with CNN. Jack let him know ProJo had decided that TVFN could not have a part-time boss, no matter what the contract said. Tryg and he would stand together on this. Tribune executives claimed they were unaware of the 20 percent stipulation and, never fully trusting Reese, threw their support behind Jack, too.

  Reese was furious. He respected Jack as a salesman and understood that Jack had played a key role in convincing investors and cable providers to come aboard TVFN at the outset. But this was an obvious ruse. TVFN was commanding Reese’s attention with or without the BBC deal. It was clear that Jack was doing whatever he had to do to get his hands on the network. What’s more, in Jack’s eagerness to usher Reese out as quickly as possible without scotching the New York cable distribution deal, ProJo authorized TVFN to spend hundreds of thousands of dollars to print and mail Manhattan cable customers statutorily required notices that they would no longer receive New Jersey public affairs. If the mailings had waited a few weeks, the notice could have been included for negligible cost in the regular monthly bills. The waste grated on Reese.

  On the other hand, the deal ProJo was offering him to leave was good. They would allow him to retain his 5 percent ownership stake in TVFN and keep a seat on the network board. Reese allowed himself some time
to think it through. He figured that the network was on its feet. He could keep his eye on things by serving on the board. If ProJo wanted him gone, it would be a nasty fight to try to stay. Ultimately, it sounded like a better idea to relent, keeping his chips, but free to work on new projects.

  “They said, ‘Look, we’ll give you everything you want. You get all your money. You get everything else. Just stop doing it.’ And I said, ‘Well, that sounds like a good deal to me.’ And I went back trying to get into the news business again.”

  —REESE SCHONFELD

  He stepped aside at the end of November 1995, having lasted at TVFN a few days longer than two years from the launch date. At CNN he had lasted a few days short of two years. At both networks, he had gotten an amazing job done, transforming a few rough ideas put on paper into very real desks, satellite dishes, talent, producers, distribution, marketing, and eyeballs. Reese, an enormous and forceful character, was justifiably a legend for what he had accomplished. But, like many mavericks, his explosive skills were best used in getting things going, not in running an existing operation in a stable fashion, especially not one in a subject area he cared little about. In both cases, his tempestuousness alienated some colleagues and led to blurry chains of command.

  What he did still care about was seeing a profit from this start-up. Although Reese was leaving as president, his role on the board assured that he was not yet done as a factor in the Food Network story.

  In January 1996, Tryg announced his own resignation from ProJo, although he stayed many more months. During his five-year tenure, the value of ProJo’s privately held stock tripled.

  With Reese out of the way, Jack was in control of the young cable network. The TVFN team in New York could only hope he didn’t stir in too much cumin.

  BAM!

  When Reese agreed to step down, Jack Clifford asked Jeff Wayne, a ProJo executive, if he could devote perhaps two months to overseeing the operation in New York and report back to him. Jeff had been answering up the command chain to Jack for about seventeen years—he’d eaten the killer chili countless times and survived—so he was a trusted, steady lieutenant, the opposite of the freewheeling rival that Jack had had to contend with in Reese.

  Jeff had been head of marketing for Colony Cablevision and then was plucked from its ashes and installed as vice president of programming at the Providence Journal. When Jack approached him, Jeff, wearing his clunky gold wire-rim glasses and sporting an unfashionable brush mustache, was still envisioning a comfortable future in which he lived happily in Providence, coaching his twin sons’ Little League team and enjoying the kind of quiet existence possible when well employed in a small city.

  So he told Jack, fine, but only with the understanding that this was a temporary assignment of no more than a month, with the condition that he could spend his weekends in Rhode Island.

  —

  At Colony, Jeff had been skeptical of TVFN from the start, questioning the strategy of giving the network away for free to cable providers. He used to rib Joe Langhan about how unlikely it was that a food channel would ever get going, especially when Johnson & Wales kept failing to commit. Now, after two years of operation, the network was hardly living up to the investors’ financial expectations. It was millions of dollars behind the projections in the original business plan. It had lost $20.8 million in 1995, and was on track to lose $18 million in 1996. Many backers wanted out.

  Jeff’s primary assignment was to answer two questions: How awful was the operation Reese had set up? And is this a viable business at all?

  —

  Joe showed Jeff around the network in New York, and after only a week, Jeff was more impressed than he thought he’d be at how TVFN churned out cooking shows on a pea-sized budget. There was an energy and enthusiasm to the place, despite obvious disorganization. When he called Jack with his initial reactions, Jeff raved: “Holy cow! This is going to be huge.”

  Jeff’s reports on the state of the network were so positive that ProJo began taking every opportunity to buy out TVFN partners. It paid Landmark Programming approximately $12.6 million and E.W. Scripps $11.4 million for their roughly 12 percent stakes in May 1996, thereby valuing the network at around $100 million.

  Ken Lowe, who had launched Scripps’s HGTV a year after TVFN, was busy overseeing HGTV in Knoxville, and had not been consulted by the corporate higher-ups in Cincinnati about the sale. HGTV was collecting about 3 cents a month per subscriber. Even with as few as 12 million subscribers, that added up to more than $4 million in revenue a year, money HGTV got and TVFN did not. Scripps had been able to extract the fees from cable operators partly because it effectively tied them to retransmission rights from its own powerful broadcast stations and partly because it made the case that HGTV’s shows were of a higher quality than most start-ups. When Scripps’s sale of its TVFN stake was mentioned to Ken in passing, he understood the business reasons, yet couldn’t help but think how he could bring what he was learning from HGTV to bear on a food channel. Not privy to what Jeff Wayne was actually seeing in New York, Ken continued to believe the concept of a food-centric channel was good, even if Reese’s execution was not. “If we could just get our hands on it,” Ken thought.

  But he couldn’t. In January 1997, ProJo continued to consolidate, paying an undisclosed amount for Continental Programming’s 14 percent stake, leaving the Rhode Island company with 55.5 percent ownership of TVFN. The only other large stakeholder was Tribune, with around 30 percent. Each time one of the original investors sold out its Class A shares, Jack gave their seat on the board to Jeff, whose vote he could count on.

  The organization certainly wasn’t perfect. The ad sales department, marketing, affiliate sales, and programming never met together to plan overall strategy. Reese had kept it all in his head, conducting meetings one-on-one, barking orders as he roamed the halls. Jeff organized regular meetings between all the departments. He went over the books line by line with Betty Harris, the CFO. He pointed to a number in the budget for 1996, the coming year, an amount around $350,000.

  “Uh, what is this for?” Jeff asked.

  “Oh, that’s for the recipes,” Betty replied, looking at him expressionlessly through thick round glasses.

  “What?”

  “At the end of every show we put this screen up that basically says, if you want the recipe you just saw, please send a postage-paid envelope, and we’ll send it.” Betty explained that Reese—in the absence of Nielsen ratings—had been using recipe requests to gauge the number of viewers. If he paid the postage, more people would request recipes; if more people requested recipes, it would look like more people were watching the network. Even though the network had finally started receiving Nielsens in mid-1995, no one had called off the recipe giveaway.

  It struck Jeff as lunacy. “So you’re telling me that here we are at thirteen million subscribers, and you’re spending hundreds of thousands of dollars on fulfilling recipe requests?”

  It was all being outsourced, she said, noncommittally.

  “So, Betty, you mean when we’re at like, thirty million subscribers, this is gonna be like a million dollars?”

  “Well, that’s ri-ii-ight!” she said, breaking into a smile, as if to praise Jeff’s mathematical perspicacity along with the madness of the scheme when you looked at it that way. “That’s ri-ii-ight!”

  After hearing this, Jeff asked Joe if the website could be improved to deliver all the network’s recipes and make them searchable. The head of marketing put together an on-air promotion to improve traffic to the site and tapped Curtis Aikens, the host of Food in a Flash, to star in it. Aikens had gained recognition beyond the food world for learning how to read only as an adult.

  “Two years ago, I couldn’t even read,” Curtis told the camera, sitting in front of a computer, typing. “And now I’m on the computer getting the recipes for my show and all of the other shows on the Televis
ion Food Network. And you can do it, too. Just log on to foodtv.com.”

  Traffic barely budged. Don found that less than 20 percent of Internet users were female. But 71 percent of TVFN’s audience was. So they came up with an ad to reach women, one that told viewers that even if they personally were not on the Internet, they probably had a male friend or relative who was, and who could log on and get the recipe. Traffic started improving. TVFN had a head start on the rest of the industry. Food & Wine magazine did not put its first recipe online until January 1997. By May 1997, the foodtv.com site was receiving 500,000 visits a month.

  Once Jeff gave Jack his appraisal of the network, his tasks were to trim any financial excesses he could, bring his skills as a trained marketer to bear, and keep the network piloted forward until a permanent president could be hired. Jeff axed live coverage of the James Beard Awards show, saving the network around $250,000 a year. Coverage of the “Oscars of Food” might have helped TVFN gain credibility in its early years, but the business could no longer afford it. Jeff also ended the network’s involvement in the TVFN charity telethons, Let’s Make Sure Everybody Eats, which Tryg’s wife had advocated, using her involvement in them as an excuse to trade Providence for New York. These raised needed funds for the poor, and memorably featured boxers Joe Frazier and George Foreman participating in one of Jack’s chili cook-offs, but they cost the network $555,000 in 1994 and $825,000 in 1995.