Sky the limit for astute entrepreneur

By GEOFF SENESCALL

A hard business sense and a knack for picking winners have netted Craig Heatley a fortune estimated to be over $100 million.


If you were looking for someone to call a horse race Craig Heatley certainly ain't your man.

His slow ponderous resonant speech scratches him from the running straight away.

But if you want someone to pick a winner then Heatley is your guy. And the nag will more than likely pay good odds as well.

For proof just look at Sky TV - once just a mere vision struggling to find backers but today worth $1.35 billion.

Bruised from the October 1987 sharemarket crash, Heatley, a 31-year-old turk said to be worth $60 million at the time, might have been wary about jumping on another horse.

But just a month after businessmen were leaping out of skyscrapers instead of facing their losses, he was on to his next venture.

That was Sky Network Television, an idea brought to him by Terry Jarvis - an importer-exporter well known in cricket circles but someone Heatley had met only socially.

The concept made sense to Heatley, albeit at the time it meant putting $3000 satellite dishes in people's backyards.

That quickly changed with the deregulation of broadcasting, which opened up the UHF wavebands, enabling services to be provided with just a small aerial.

While Heatley might have seen the big picture, he did not envisage that Sky would chew through $220 million before becoming cash-flow positive.

Thirteen years on, Heatley is certainly on his bank manager's Christmas card list. This year's NBR rich list says he is worth $100 million. But sitting in his office at the Takapuna palace he shares with his wife and three kids he quietly smiles "you don't want to believe all you read."

You get the feeling the figure is a lot higher.

Asking him to put the record straight, he leans back in his expansive chair and says, "Let just say I don't have to worry about the grog bill."

Whatever the sum, it is a pretty good effort for a paper boy from the working-class suburb of Upper Hutt.

However, anyone who knew him back then would have realised his entrepreneurial flare.

At school he was already dabbling in shares. While still in his uniform he also bought a property in Foxton, subdivided it and sold it at a "reasonable" profit.

Before he was 30, and after fitting in a BCom and overseas travel, Heatley headed his own listed investment company, Rainbow Corporation.

Like Sky, this idea started as a germ. On a windsurfing trip to Whangamata with a Fletcher Challenge colleague he saw mini-golf, which prompted him to quit his job and establish a course in Taupo.

With partners he broke into Auckland with Lilli Putt in Tamaki Drive.

Over the next few years he reached out further to finally establish Rainbow in 1984.

It quickly became a market darling after a series of corporate raids. In line with the hype, its value soared from just $6 million to nearly $500 million - the price Brierley Investments paid in a scrip bid to swallow up its former sparring partner.

It was a lucky break. Just days later the '87 crash hit and stocks plummeted. Had Rainbow been standing on its own brokers believe it would have collapsed.

Heatley waited till 1989 to ditch his Brierley shares, which had slumped from around 500c to 200c. Today, Brierley is worth 35c.

Having packed so much into his 43 years, it is not surprising Heatley seems much older than he looks. He does not drink or smoke. He works out daily on his lean 1.83m frame.

His passion for golf sees him hit off a competitive handicap of 10.

But behind this clean-living lifestyle is a hard businessman and tough negotiator, descriptions that Heatley winces at but accepts with a "maybe."

Two instances highlight this in him.

In 1991 Sky TV needed cash.

A deal had been struck with a US consortium that included Time Warner, Ameritech and Bell Atlantic.

But at the 11th hour, they tried to make changes. Not to be jerked around, Heatley threatened to walk. Several days later, the Americans caved in and did the deal on the original terms - investing around $100 million, $25 million of which went into Sky and the rest to shareholders.

The second instance happened just last year when TVNZ sold its 12.6 per cent shareholding in Sky. Heatley, INL and Todd Corporation all lined up to buy the stake off the state broadcaster at 275c a share. But during its notice and pause standdown period a higher offer was made to TVNZ. Whether it was a handshake or a verbal agreement which bound the deal, somehow Heatley got the shares.

TVNZ later explained it was a strategic decision about content. Weeks later, Sky's rugby rights went from TVNZ to competitor TV3.

Heatley's steely business stance appears to stop at the negotiating table. According to a former employee, Pauline Hughes, Heatley is not a person prone to outbursts. Long-time friend Brett Wilkinson, a broker for Ord Minnett, talks about Heatley's generosity and says he has a "strong emphasis on family and close friends."

Wilkinson, however, says Heatley was fiercely competitive. He remembers body-surfing competitions at Langs Beach. "Craig was always hard to beat. It would start out the best-of-five then 11 and onwards till he won."

But he has mellowed in recent years, says Wilkinson.

Loyalty to his mates also seems apparent. For example, Heatley invested several million into Aquaria 21, a company set up by former Rainbow colleagues.

Heatley's own description of himself is `instinctive."

Interestingly, he is again on the move. Late last year he switched out of most of his Sky stake and plunged into the Rupert Murdoch-controlled media group INL, which owns just under half of Sky.

"I looked at the relative positions of the two companies and their prospects, I saw in INL you can have a piece of both. On a relative-value basis I thought INL was undervalued."

So far the move has boosted Heatley's paper wealth by $30 million.

It is not only the share price which has heated up since he arrived. Earlier this year, Telecom swooped on a 10 per cent shareholding in the media group with a firm eye on pay TV.

With Murdoch spinning off his pay TV assets into a separate vehicle, questions are being raised about what that means for Sky.

You can bet Heatley knows a lot more than he is ever going to let on.

His admission that he is not a passive shareholder suggests he is going to be a key player in driving INL.

Ask him about the wider picture, however, and all he says is that "content is a big issue these days." He sees telecommunications and media in their widest forms, as well as the internet, becoming closer over time.

While Heatley is enthusiastic about media, it is his move into the e-commerce group eVentures that really excites him. "You are either a believer in where the internet is going or not. I am ... We haven't scratched the surface about how the internet is going to impact on our lives."


Skip to the subject of politics and the economy and Heatley becomes even more passionate.

This is not surprising as he bankrolled the formation of Act.

"Act is a voice of reason in a Parliament desperately short of reason. Do I agree with all Act says? No. Do I think their core economic principles are right? Yes."

Moving forward his chair, Heatley says: "I am becoming more and more bearish about New Zealand. I am not laying blame at this Government only. It is not helping but it has been a situation that has existed for the last decade."

He admits to having most his money overseas. It is not something he is happy about but "that's where the best investment opportunities are."

So what needs to change? Heatley launches into one of many analogies during our two-hour meeting.

"Pretend the whole world is Auckland. New Zealand is like a dairy in Pukekohe ... as relevant to Auckland as NZ is to the world. The question the politicians would have to ask is: why would anyone in Auckland take the trouble to drive all the way to that dairy?

"There are only two answers. Either they can buy things in that dairy cheaper than anywhere else even after they have hopped in their car and covered the cost of going out there. Or they can buy things at the dairy they can't buy anywhere else.

"That is how we have to start thinking."