Once they were warriors .... now they produce the goods

By Karyn Scherer

To some, they are an unlikely pair. She is smart, savvy, and wildly creative. He is a genial finance man whose job is to keep his eye firmly fixed on the bottom line.

Her main claim to fame is that she produced the most successful film ever made in this country, Once Were Warriors. His is ... well, never mind.

Together, however, Robin Scholes and Alan Withrington make a dynamic duo. Which is just as well, because they share a challenging task: they are joint managing directors of one of New Zealand's best-known independent production houses, Communicado.

For many people, the firm will forever be associated with its ebullient founder, Neil Roberts, whose untimely death last November cut short what is commonly known as a "colourful" life.

What is not widely known is that the company that has given us some of our most memorable home-grown film and television nearly went with him - and nearly left a well-known investment company with egg on its face.

"It hit a glitch," is how Scholes sums it up. "Lots of companies have glitches.
We had one, and boy - we're not having any more of those thank you."

The business began its life in 1984 as Neil Roberts And Karen Sims Limited. Sims was Roberts' second wife. But as was often the case with Roberts, circumstances soon changed. It was his third wife, entertainment lawyer Karen Soich, who came up with the name Communicado.

Soich was somewhat notorious at the time, thanks to her previous relationship with drug boss Terry Clark. "The idea was that I was 'incommunicado' at the time and it was a good play on words," she recalls. "The other choice was Combined Communications, but that sounded a bit like a Russian combine harvester."

The other partners in the venture were Scholes, with whom Roberts had worked at Northern Television, his brother Murray, and friend Garry McAlpine. The company's bread-and-butter was corporate videos, but it also had some early success with shows like That's Fairly Interesting. It grew rapidly, making its name with programmes such as Heroes, Made in New Zealand, Mud and Glory, and Magic Minutes.

In 1994 it attracted another investor, broadcaster Paul Holmes. Holmes refused to answer the Business Herald's questions, but it is believed he paid nearly $1 million for his shareholding. He is supposedly a silent partner but according to Scholes, maintains close contact: "I talk to him every week."

By 1996, the partners wanted to expand overseas. Publicly listed investment company Direct Capital agreed to take a major stake, injecting an extra $4 million into its coffers. The deal valued the company at more than $12 million.

Direct Capital had every reason to believe it had made a sound investment.

Between 1993 and 1996, Communicado's sales had virtually doubled, from $7.5 million to $14 million, and pre-tax profits had nearly tripled, from around $500,000 to $1.3 million.

However, it wasn't long before alarm bells began ringing. In August, when the deal was signed, Communicado was forecasting a profit for the year of $2.7 million. Within just three months, this had been revised to a $600,000 loss.

Direct Capital was forced to convert some of its equity to an interest-free loan.

Not long afterwards, Roberts decided he wanted out.

"Neil left because he really felt at that point that he had nothing left to contribute. At least that's what he said to me," says Scholes. Soich confirms he wanted to travel and write. Within days, however, he learned that TVNZ was looking for a general manager.

Not everyone was delighted when his appointment was announced. "If what we can look forward to in the future are variations on a theme of Success, Middlemore and The Way We Were, then we might as well start blowing up our tellies now,"
Pam Corkery was quoted as saying.

Although there were concerns in the industry that Roberts might show favouritism towards Communicado, he was determined to be impartial. It was a difficult time for his old mates.

The company was struggling to recover from a combination of unfortunate circumstances and bad business decisions. It had blown a large chunk of the cash provided by Direct Capital on a string of projects, such as the TV show Bizzarro, which came to nothing. It was also distracted trying to get an ambitious project off the ground: a 13-part drama called Greenstone, for which NZ On Air had already allocated $5 million of broadcasting fee money.

Enter stage left another high-profile businessman, former health chief Lester Levy. Levy has always been fond of the media (the feeling, note his detractors, appears to be mutual).

He had already had some dealings with Communicado as head of Middlemore, and he also knew Holmes - the pair were part of the Austereo consortium that bid unsuccessfully for Radio New Zealand's commercial stations. When he was approached to replace Roberts as chairman, he jumped at the chance.

As Levy tells it, the company was in "deep difficulty" and facing a loss of millions of dollars. "Everything wasn't the way it was projected to be. That was an important role and I don't think I won many popularity contests taking that role on. But I think without that the company may well have not survived."

All staff were advised their jobs were under review. General manager Murray Roberts and managing director Mike Hutcheson left soon afterwards. Another of the original partners, Garry McAlpine, also left.

Former Telecom Directories boss Kevin Riley was brought in as chief executive.

He lasted less than a year before moving on to Sky City. Meanwhile, Direct Capital was going through its own changes. In June, it was taken over by Canadian investment company Emerald Capital. Emerald's New Zealand investment manager, Andrew Clements, now sits on the Communicado board.

"What you're looking for as an investor is value growth and it's fair to say it hasn't produced that," he concedes. However, Clements is optimistic about the future. "It's certainly turned the corner and we pretty much leave it to management now," he says.

In its heyday, Communicado employed more than 100 people. In fact, says Scholes, it never had more than 70 full-time employees. It now has fewer than 30, and has closed its offices in Singapore and Wellington. The decision to replace Riley with Scholes and Withrington has been widely welcomed.

"This business is show business," observes TVNZ commissioning chief Geoff Steven. "Communicado had a lot of show and maybe at some stage during Neil's era the business side got a little ropey. Then maybe they went a little bit too much business and lost a bit of the show. With Robin and Alan, you've got both the show and the business and maybe there's a chance for it."

Levy confirms the company is still seeking either a new investor, or another company with which it can form a strategic alliance. "We have had a number of discussions with people and are still having discussions. There's no desperation on our part. I think the kind of overseas people we've been talking to are likely to add more value than local partners, but there may be room for both."

Back at its Sale Street offices, the show (and the business) goes on. Although Touchdown head and one-time Communicado employee Julie Christie would appear to have stolen Communicado's crown as the busiest independent producer around, Scholes and Withrington are not complaining.

A sudden boom in demand for independently-made programmes means it is currently working on seven television projects, as well as 12 corporate videos and its in-flight work for Air New Zealand. It is also hoping to produce two feature films (one of which, Crooked Earth, is likely to be directed by former Kiwi Sam Pillsbury). Greenstone will finally go to air later this year.

It has to be said that some in the industry, many of whom are disgruntled former employees, remain sceptical about the company's future. However, there is one point on which both its friends and foes agree: if anyone can lead Communicado into the 21st century, it is Scholes.

Although she has never sought the limelight, she is regarded by many as the real talent behind many of the company's biggest successes. In 1995, she was awarded an OBE for her services to the film industry, but it is her efforts since then keeping Communicado together for which many believe she deserves a medal.

Scholes is typically sanguine about what she admits has been a difficult time.

The decision to bring in an outside investor caused much heartache, but she isn't the type to have regrets. "Some people bitched and whined about it but I never have because that's what we agreed to do," she enthuses. "At the end of it all, Communicado is a very good company producing very good product and in this market, that has to count for something."

Soich, who also remains a shareholder, couldn't agree more. In a market in which tackiness and tawdriness have become increasingly synonymous with success, Communicado's main strength remains its positive, generous approach, she says.

"I feel really positive about its future and the ideas it is bringing to broadcasters now. It's a very cyclical business. I think it's coming up to Communicado's time in the sun again."