BC Business
How a former B.C. finance minister and a Hollywood producer turned around money-losing OutTV.
If their lives were a movie, Joy MacPhail and James Shavick’s Hollywood ending would have come with their Hollywood wedding in 2005. The one-time B.C. finance minister and the TV and movie producer responsible for hits such as The New Addams Family and The Teenage Mutant Ninja Turtles exchanged vows on the back lawn of a friend’s 1920s-era Spanish-style estate in Bel Air, with a mariachi band playing and a Canadian flag borrowed from the consulate flying proudly in the California sun.
At the wedding, MacPhail’s NDP colleagues, such as MLA Jenny Kwan, former premier Mike Harcourt and MP Libby Davies, mixed with Shavick’s showbiz pals, such as producer Kirk Shaw (Blood Ties, Battle in Seattle), director Ron Oliver (Degrassi: The Next Generation, The Chris Isaak Show) and composer and producer Shuki Levy (The Power Rangers). “It was so funny,” recalls MacPhail, who had recently retired from 14 years in provincial politics, about these colliding sets of friends. “Because Hollywood thinks they know everything political, and B.C. politicians are fascinated with Hollywood.”
That could have been it – end of story, with MacPhail and Shavick continuing to work in their divergent fields and keeping professional and private lives at a safe distance. Instead, the couple’s marriage has turned out not only to be the culmination of their love story but also the first act of a business triumph. In June 2006, only a year after getting married, the two decided to purchase a 58 per cent stake in OutTV, a digital cable network for the lesbian, gay, bisexual and transgender (LGBT) community, for a seven-figure sum.
At first glance, it’s more than slightly puzzling that these “opposite-sex life partners” would choose to take the wheel of a channel floundering with only 185,000 subscribers, minimal advertising support and unco-operative cable partners. But working in tandem and using their unique skill sets and connections, this duo – Shavick as CEO, MacPhail as chair – has more than tripled subscriptions, increased advertising revenues and sold original programming to Europe and the States.
“I have a lot of respect for James and Joy’s commitment to the community,” says Andrew Chang, COO of Pink Triangle Press, publisher of the Toronto-based Xtra chain of LGBT newspapers, which, at 25 per cent, owns the largest minority share in OutTV. “They’re very cognizant that it’s a bit of a trust to operate a community’s media. They take that very seriously.”
Even taking into account the presence of a snoopy reporter, the affection between Joy MacPhail and James Shavick is palpable. Sitting across from each other in the living room of their Kits Beach duplex (which they bought together in 2004), they steal glances at each other like teenagers who’ve been going steady for three whole weeks since the grad formal. At the same time, they reflexively fact-check each other’s anecdotes and fuss over each other as though they’ve been married for decades.
Shavick, a tall man with a broad, perma-tanned face and a greying head of floppy hair, in a black shirt and blazer, has the kind of indulgent confidence that suits a man accustomed to pulling the levers offstage. At one point, in the middle of a long-ish anecdote, he pauses and says to his wife, “Tell me if I’m going on too long.”
“You are going a little long,” says MacPhail, a strawberry blond who’s wearing a blue blazer over a cream-coloured turtleneck. “The reality is, you don’t have all day.”
Shavick was born in 1950 in Montreal, the privileged grandson of Alvin Walker and the son of Len Shavick, who were both, at different times, the president and CEO of Holt Renfrew. Rather than going into the family business, Shavick became hooked on moviemaking after he sold a 30-minute documentary to the CBC that he made as a final project for a film-history class at Sir George Williams University (now Concordia). Still in his 20s, he made a splash when he purchased the film rights to Hugh MacClennan’s iconic Canadian novel Two Solitudes in 1975 with money saved from his bar mitzvah.[pagebreak]
Shavick, who has four grown children, moved to Hollywood in 1988 to further his career (he still maintains a home in the old hippie enclave of Topanga Canyon outside of Los Angeles), then settled in Vancouver in the early 1990s after being invited up for a visit by B.C. film commissioner Dianne Neufeld. “I realized that there were a lot of Cadillac productions like Stephen J. Cannell shows but no Volkswagens,” recalls Shavick of B.C.’s film scene at the time. “I saw a niche that could be filled.”
It was in 1999 on the set of The New Addams Family, which was shot in Vancouver, that Shavick first met Joy MacPhail. The location had been chosen to announce a new provincial tax credit for filmmakers, and the movie mogul introduced himself to MacPhail, then B.C.’s finance minister. “I was just totally impressed with James,” recalls MacPhail. “He was so self-effacing, almost shy.”
Shavick admits to a more immediate reaction. “I was frankly smitten at first sight,” he says. “She was absolutely drop-dead gorgeous and probably the smartest person I’d ever met.”
A short while later, Shavick and MacPhail, who were both attached to others at the time, were seated together at an NDP fundraiser. Their friendship grew, and by 2003 the two were an item. “We figured out we liked each other best,” says MacPhail.
Unlike Shavick, MacPhail’s rise to power began with more humble beginnings. MacPhail, 57, says her passion for politics stems from working-class origins in Hamilton, Ontario, as one of four children to a construction worker and nurse. As an economics major at the University of Western Ontario (she eventually completed her degree in labour studies at the London School of Economics), MacPhail became involved with the NDP. After moving to Vancouver in 1981 with then-husband Gerry Scott, a longtime NDP strategist (and father to her only son, Jack, now 20 years old), MacPhail took on a number of jobs with labour organizations such as the Service Employees International Union and the B.C. Federation of Labour as an organizer and economist before being elected as MLA for Vancouver-Hastings in 1991.
MacPhail – who at various times helmed the ministries of Social Service, Health and Finance – was beloved by local media for her sharp wit and sometimes loose tongue (she publicly mused in 1997, for instance, about having “Platonic mind sex” with federal Liberal cabinet minister Pierre Pettigrew). When we talked in April, she had recently returned from Pakistan, where she helped oversee that country’s first democratic election on behalf of the National Democratic Institute, a non-government organization working with the women’s wings of the country’s political parties. A trailblazer for women in politics in B.C., MacPhail has also been a longtime champion of gay rights, granting equal adoption rights to gays and lesbians in 1996 as social services minister and becoming an early advocate for same-sex marriage.
In retrospect, such bold social stances make her a natural fit for OutTV’s chairmanship. But MacPhail says that when she decided to leave politics in 2005, there was no intention of pursuing the corporate life. “I retired in May and got married in June,” she recollects, “so my exit interviews were all about whether I would go into business with James, and I said, ‘No, absolutely not. There’s huge expertise there that I couldn’t learn.’ ”
Shavick looks at me with disbelief. “This from a woman who managed billions of dollars and had dealings with all the big bond companies,” he says.
Eventually, MacPhail changed her mind, deciding to put some of her own money into the 2006 purchase of OutTV. (MacPhail declines to reveal the exact amount, but says she has a 50 per cent stake in their majority share of the company and has “contributed accordingly.”) She saw it as an opportunity to help bring a community she had long supported from the shadows of society into the mainstream. “The original impetus to purchase the network came from my husband,” she says. “When he brought the proposition to me, as his spouse and business partner, I thought it was a perfect fit for my entry into the private sector.” Shavick, who had previously worked on gay-friendly film and TV projects such as the horror series Dante’s Cove and the Donald Strachey mysteries, a GLAAD-award-nominated series of movies starring Chad Allen as a gay detective, saw a relatively inexpensive opportunity to build a brand around a niche highly coveted by advertisers. While their motives might have been different, they have proven complementary, with OutTV’s success a result of both Shavick’s entrepreneurial and filmmaking know-how and MacPhail’s political prowess.[pagebreak]The couple were initially turned onto OutTV by Paul Colichman. Through his media company, Regent Entertainment, the L.A.-based producer (along with business partner Stephen Jarchow) owns the LGBT-themed television network, Here, and magazines such as Out and The Advocate. Colichman, whose credits include the Oscar-winning feature film Gods and Monsters, has been a friend and frequent business partner of Shavick since 1996. It was at his Bel Air home that Shavick and MacPhail got married.
Colichman had been approached in 2006 by William Craig, who had purchased OutTV from its original owners, Headline Media, and was looking to sell. Colichman was unfamiliar with the Canadian cable television environment and wary of entering, but Shavick instantly came to mind. Shavick had worked with Colichman on a number of Here series and features, including the Donald Strachey mysteries. “I said, ‘James, for God’s sakes, you’re already the largest producer of gay and lesbian content in Canada, and we have the largest library in the world of this content,’ ” recalls Colichman, who considers Shavick one of his most gay-friendly collaborators. “ ‘Buy this franchise.’ ”
Launched in 2001 as PrideVision, the channel had arrived with high expectations. “It’s fair to say PrideVision was a diamond in the rough,” says Sean Davidson, editor of Playback Daily, a Canadian television trade publication. “My impression was, it was destined for bigger things by virtue of the market it was aimed at.” Canada’s LGBT population, estimated by gay marketing agency Wilde Marketing to be around 1.2 million, is widely considered an appealing target market for advertisers because of its high level of disposable income and a propensity to travel. But like many startup digital channels, PrideVision had trouble early on delivering high-quality programming to its target audience.
The network also made a huge mistake by broadcasting adult content. “When you start playing adult content,” says Brad Danks, COO of both Convergent Entertainment and OutTV, “you create a problem for cable companies.” By the time Shavick and MacPhail purchased OutTV, the channel had already taken on a new name and stopped playing porn but still had a muddled brand identity, negligible annual ad revenues – less than $25,000 – and no underlying vision behind its programming decisions. “We thought that it would be more successful as a mainstream brand,” says Danks about the new direction in which they wanted to take OutTV. “We felt that if it still satisfied the core gay-and-lesbian viewership but also appealed to a broader gay-friendly audience, it would be more appealing to the cable companies and advertisers.”
The new majority owners set about rebuilding their brand and, with the help of their partners at Pink Triangle Press, attempted to re-engage Canada’s LGBT community. “They have a lot of experience in television, and we have a lot of experience in reaching out to gay people through our properties, so it’s a really good match,” says Pink Triangle’s Chang about his company’s relationship with Shavick Entertainment. Using data obtained from Nielsen ratings and website hits, OutTV’s new owners realized that travel and gay-friendly dramatic programming were most popular among viewers, and they built a clearly defined programming schedule around this data: Travel Tuesday and Box-Office Thursday take up the weekday programming grid, between Man Candy Monday and WOW Wednesday (a night of lesbian-themed television).
Original programming was also boosted. As part of its broadcast licence, OutTV is not only required to devote more than half its schedule to Canadian productions, but must also invest 49 per cent of its revenue into new production. In this regard, Shavick’s production experience and connections come in handy. “We do more work in Canada than we might normally because James needs his Canadian content,” Colichman says.[pagebreak]
OutTV’s prime-time programming typically gets between 20,000 and 40,000 viewers, with a record audience of 90,000 tuning in last December to see a documentary on Harvey Milk, the late gay San Francisco politician who was the subject of 2008’s Oscar-winning feature starring Sean Penn. OutTV’s homegrown programs, which cost between $15,000 and $30,000 per episode, are also gaining audiences overseas. Cover Guy (a male-modelling series) was sold to Here in spring 2008 for an undisclosed figure, while Chris & John to the Rescue (a gay male equivalent to Supernanny) was acquired in fall 2008 by Logo, a gay network owned by broadcasting giant Viacom. And in April 2008, a Dutch group launched its own version of OutTV in the Netherlands using programming and branding it licensed from Canada. Compared to cable titan TSN, which has a six-figure audience, OutTV’s numbers remain paltry. But its balance sheet looks solid compared to other digital cable channels producing TV shows on shoestring budgets, such as Fashion TV and Discovery Health Canada, and it’s enough to keep OutTV in the black.
And the trend lines are encouraging. Since rebranding and adding original programming in 2006, OutTV’s subscription level has risen from 185,000 to 550,000. Each subscriber roughly equals 45 cents a month for the network, which accounts for about 80 to 90 per cent of the network’s total annual revenue of more than $3 million. With increased viewership, OutTV has also gained more clout among advertisers. Charging a relatively modest rate of $100 for a 30-second prime-time spot, OutTV now has advertisers such as BowFlex, Telus and TD Bank, and takes in more than $200,000 in annual advertising sales.
Building a branding strategy and homegrown programming, however, are exercises in futility when a cable carrier makes it near impossible to reach your audience. As part of its Category-one network licence, OutTV is guaranteed carriage and the same access to customers as other channels. Since its inception, however, the network has battled with Calgary-based Shaw, Western Canada’s biggest cable carrier, to be given equal footing with other digital cable channels. In 2001, when the network launched, the company’s CEO Jim Shaw said he expected a “consumer revolt” and a “public-relations nightmare” if OutTV were offered as part of a free-preview package. According to MacPhail and Shavick, the shabby treatment persisted into 2008, with Shaw neglecting to promote OutTV to its customers on its website and print marketing, and placing it on the digital dial alongside adult channels such as Playboy. Additionally, Shaw customers who wanted an “all-in” package, every available channel, would not be given OutTV unless they specifically asked. To many observers, Shaw’s tactics seemed inspired not by financial imperatives but by homophobia.
That’s where MacPhail’s political savvy came in handy. “Many in the community and in our boardroom wanted to go out on a loud charge of homophobia,” MacPhail recalls. “I was convinced that we could always do that, but let’s try to have a business solution first. It didn’t make any sense from a business point of view, for me, why Shaw didn’t want to build up a subscribership of our specialty network; it meant way more money in their pocket than ours per subscriber.”
Despite MacPhail’s best efforts, however, the cable behemoth continued to resist. Seeing no other resolution, MacPhail filed a complaint with the Canadian Radio-television and Telecommunications Commission (CRTC) in April 2008 after a trip to Ottawa to make a detailed presentation. The CRTC ultimately sided with OutTV, ruling that the network was subject “to an undue disadvantage with respect to the marketing of OutTV, a Category-one specialty service, contrary to section nine of the Broadcasting Distribution Regulations.” And Shaw has complied, to an extent, placing OutTV lower on the channel list (it’s now channel 100 in Vancouver, down from channel 370), revising its promotional material and including OutTV on free previews to new subscribers. “By implementing each of these measures, Shaw is committed to packaging and marketing OutTV on an equitable basis,” wrote Shaw vice-president Michael Ferras in a December 2008 letter to the CRTC, “with terms comparable to those applied to every other Category-one digital specialty service.”[pagebreak]Shavick and MacPhail are still displeased with the response. “To this day, if you are a digital subscriber and call up Shaw and say you want every channel,” Shavick says, “the only channel you don’t get is OutTV.” In fact, Shaw has two all-in packages; customers have to ask specifically for the one with OutTV.
“The CRTC has no penalty power,” MacPhail says, “so we’re still looking for solutions.”
Behind-the-scenes politicking aside, MacPhail has also had an undeniable impact on OutTV’s programming. Last year, while visiting the Gay and Lesbian Centre of Vancouver after the organization requested fundraising assistance, she first became aware of the city’s Queer Prom, an annual event for Vancouver’s LGBT teens. “Kids from all over the Lower Mainland attend, and it’s just cool,” says MacPhail, who will also be hosting a new program called Favorite Places, in which she interviews prominent gays and lesbians about their favourite spots in the Lower Mainland. “And I went to James and said, ‘We should do something; we should support this.’ ”
Shavick loaned the kids video cameras, and the result is a documentary, Queer Prom. The 90-minute program, which aired in May, might not be OutTV’s highest-rated show or generate its most overseas rights sales, but it nevertheless offers a timely reflection of Canada’s gays and lesbians that goes beyond stereotypes and the glamorization of reality TV.
“For me it’s first and foremost a business,” says Shavick, who was initially drawn to producing LGBT entertainment only because of his association with Colichman. “But I am aware of a stewardship. We do a lot of things for the community as opposed to whether it’s economically the right thing to do. We’re very community driven.”
Sean Young, a Toronto-based journalist who blogs for Planet Out Media, is pleased with the direction Shavick and McPhail have taken OutTV. “I found that whenever I had to watch it, it was all porn,” says Young about the network’s earlier days. “The future of gay TV is on focusing on who gay people are instead of focusing on the stereotypes. It’s good that they’re now showing films like Milk, which help subscribers in small towns stay connected with what’s going on in the global gay community.”
When asked about their future plans, Shavick and MacPhail talk not about any trips to Europe or Caribbean cruises but more work. “At the moment, our plate is full with OutTV,” says Shavick, somewhat dryly. “Our focus is on growth and building viewership from our Nielsen data.” When I speak with him on a follow-up call, he mentions that his wife is buying groceries at the Great Canadian Superstore. “We like to buy food in bulk and then freeze it,” he says, joking about their thrifty eating habits. “After all, Joy’s Scottish.”
Perhaps working in tandem is the best way for a power couple to spend time together. While keeping close quarters doesn’t seem to produce any friction, that doesn’t mean there aren’t any differences in opinion. Last year, for instance, in the race for Vision Vancouver’s mayoral nomination, Shavick, who describes himself as a business-minded “Bourassa Liberal,” backed Gregor Robertson, a charismatic politician with entrepreneurial experience. MacPhail saw herself in the working-class east-side roots of Vision councillor Raymond Louie. Shavick, of course, won the bragging rights.
While the beauty of Shavick and MacPhail’s personal and professional union is the way they both respect and leverage each other’s talents, Shavick clearly relished the chance to wear the political pants in the house – at least for a day. “For me to win anything political against Joy MacPhail,” Shavick says, proudly, “is a once-in-a-hundred-million shot.”