John Hendricks - Oral History
Interview Date: Friday September 12, 2003
Interview Location: New York, NY
Interviewer: Brian Lamb
Collection: Hauser Collection
LAMB: John Hendricks, the first moment you can remember when this whole idea of a need for a channel called Discovery?
HENDRICKS: Well, I think probably the first glimmer of an idea about being involved in television, which kind of led to Discovery, was a moment I had in college, actually, when I was a work study student. I was a history student at the University of Alabama in Huntsville, and my job was to get in some of the 16 millimeter films at the time. I was in college in 1970-'74 timeframe. I remember one of the faculty members who was at that point in his American history curriculum when he was at the McCarthy hearings, and there was a nice 16 millimeter film that had captured the hearings that were one of the first televised. I think they were the first televised hearings. At that point, when I got that 16 millimeter film in I went to his class so I could see it, and I thought well, why can't this be on television? On a Saturday morning, couldn't one of the local broadcast stations there in Huntsville, for example, carry documentaries? We had all these catalogs that you would order these films from; I remember the names – Encyclopedia Britannica Films, there was a company called Films, Inc., there was Time Life Films, and I remember calling the local broadcaster just to ask that question and there was just a laugh at the other end of the line, "Who is this kid calling up?" And then I thought – we had TelePrompTer Cable – and I remember making a call to just ask why and the general manger or the assistant general manager who was on the line said, "Son, you don't understand. We can't do anything but retransmit broadcast programming." And so, again, I just kind of filed that away and never thought about it until 1975, by that time I was in the Washington area, and I remember reading in the Washington Post about this company called Home Box Office that was challenging that FCC rule, kind of challenging the laws of the land that cable could only retransmit broadcast programming and a movie channel was born. At that moment, I just said, "Well, that's interesting. I think something's going to come of this."
LAMB: Where had you grown up?
HENDRICKS: I was born in West Virginia and I was the son of a builder.
LAMB: What town?
HENDRICKS: Matewan, a little town in the southwestern corner of West Virginia, right on the Tug River that is the border between West Virginia and Kentucky.
LAMB: Didn't they make a movie out of that?
HENDRICKS: Yeah, they did. It was a little town, about 500 inhabitants, but it was famous for two things: one, the union problems in the 1920s and prior to that it was kind of the nearest little town to the Hatfield and McCoy feud. So, that's the little town in Appalachia that I was born in, but I really grew up in Huntsville, Alabama. My family moved to Alabama in 1958. My late sister had taken a job down there and was telling my dad that he had to bring the family down because Huntsville was one of the three places in the country that benefited from the NASA investment. There was, of course, Cape Canaveral at that time, now Cape Kennedy; and then Huntsville was the place where the Marshall Space Flight Center was constructed; and then of course Houston, where Mission Control was. So I grew up in Huntsville at the time that it was just growing by leaps and bounds. It grew from, I think, about 48,000 in the mid-1950s before Werner Von Braun and the rocket team arrived, to about the early '60s, it was a town of over 200,000. So it was a great place to be for a builder.
LAMB: Building what?
HENDRICKS: Houses. My father was a residential builder.
LAMB: What about your mom?
HENDRICKS: She worked in the city clerk's office. She was a homemaker until the time I was about 13 and then she studied accounting and she worked in the city clerk's office.
LAMB: Now, were they political at all?
HENDRICKS: The politics that I remember were we were kind of supporters of Kennedy and I remember we were kind of ostracized a little bit, I remember from some of my friends, but my father was a Kennedy man. The place that we grew up, where I was from, in West Virginia, it was so poor you couldn't possibly have two school systems and there we were kind of immersed in this segregated society, which was Alabama and the rest of the South in the late '50s, and it was very strange. So we kind of took a different point of view than a lot of people, although Huntsville was different. It was a town where some 70% of the population was from somewhere else by the '60s, and so it was a more liberal, progressive area in which to kind of grow up.
LAMB: What was the date of your birth?
HENDRICKS: March 29, 1952.
LAMB: And when did you move to Huntsville?
HENDRICKS: 1958. I was six years old, so I started school in Huntsville.
LAMB: And you stayed there for college, so did you go to high school there?
HENDRICKS: Yep, I went to Butler High School and then went to the University of Alabama, went to the main campus for the first year and got to experience Bear Bryant and the big football campus, which was fun, but I was a little more serious and I saw that the class sizes, especially in the field I wanted to study, history, was much smaller at the Huntsville campus.
LAMB: Why do you think you were interested in history?
HENDRICKS: Just from the time I was a kid I was just always fascinated about not only the world events and domestic events, but just like how did we get here? What is the story of civilization? When I was in college I didn't know what I was going to be or what I was going to do, and I thought well, if I'm going to spend four years reading, why not study and read about things that interested me? So, history was that topic. It was that subject.
LAMB: Had you had a high school teacher that was particularly encouraging to you in the history world?
HENDRICKS: Yeah, I had a couple of teachers that influenced me in high school, but it was some of these early, I think, experiences in college, in the freshman year that really captured my attention. I had a fascinating professor at the University of Alabama in Tuscaloosa. He never even knew my name – it was a class of about 200-250 kids and it was that American History 101. I remember his name, he had an interesting name, his name was Dr. John Pancake and he just made history come alive, and then as I got to the Huntsville campus, there was one literature teacher who just had such a spark in her eye that it always had an influence on me. Her name was Eleanor Newman, and then John White in the history department there and others. I just knew history was the subject that I was going to study for my college tenure.
LAMB: What year did you get out of the University of Alabama?
LAMB: First satellite launched in '74 with Western Union; the second one launched by RCA in '75. Were you aware?
HENDRICKS: I just wasn't following at that time. I think it was around '71-'72, probably my sophomore, junior year that I made those two phone calls to the local television station and to TelePrompTer, which was the cable operator in the area, and then by late '75 I was working at the University of Maryland, and that got me to the Washington area.
LAMB: How much television did you watch?
HENDRICKS: I was not a huge watcher of television, but I was fascinated by the Nixon Watergate hearings. I remember just being glued to that coming in from my classes at college and then I was just lost for five or six hours watching those hearings. My favorite kind of television was documentaries. I remember the Walter Cronkite series You Were There, and I was a big watcher of the news.
LAMB: Why did you go from the University of Alabama to Maryland? What was that move all about?
HENDRICKS: Well, when I was a senior, or the summer before my senior year in college, one of my professors – Frances Roberts was her name – she got me a little $700 stipend and it was from the Tennessee Valley Authority. It was a little project that I got fully into for those three months during the summer. I thought it was all the money in the world, too, and it gave me a chance to go to Washington to do research at the Library of Congress. My project was to research the old historic sites that were covered up by the damming of the Tennessee River, and unfortunately they just didn't do a good job back in the '30s and early '40s when they were damming up the Tennessee River so a lot of old Cherokee Indian towns and villages were covered up and my job was to go try to find original maps, original correspondence between the Secretary of War at the time, who was in the early days Henry Knox, who would correspond with Indian agents in the area, and lo and behold some of them at the end of their correspondence would actually chart out the river systems and the creek systems, which were more important, and then the locations of these Indian settlements. So, at the end of the research project, I submitted my paper, which was fairly long, to the Tennessee Valley Authority and they published it. That kind of got the attention of the president of the university, a guy named Ben Graves, and he offered me a job when I graduated. I didn't know whether I wanted to go to graduate school in history or go to law school or what, and here was the president of the university offering me a job to...
LAMB: At Maryland?
HENDRICKS: No, this was at the University of Alabama, Huntsville, and he offered me this job as Director of Government Relations. Now, at the ripe old age of 22 that was job and my job was to go to Washington because I told him I really loved the Washington area, and to try to bring back federal money to the university, to meet with all the agency people at HEW and the Office of Education, and one of my grant proposals beat out the University of Maryland and the kind of retaliated by offering me a job and I couldn't resist it. It was more money and a chance to live in the Washington area, which had a lot of appeal to me.
LAMB: What kind of a student had you been at the University of Alabama?
HENDRICKS: I was an A student.
LAMB: Perfect As?
HENDRICKS: I had a few Bs. I remember I struggled a little bit with my fourth year of French. That was my one C in college, a C+.
LAMB: Were you an expert at that point – I mean not a worldwide expert – but were you an expert at any particular area of history?
HENDRICKS: My concentration was American History, particularly the 20th century, but it was a pretty well-rounded program, so we got a lot into European History. The part that I still find myself trying to read more about, which I didn't get a chance to because early on you either had to concentrate in Asian studies, European studies or American studies, so I'd find myself trying to read more in ancient history, Roman Empire, the Greek Empire, and I feel like we all try to complete our education. Asian History, to me, is something that I think needs to be completed. But that's probably the area I know best.
LAMB: We're recording this in the early part of September, 2003. Are your parents alive?
LAMB: When did they die?
HENDRICKS: My father died when I was 20 years old, so it was right before my junior year in college.
LAMB: Your mom?
HENDRICKS: And my mom died about ten years later.
LAMB: Now you mentioned that your sister is deceased.
HENDRICKS: Yeah, it was a real tragedy. She was twelve years older – there's three of us, three kids in the family: my brother, who is nine years older – I was the baby – and my sister, who was twelve years older. When she was 34 years old she developed just a small spot on her breast, it was breast cancer, and was actually cured of the cancer, but had, unfortunately, an overdose of radiation during the treatment stage, and it was just a horrible situation. She struggled with it for about three years and died at age 37.
LAMB: And what year would that have been?
HENDRICKS: That would have been 1978, I believe that was.
LAMB: And your brother, is he still alive?
LAMB: What's he do?
HENDRICKS: He kind of followed the footsteps of my father. He was a lifelong woodworker, craftsman and a builder in Huntsville, Alabama and still there. He's retired now.
LAMB: So you moved to College Park, Maryland, the University of Maryland, in what year?
HENDRICKS: This was late 1975.
LAMB: And your job, again, was what?
HENDRICKS: Well, they hired me to do Corporate and Foundation Relations, so I worked in the central administration at that time. The University of Maryland had five campuses. Wilson Elkins, who had been the president at the College Park campus, had a new position there; he was president of the University system, and so he created a system office, which would administer all five of the campuses including the flagship campus, College Park. So I worked for him in the development office and my title was Director of Corporate and Foundation Relations. So what I did was to meet with companies and foundations and propose projects that they could support, whether it was supporting the dental school at the Baltimore campus, or some of the science projects. I remember a fascinating project that the physics department was trying to detect gravity waves at the time, which were predicted by Einstein, but no one had ever physically detected them, and that was the project that I met with Alcoa about, and the reason that I remember this particular project was because we wanted them to provide this huge aluminum cylinder, two of them that could be widely separated and hopefully there could be some detection. That was the kind of projects that I worked on.
LAMB: So we have a timeframe – that was 1975. You went on the air with Discovery on what date?
HENDRICKS: Well, I had the idea in '82 and then we went on the air, first time up to satellite, June 17, 1985.
LAMB: So you had ten years between the time you got to Maryland and the time you started Discovery. Go back again to 1975. How much did they pay you when you went to the University of Maryland?
HENDRICKS: $13,000 was my salary because I remember the raise. I was making $8,500 at the University of Alabama in Huntsville and this was a huge raise to me.
LAMB: What did you think about life at that point? Were you still single there?
HENDRICKS: Yep, I was single. I came up. I was kind of lonely. I was excited but I was coming to a place where I really had no friends, no family, just kind of starting life over, and so I remember there were lots of phone calls back to my mom at the time and just getting settled into this area, but soon made friends within the University of Maryland. We were housed on the campus there at College Park, so it was a very vibrant place, and after awhile it became home.
LAMB: Did you think of yourself as a Southern boy?
HENDRICKS: Yes, and it was kind of obvious. Huntsville was a little different place and because my parents weren't from the Deep South I never developed a very deep Southern accent, but it was very detectable and people would comment generally after I chatted with them a little bit. They would always say, "Where are you from?"
LAMB: Now, in 1975, did you think you knew what you wanted to do in your life, and what was that?
HENDRICKS: I think at that time I knew I wanted to be in business for myself. I didn't see myself long-term at a college or university. I kind of wanted to get out and do something on my own. Being a history student, in a way you could be an observer of what was going on in the world and I kind of wanted to be more of a participant, but I saw myself being out and being on my own in some kind of an organization that I would start.
LAMB: Did you watch much television '75 to '82 before you actually got the idea?
HENDRICKS: Yeah, I remember what Carl Sagan was trying to do on television really fascinated me. He wrote a book, Cosmos, and followed that up with a really elegant, I thought, television series and very stimulating intellectually called Cosmos. I remember that was something I watched. It was on PBS. There was another series that Jacob Bronowski did called the Ascent of Man, and that was in the '75 to '80 time period, and that told me television could just be so much more. Why was that something that was only on once or twice a year? Once or twice a year that there'd be these kinds of series, typically on PBS, although there were attempts in the early '80s – I remember when Walter Cronkite stepped aside from the anchor seat and he did a series called The Universe series, and I remember it was on every Tuesday evening from 8:00 to 8:30. That was kind of a bright spot, I thought, of the potential of television. I left the University of Maryland to start a consulting business where I would advise colleges and universities.
LAMB: What year?
HENDRICKS: That would have been '78, '79, maybe early '79.
LAMB: So you only stayed at Maryland for four years.
HENDRICKS: Yes, and then they were one of my first clients in my consulting business.
LAMB: Where did you headquarter?
HENDRICKS: Right in College Park.
LAMB: When did you marry, by the way?
HENDRICKS: I met Maureen in '78 and we got married January 10 of '81, so that was in that timeframe.
LAMB: Where did you meet her?
HENDRICKS: I met her in Washington. She was a girl from Connecticut and worked at the Naval Oceanographic Laboratories in Washington. We met downtown at a restaurant. I say a "restaurant"; some people would call it a bar. I always told my mother after, I said, "You know, they served food." So I always termed it a restaurant. So we got married in '81.
LAMB: And how many children do you have?
HENDRICKS: Two. Elizabeth, who's a junior in college and Andrew, who we just got off to college. He's now a freshman.
LAMB: So your consultant business started in 1978?
HENDRICKS: Yes, the university had a fairly flexible consulting policy, so even as a full-time faculty member or a member of the administration you could consult, as long as it was in your field, up to one day a week. My first client was a hospital back in Alabama, who wanted help to try to raise some funds to do an addition – Huntsville Hospital, was the client. So that's what got me intrigued that maybe I could someday break away from the University of Maryland and just do this full-time, and that's what I did in '79. And also I could enlist either members of the faculty in the business and management school, for example, or in the development office to assist because I knew they could consult one day a week. So I founded a company called American Association of University Consultants – AAUC.
LAMB: How big did that ever become in the numbers of people?
HENDRICKS: Only about eight people at any one time were employed. We created some newsletters. I felt like the one opportunity was to create newsletters about the funding opportunities in all the Washington agencies, so I remember we created a newsletter called the Chemistry Funding Newsletter. At that time you could get direct mail lists of colleges and universities down to the department chairman level, and so I remember when I realized that, that there were like 1,400 people in the United States that were chairmen of chemistry departments and every other discipline, so we did mailings and then we would do all the research because a lot of the large universities – like Ohio State, for example – would have a Washington office, it was so important to get government contracts and grants, but most colleges and universities didn't have those resources, so they didn't have the connections to know who within the National Science Foundation was the right contact if you were doing a certain research project to try and apply for a grant. And so that was the nature – trying to fill that need – was the nature of that business. And so, I think at one time, we had some 350 colleges and universities who would subscribe by mail to these funding information newsletters that we would try to get out on a monthly basis.
LAMB: Had you, by 1979, talked to anybody in the television business again – remember your early days of talking to TelePrompTer down at the University of Alabama in Huntsville – had you talked to anybody about anything in television?
HENDRICKS: No, but I got cable... in the Washington area, cable did not start getting... you know, College Park's in Prince Georges County, and they started cabling the neighborhoods there, I believe in like '77-'78. So I think it was like '78-'79 that I got cable, and that was right at the time that there were just a few networks. There was HBO, but ESPN came along in '79, and I just remember thinking, well, they're going to create a channel for me soon. In 1980, Ted Turner created CNN and I kind of paid attention to that. Then I had a client that was a professor of theology at American University at the Wesley Seminary there, and he had talked to... the local ABC affiliate, Channel 7, provided him airtime on Sunday mornings to do a series that they called Children of Abraham, which was about the three great religions of the world and how they traced their origins back to the patriarch Abraham. So it was a very non-denominational, kind of intellectual look at the growth of these three religions, and he had people from all three faiths there. It was a great hit. It was written up well in the Washington Post and people really enjoyed that series. It was a thirteen part series. So, he asked me, through some connection I had with one of his board members, if they could get that distributed on public television or some other way. This would have been in late '81 or early '82.
LAMB: Again, that was Philadelphia?
HENDRICKS: No, that was here in Washington.
LAMB: It was Channel 7 here in Washington?
HENDRICKS: Yeah, Channel 7 here in Washington.
LAMB: And it was only seen here in Washington?
LAMB: And how long was the series, again?
HENDRICKS: The Children of Abraham was a thirteen part series, as I recall, and it was broadcast on Sunday mornings and the professor was Ed Bauman and he was at Wesley Seminary at American University. So I had some clients at the time through the mail, and then I had a number of non-profit organizations in the Washington area that were consultants, and his group was one of those. So it was in the process of saying, "I don't know much about it, but I'll see if we can't get this on public television or if there's some opportunities on cable." So it was in researching cable – I remember it was in April of '82 – that I saw some of the trade magazines. I think it was Cablevision was around; I just remember getting some of the trade magazines and reading about cable television. It was at that moment that I thought, well, there really is not a good place for this on cable, but there ought to be, and that was in April of '82 that I then started thinking there should be a channel.
LAMB: Who did you talk to? Did you sit around with anybody at that time and kind of strategize about there should be a channel.
HENDRICKS: No, I remember talking to my wife about it. She was the first person that heard the idea. I asked Maureen, I said, "What would you think if there was a cable channel that was just all documentaries – had everything from science and history to nature, human adventure. It would have things that would trace our routes in civilization, like what Ed Bauman's trying to do with this series." I remember she said, "Well, if this is such a great idea, why isn't someone like Ted Turner doing it?" I remember that was her first reaction.
LAMB: What was she doing? This was '81; you were married then.
HENDRICKS: Right, we were living in Greenbelt because that was close to where she worked at that time. She worked for a company that was on contract to Goddard Space Flight Center – Computer Science Corporation, CSC.
LAMB: Did she watch television at all?
HENDRICKS: Yeah, she would watch the Ascent of Man series with me, and she would watch NOVA on PBS, so we would typically watch a lot of PBS product and we were news watchers. It doesn't mean we don't love drama; we love drama on television as well, but it just seemed to be those were the great moments that we had around television.
LAMB: No kids yet?
HENDRICKS: No kids.
LAMB: And how were you doing financially, the two of you together? What kind of a living did you make?
HENDRICKS: We were upwardly mobile professionals.
HENDRICKS: Yeah. She had a good job on contract with NASA. She had her master's degree from Johns Hopkins and she was a computer scientist, a software specialist, and so with two incomes we were doing quite well, and then I had the income from the consulting business, which you never had enough because you always wanted to hire another person so you're kind of living on the edge, but it was enough to get by, and I though pretty comfortable.
LAMB: Who's the first person you talked to?
HENDRICKS: Well, my wife and then it was just kind of a circle of friends, and then probably the first professional person I talked to, I went to see Winfield Kelly, who was the local cable operator. He had won the franchise – he was the former county executive – and he had won the franchise to wire, after he left office, Prince Georges County. So Storer Communications was the company that was wiring Prince Georges County, so I went to talk to him about it.
LAMB: Now, Prince Georges County, for those listening, abuts Washington D.C.
HENDRICKS: That's right.
LAMB: So, it's right in the area.
HENDRICKS: So I talked to him, and he was encouraging. It wasn't like he said this is something that won't work. He said, "We need content." So he recommended that I fly down to Florida – I can't remember where in Florida, I think it was around the Fort Lauderdale area...
LAMB: Storer people?
HENDRICKS: Storer – to meet with Peter Storer and Ken Bagwell – I remember those two names – to talk about the idea, and that meeting was like a month away, and I was so excited. And so I spent time working, researching because I knew they would ask all these questions and I knew the fundamental risk. By this time, this was late summer, so I'd thought through the idea from spring through the summer, so by the late summer I'd met Winfield Kelly. I think the meeting ended up being in December of '83 down in Florida, but that was my first...
HENDRICKS: Yeah, this was '83.
LAMB: You're how old then?
HENDRICKS: Well, I was born in '52, so in '83 I was 31.
LAMB: Do you remember the meeting itself?
HENDRICKS: Yes, oh yes.
LAMB: In Fort Lauderdale.
HENDRICKS: This was in Fort Lauderdale. Winfield Kelly came down; he went with me. It was not a good time for them. They were very close on some of their bank covenants, I recall from the conversation, and cable was regulated at the time. They were having trouble adjusting their rates. They were very encouraging, extremely encouraging. I remember one thing that came out of it, which was something I was working on. I'd incorporated in September of '82, and I didn't know what the brand name was going to be; I just knew it was going to be educational. So I incorporated as Cable Educational Network, and they said, "You've got to come up with a better name," and I said, "I know, I know, I know." So on the plane on the way back – this was in December of '83 – it was when I wrote down five words: Horizon, Vista, Discovery, Explorer, and there was another one there. But I remember by the end of that trip I had circled the word Discovery because I thought everybody is attracted to that word. We were always very pleased with ourselves when we discover something, and it could work for history programs as well as science and technology programs. Discover the future, discover the past, so I felt that that was the word that had to be the cornerstone of the name, and so from that point was when I used the word Discovery Channel to talk about the concept.
LAMB: Can you remember whether it was Peter Storer or Ken Bagwell who said you've got to have a better name?
HENDRICKS: It was their marketing guy and I wish I could remember his name, but it was the marketing guy that was in the meeting. They had about five or six people in the meeting and the big question was if this was going to be a pay service – and that's what I remember Winfield Kelly was kind of urging me, "Why don't you make it a mini pay service, three or four dollars a month – or was it going to be a basic and be very, very affordable, almost next to nothing to the consumer and have more widespread coverage. And so those were the two thoughts I came away with. I knew those were the two economic models: either be pay or basic.
LAMB: How long was the meeting?
HENDRICKS: It was probably about three hours.
LAMB: And did they all stay there the whole time?
HENDRICKS: They all stayed there and listened to it. I was presenting the programming concepts, the schedules.
LAMB: Did you have a business plan then?
HENDRICKS: I had a business plan. This was... I'm trying to think now... let's see, it was September of '82 was the time I incorporated, and I know this meeting was late '83, so what I left out of the story was this almost year long process of doing the business plan, still doing my consulting business, but being fascinated and almost obsessed by this concept for a cable channel.
LAMB: Who was helping you with the business plan?
HENDRICKS: There was a fellow named Tom Newman, an interesting fellow, who I had met, who was on the board of one of the groups that I was consulting with, and I knew that he knew venture capitalists. So I remember him buying me a book at the bookstore, and it was as simple as Writing a Business Plan. I knew how to write and I knew how to do research and that was kind of my whole planning in college and also in writing proposals and grants for colleges and universities and clients. The task was to try to put down these ideas to paper and be able to submit a formal application – so it wasn't a strange process – and then do follow up meetings to try to convince people to part with their money to support your project whether it was a university project or another project. So this was something that was a little different in that this was a private enterprise and it was creating a business plan, but the communication skills were the same. It was writing it up, making sure it was well researched so when you said people will watch this, you had the ratings data that could support that. That's what I discovered in that year long process of doing the business plan, that the top 24 of the top 25 shows in PBS's history weren't dramas or performing arts, but were all these documentaries. The ratings when – NBC every now and then would do a documentary, they called it the NBC White Paper – I remember they got good ratings, but these were just kind of little islands within the network schedules, but I knew that if you could start a channel and it was consistently in this format that people would come to it and watch.
LAMB: Now how much in your head at that time was "I'm going to make a lot of money"?
HENDRICKS: I don't think that was part of it. I remember thinking I wanted desperately to be independent and to be in business for myself, but this was something that just captivated me because I thought there was a real need for it. It was something, and it's always a classic mistake by an entrepreneur – sometimes just because you want something or you think there's a need for it, is there a lot of other people... a lot of people will solve a problem, but it's a problem that doesn't meet a real fundamental consumer need, but I really felt like television had so much to offer and that it hadn't in the past. We were kind of victims by what I call the triopoly of ABC, CBS, and NBC for so many years, those were the only three choices and they program for the masses. Unfortunately, when you program for the masses, it's the lowest common denominator programming that will typically get the 30-35 rating at that time. What got ignored was programming that could enlighten people and inspire people. That's what I saw was kind of a huge promise that cable television offered.
LAMB: Did you have children yet?
HENDRICKS: '83, March 1st, was when my daughter was born, Elizabeth.
LAMB: Any impact on your whole attitude about what you were doing?
HENDRICKS: Well, there was a lot of stress at home because I remember having to travel a lot, especially the first step in December of '83 was getting off and starting seriously – after I'd done the research for the business plan – was starting to meet with people who could help fund the venture because it was clear it was going to take a lot of money. I mean, looking back on it it was not a lot of money, but at that time it was all the money in the world.
LAMB: How big was your business plan? Do you remember, just in pages?
HENDRICKS: Oh, I remember probably about 40 pages of text and then maybe that much of appendix material.
LAMB: Did you write it yourself?
LAMB: In your original plan, how many years out did you...?
HENDRICKS: Ten years.
LAMB: And what was your initial capital that you thought you were going to need?
HENDRICKS: I thought that we could get to break even in about three years with 25 million dollars in funding.
LAMB: You needed it up front – 25 million?
HENDRICKS: I didn't need it all upfront, but I needed about a million dollars a month in the beginning that would then slowly go down to by the third year, starting that year, needing about $200,000 a month. The difficulty was cable was regulated and it was hard to get a license fee from cable operators, and so the '84 Act came along and there was lots of debate in late '83 leading up to the '84 Act that looked like the signs were right for cable to get deregulated where they could charge what the market would bear, and then be able to support content. So, as happenstance, that's what happened. So, in comparison, years later when we started Animal Planet, that was a 300 million dollar investment. So, that's why I say the 25 million is kind of a paltry sum when you think about it today, but again, at that time it was all the money in the world. I remember checking what were going to be the fixed expenses just to be a cable television network an that first big expense is the satellite transponder, and even at that time, you could buy one for 12 million – that's out of the question – or you could lease one for a monthly lease of I remember Westinghouse had one that was $337,000 a month was the lease payment, and that was a big part of that operating expense line that we would have to have, and then add to that the staff, the programming. On programming I was fortunate because I knew that these documentaries were out there. The BBC, everything that they had done they had put on 16 millimeter film because an after-market was renting those films, whether it was about World War II or politics or whatever, colleges and universities could rent them, so I knew there was content available, and I was able to meet with representatives of the BBC and for them it was just found money. The U.S. cable rights was a right that had never existed, and so I remember doing a small contract where I said, "I'll pay you $25,000 to get an option on 500 hours that I will license from you at $2,000 an hour." And so for them, it was a million dollars that was just found money and for me it was the basis of a business, a cornerstone of content that I could count on. So there were a number of libraries like that. There was TV Ontario in Canada. I looked at English speaking markets around the world – Australia, Canada, and the U.K. – where there was a higher value that had been put on documentary entertainment in their television systems, and certainly that was the case in Canada as well as in the U.K., and there was a good natural history library that I remember we could tap into that was in Australia.
LAMB: Now, in that first business plan, how much of it was going to be yours? How much of that company? Percentage wise, in terms of ownership?
HENDRICKS: Well, the ownership early on was you go from owning 100% of something, but that moment that you start selling stakes you go down from there. So that first trench I believe we were selling 40% of the company for something like six million dollars was the attempt.
LAMB: And you had the 60% at that point?
LAMB: You alone, or were there other people around you?
HENDRICKS: There was Suzanne Hayes, a person I had met, she actually sold me a computer but she always wanted to be in television, and she was a bright person who had recently graduated from the University of Virginia and I hired her, and she was our head of programming. It was her job to go and meet with the BBC and all these people. So all these people I gave little pieces of stock to, so there was a core of about three or four people in the early days that had some stock, and then that stock was ultimately cashed out in '89 because we wanted to keep the company private, and that's a little further into the story, but there were some early people.
LAMB: Who were the others, do you remember?
HENDRICKS: There was a guy named Bob McCleary. Bob McCleary was very important in that he worked at the University of Maryland, and he was head of the Radio, Television and Film department, and he was another person that I talked to early on to say, "Do you think this would work?" Bob was very, very supportive of the concept and said, "If you can get funding for this, I'll join you." So he started as a consultant and as soon as we got our first funding he left to be our vice-president for programming, and he brought the television credentials that I didn't have. I needed to have people who really knew how to produce television to have a chance of raising funds for this. I picked the model not pay because I wanted it to get more homes, so I thought let's go the basic model. It will be a struggle to get a license fee, but I think that companies will want to be associated with products like this. I remember on television at the time, General Motors was very supportive of programming on PBS, and I thought, well, maybe in their advertising they would like to be associated. Joe Maddox was someone who worked on Madison Avenue and was a good ad salesperson, and so he was part of that original team as well.
LAMB: Are any of those original team members still with you?
HENDRICKS: There are, of the founding team, there are about nine who were present on launch day. I think there are still nine in the organization. We have about 4,000 employees now, but there are nine that are still... We only had nineteen employees the first day when we launched on satellite on June 17, 1985.
LAMB: And you were physically located where?
HENDRICKS: Landover. Again, I had stayed in that area and there was a new little office complex that was right at the Metro station there in Landover and New Carrolton, and that was where we were located.
LAMB: Go back before you had your meeting with the Storer people in Florida in December of '83, had you shopped your business plan to any other companies?
HENDRICKS: No, they were really the first pitch.
LAMB: Why them? Why them first?
HENDRICKS: Well, it was because of the introduction through Winfield Kelly, and I didn't have the connections. Now, this fellow I mentioned, Tom Newman, he introduced me to someone named Harry Hagerty, who was a local stockbroker and had connections.
LAMB: Here locally?
HENDRICKS: Here locally, he had an office down in Georgetown. I think he's still there. I talk to him about once every two years or so, and Tom Newman's advice to me was, "John, you've got to get a real smart New York investment banking firm involved to help you raise 25 million dollars." I kind of knew that from all that I read, too. At some point we had to have venture capital and there had to be an involvement of an investment banking firm. Tom Newman got me in touch with Harry Hagerty, and Harry Hagerty listened to the idea. He said, "Well, I know a few people at Allen and Company," and that's the investment banking firm that Herbert Allen...
LAMB: Herb Allen, yeah.
HENDRICKS: So in the spring of '84 was what I think of as the second big round of meetings. I just kind of lived in New York for about two or three weeks trying to meet everybody I could in the investment banking firms. I met people from Oppenheimer, Merrill Lynch, but Allen and Company was the place that I got the best reception.
LAMB: And you're still 31 years old, never ran a business except your consultancy, you just had your first daughter – your first child, your only daughter – is your wife still working?
HENDRICKS: Yep, she's still working.
LAMB: Now, how are you feeling about all this? Was there an 'I'm drowning' factor at any point?
HENDRICKS: You're excited by the possibility, terrified of failing.
HENDRICKS: Because the moment you get someone else to leave their job, a Bob McCleary leaving a job as chairman, the head of the Radio, Television and Film department at the university, to leave his career to join you...
LAMB: When did he do this?
HENDRICKS: It was after that first funding. It was in '84.
LAMB: Oh, so he didn't do it in '83.
HENDRICKS: No, no one jumped... I was the only one that jumped full-time.
LAMB: When did you jump full-time?
HENDRICKS: I did that in... I really kind of left the consulting business and the people that were in there, Peg Hall, Eddie Peabody, probably late '83 I just stopped thinking about that consulting business all together and just devoted all my energies to Discovery. Even though I got a no on the funding request, the investment request down at Storer, they were so encouraging. They just did not have the resources to invest at that time.
LAMB: Did they give you that no on the spot?
HENDRICKS: Yeah, they said that they just could not provide the funding. They said they could be a customer, they would love to distribute it, they would even work with me on trying to design a license fee structure if the industry was deregulated, which was, again, on the horizon. So it was just enormously encouraging.
LAMB: Now, how much money did you want? Did you want six million from them that day?
HENDRICKS: No, I was looking for anything just to kind of get through the next year. I felt it would probably take another 12 months to 18 months to get ready for launch, so I was just looking for seed funding at that point, maybe a million, a million five, something like that to try to get through the next year.
LAMB: So you're sitting there with Winfield Kelly, who doesn't work for you. Did he ever have a chunk of this, by the way?
LAMB: He's not in cable anymore, is he?
HENDRICKS: No, he's not.
LAMB: So you're sitting there alone with Winfield Kelly and the group from Storer. Nobody else is on your payroll?
HENDRICKS: I'm trying to think... Bob McCleary may have made that trip with me. Bob McCleary may have gone down.
LAMB: So you get a no and you fly back home.
HENDRICKS: Right, but I'm encouraged. I just at that point, which is interesting, I thought well, the cable industry itself is not going to be a source of funding. My first thought was this is something that is going to help drive cable, I hoped, and that they would be a logical source of the venture capital to start it. So that was kind of the negative, but very optimistic on "Yeah, we'll carry it." And they were a large cable system, one of the larger ones, and I knew that was a key ingredient, so I had a real potential customer here that would actually carry and talk to other people about it and endorse the idea of a documentary channel.
LAMB: So what did you do next?
HENDRICKS: I came back and then met with Harry Hagerty, who set up a meeting probably in the February-March timeframe of '84 in New York with Allen and Company. Harry took me to a bunch of places. I remember going to lots of places in New York and Harry did get a piece of the company. So he was an early believer and at a time when $10,000 was all the world to me because that would pay for hotels and plane trips and things like that, Harry invested $25,000 early on.
LAMB: So he was your first investor?
HENDRICKS: I think Harry was probably the first person that wrote a check in the Washington area. He wrote it during that period. I think he was optimistic that... he heard that first meeting though, he was there with that first meeting at Allen and Company and he heard their support, although I didn't get a check, and so he just knew that I had to stay alive.
LAMB: So the timeframe again, your meeting in March of '84 – you started first programming when in '85? What was the date?
HENDRICKS: June 17th.
LAMB: So you're still about 16 months or so away from starting a network. In March of '84 do you have any employees beside yourself?
HENDRICKS: March of '84, probably four at that time because I did have an office space at that time. I did get a small office and I'm thinking there were around four or five of us. Maureen's, my wife's, brother had recently graduated from the University of Connecticut with a finance degree. He offered to kind of be helpful in any way, so he was probably the first person on the payroll of Discovery.
LAMB: And you, and who were the other two?
HENDRICKS: Suzanne Hayes, Bob McCleary, Joe Maddox hadn't joined us, there was a guy that I worked with at the University of Maryland in PR, Ed Peabody, was there, and that was it.
LAMB: Allen and Company told you what at that meeting in '84?
HENDRICKS: We met with three people there. It was two principals of the firm. I had not met with Herbert Allen yet. I met with Richard Crooks, Thalia Crooks and then their smart MBA student who was really looking at this, and he was a bright young fellow from the Philippines and his name was Manuel Rojas, and he was the one who would dig into all the questions of would this venture work. So, those were the three people and this was in that March timeframe of 1984.
LAMB: Arts and Entertainment, ESPN, MTV, The Weather Channel, all of those were existing at that point.
HENDRICKS: Yeah, and then there was a new one, Cable Health Network, that was starting up too. I remember they were kind of in the mix, but nobody had really nailed this niche and I was desperate.
LAMB: Did you get a sense that somebody was about to nail it?
HENDRICKS: Yes. Two things in that '84 time period were troubling me. One, I'd heard rumors that CBS was going to cancel or get out of their cable venture, CBS Cable.
LAMB: Had they started?
HENDRICKS: They had started up, and this was kind of a pet project of Bill Paley's, and it was performing arts, which is a valuable part of television programming, but if you're looking at that to be hugely commercially successful on television it just kind of loses something on the small screen. So they weren't doing well on ratings, they weren't doing well on attracting advertising support, and so management wanted to kill it. Paley, I think, was either out or retired at the time, and there was a guy named Tom Wymans who was president. He wanted to kill it, but the people in news divisions – and I heard rumors of this – at CBS said, "Don't kill it. Turn it over to us. We'll program it with news and documentaries."
LAMB: By the way, just another note - in '84, CBS Cable is there and you're a little bit looking over your shoulder at CBS Cable. How much can you remember of the industry saying, "We don't even like CBS. We don't want them in our business," versus "Here is struggling John Hendricks. He's not a part of that."
HENDRICKS: No, I didn't hear that. I just thought they were CBS and had all the money in the world and if they wanted to do a Discovery type channel, or if any of the networks did, they could have easily done it. That was my fear.
LAMB: But did you find people as you went along the way saying, "Here is young John Hendricks," could you see it in their eyes, "This is the kid that's got an idea."
HENDRICKS: Yeah, I think there was some of that that it was just totally unaligned with any of the broadcasting powers, so there was some appeal to that.
LAMB: Did you see that in the cable industry itself?
HENDRICKS: I was really talking to the cable operators at the time more about trying to get carriage. Again, I didn't think of them as prospects until later for investment. The meeting at Storer made it clear to me, they're struggling to build their plant at that time and they didn't have a lot of residual capital that they could expend on the content side of the business.
LAMB: Who else along the way there, early on, from the cable business said, "I'll carry that."
HENDRICKS: Storer... It wasn't until we put up a sneak preview during... this was late '84. I'd raised enough money from Allen and Company, New York Life Insurance Company, a few local investors here in the Washington area led by Harry Hagerty, I had enough money to get some content that I cleared to go up for sneak preview week in December of '84.
LAMB: How much television did you put up there?
HENDRICKS: Well, I was able with repeats to put up a full week's worth of scheduling. It was really a sample schedule of what Discovery would look like.
LAMB: 24 hours?
HENDRICKS: Yep, and it was coming after the Western Show, so my first cable tradeshow was the Western Show in 1984. That was my big pitch to go there – we had a little booth. To this day, every time I got to a big tradeshow I always make a point of going not where the big booths are, but going over there where the tables are, with the people with little backboards up, where there are two or three people and they have a little space because a lot of times that's where these ideas are. I remember first seeing groups that were thinking about DVR technology and others there, but that's where we were. We were just kind of off by ourselves with some of the technology suppliers and equipment suppliers.
LAMB: So how many employees would you have had in December of '84?
HENDRICKS: There were only four or five of us still.
LAMB: In December of '84?
HENDRICKS: Yeah, in December of '84. Because I still needed about five million to launch. I knew I needed to have at least five million. That would give me about five months of operating capital. I kind of gave up on the thought that I was going to find 25 million dollars, so then my whole goal was can we get at least a chance to go up with five million dollars. Could I convince some satellite supplier to do a short-term lease? I was able to get that, but a lot of it was contingent on could I demonstrate that I could get content at a reasonable cost. I wouldn't have to, in the early days, originally produce, so I knew I could do that and that's what I was working on in the programming. The other was, even if you've got what you think is the greatest idea in the world, could you get it distributed on cable systems? Would cable operators think it's a good idea? And that's what that Western Show was all about. To tell people about the concept for Discovery Channel we invited as many cable operators back to our hotel suite at the Hyatt Regency – that's where we stayed at at the Western Show and it was in Anaheim. So we had a great promo tape that we were able to do with the support of the people at TV Ontario and then their motivation was, number one, they thought it was a good idea, but if we were successful we would buy their content and they would have another revenue stream that could help support their original productions up in Canada.
LAMB: So they put a promo tape together for you. At no cost to you?
HENDRICKS: No, it cost $65,000 – you're reminding me of the history by asking these questions – I remember getting COM Sat General. Through another introduction I met a guy who was at COM Sat and he convinced them to provide a sponsorship support of $65,000 that really sponsored that tape. Now, it was done up at the production facilities at TV Ontario and they contributed at no cost a lot of their library footage from their science programs and nature programs that really made the tape possible.
LAMB: Where did you get the space on the satellite to do your preview week?
HENDRICKS: I was introduced to Harlan Rosensweig at Group W Satellite Communications, which at that time belonged to Westinghouse. I flew out and talked to Harlan and he had a transponder and was willing to take the gamble knowing that I wouldn't have the whole funding to fulfill a ten-year contract on a satellite lease, for example. But it was sitting there, so it was something he didn't want to have to continue. As these satellites go up, they're either launched by, at that time, RCA or Hughes, and Westinghouse had done a primary lease and they were trying to sublease the space for these transponders.
LAMB: Did he charge you anything?
HENDRICKS: He provided at no cost the transponder time for that week in December, and that was a big gift because that was probably worth $60,000-$70,000.
LAMB: Do you remember what satellite it was on? Did you end up going up there on that satellite?
HENDRICKS: I don't want to get this wrong, but I think it was a Westinghouse satellite. I can't remember the transponder number.
LAMB: So his gamble turned out good for him.
HENDRICKS: Yeah. Now here's what we did. We sent out to all the cable operators, because I had to really document that the cable operators would carry this, I sent out a survey form that said, "Watch the transponder on Galaxy 5 Satellite (I think it was) for this week, and if you would carry this program, if you think you'd carry Discovery Channel, check the box here. If you would consider paying a license fee less than a nickel," somewhere around a nickel, beginning in '86, so I'd give them a free period, "check that, and then send it back, not back to me, but back to Arthur Anderson, our accountants." And so we sent this out to...
LAMB: How many?
HENDRICKS: I remember how many came out. I think we had a general mailing to the industry, I remember we got 900 positive responses back because then the industry was quite diverse. It was before the era of consolidation so there were a lot of cable systems.
LAMB: Would that have been 900 cable systems or 900 potential corporations?
HENDRICKS: I don't think anybody signed on behalf of the whole MSO. It was generally cable systems. They served a little over four million households, those cable systems, and so that was pretty compelling evidence that in only a week's worth of marketing that we would get that many positive responses.
LAMB: Now what did you have up there? Give us some idea of the programming you put up there that first week.
HENDRICKS: It was primarily a selection from the BBC and from TV Ontario. It was programs – I remember there was a great TV Ontario science show on Einstein that was up there. There was a BBC show that was part of the mix – it also was part of our launch date package – which was called Iceberg Alley. It was just a show about dealing with the icebergs in the North Atlantic and about how they develop and how ships have to avoid them. We had lots of nature programming from the BBC, they provided a lot of content from their natural history unit, as did TV Ontario. So it really did have the full gamut of what we saw as the Discovery Channel: science, nature, history, travel, human adventure, and I was very careful to try to have all of those genres within documentary entertainment portrayed during that sneak preview week, as well as we worked from our promo tape, we had logo development and so we were able to develop, I think, quite good interstitial material so that it looked like a polished week's worth of programming.
LAMB: Can you remember anybody coming up to you saying, "Discovery, what a great name," or the opposite?
HENDRICKS: No, everybody responded very positively to Discovery.
LAMB: Can you remember individuals back in those days who got particularly excited, besides the Storer people, when they heard about the concept? People in the business, people you give gold stars to today for being with you from the very beginning?
HENDRICKS: There was a guy who came by our booth, I remember he was the first representative of a big cable operator during that time period – remember it was about a year since that Storer meeting – a guy named Barry Elson with Cox. Barry came up and he said, "You guys are going to make it. This is a great concept." I just remember those words. There was a guy in the advertising world, he's since deceased, but his name was Bart McCue, and Bart came by and said, "This is going to work." It was those little things that just kind of kept me going, but I was, at that time, concentrating on trying to make these presentations, get people to come by our suite later that evening and we'd show that promo tape and then tell them, "In the mail will be a survey form and we've got this thing up on satellite a little later this month. Take a look at it and if you really think you would carry it, send that survey back to our accountants and that will help us with our fundraising."
LAMB: Do you remember people in those days saying "This is not going to work. I can't support you. This is too much money. No one's going to watch this stuff."
HENDRICKS: Not really. Cable operators generally responded favorably. It was people in the broadcast world that were so discouraging.
LAMB: Do you remember individuals?
HENDRICKS: This is unfair, but old Bob Wright... because Bob says he was only there 30 minutes when I came in to see him, but Allen and Company arranged for me to meet with Bob Wright and he was at Cox and then he went to GE Credit Corporation, GE Capital, and then was made president of NBC. Shortly after he got there, I had a meeting with him. He couldn't get it. He thought that it was going to be too tough to get ratings and make a business, so that was a decline. We chatted about that later and I think that was something that he wished he had time to really take a different look at. But we got turned down at meetings by Disney, the CBS people weren't interested, they were trying to get out of CBS Cable. Allen and Company, as I started meeting with them in the March timeframe of '84 and throughout that year, they tried to say here are the kinds of hurdles, you said all these things in your business plan that you can get programming, we need to see more evidence, try to get option contracts so that we know if we place money into this venture that you can execute these contracts with the BBC and TV Ontario, get some hard evidence that you can get distribution, and then that third leg of the stool would be advertising, and we also met with advertisers during this '84 period. So, '83 was a time of doing the research in isolation as an entrepreneur, doing the business plan. The '84 timeframe was trying to provide evidence that what I'd said in the business plan could come true; that advertisers would be supportive. So I was trying to get contingent commitments. I would say, "If we can put this channel up, get these kinds of ratings, would you, General Motors, be interested in advertising." I'd always have good meetings, it would be generally encouraging, and then I would follow up and say, "Could you put that in writing, get me a letter of intent," and they'd generally say, "Well, I can't give you a letter of intent, but I'll give you a letter of support," but all of that was very helpful in finally getting that fourth piece of the puzzle, which is in a way the most important, which is getting the funding, the capital together to actually then launch the venture.
LAMB: So let's say we're at January of 1985, you had Elizabeth in '83?
HENDRICKS: Um-hmm, Andrew came along that prior fall, he was born October 29 of '84.
LAMB: Your wife still working?
HENDRICKS: When Andrew was born it was too much. She then started staying at home. So at that time, we lived in Annapolis and so it was about a 30 minute commute into the office that I had there at New Carrolton, the Landover Metro station.
LAMB: How are your own personal funds at this point?
HENDRICKS: Tough. I mean I had totally neglected the consulting business; all my energies were into this new venture, which didn't provide, really, a paycheck, and so I was living on what I had been able to save from those years of my consulting business, which was successful enough to where I believe I had about, at one point, probably $30,000-$35,000 that I saved and could invest. I guess the biggest step Maureen made with me was when we went down to, at that time it was Suburban Bank which morphed into Sovereign Bank and then today it's Bank of America, but they provided a second mortgage loan. I remember that. That was $100,000. I didn't have that much equity in my house and the general manager of the local branch was kind of gambling a little bit with me and made a loan that really helped. So that was everything I had, about $130,000, everything I could borrow.
LAMB: In your life, that's all you had?
HENDRICKS: Oh, yeah, that was it.
LAMB: And by the way, who was that banker who helped you out? Do you remember his name?
HENDRICKS: I can't remember his name. He's since left the bank and I can't remember his name.
LAMB: So we're at '85, two kids, mortgaged to the hilt.
LAMB: Who comes along at that point and says here's some real money?
HENDRICKS: In the spring of '85, I had by that time three champions: Harlan Rosensweig at Group W – he had seen all the promo tapes...
LAMB: And gave you the free time.
HENDRICKS: He gave me the free time; I showed him the results of what that was. I had also Herbert Allen, by that time I had met him; and then David Glickstein at New York Life Insurance Company.
LAMB: For advertising or for...?
HENDRICKS: New York Life had a venture fund. They had set aside 50 million dollars to put in new ventures, new start-ups, not just investing with established companies. When Allen and Company committed to be my investment banker, that was a nice message for New York Life Insurance Company and they said, "Well, if Allen and Company will put in some money, we'll put in some money." So Herbert committed funding in the spring of '85 to get ready for launch, and again, the task was 5 million dollars and we were able to raise during that period 5 million dollars. Now, I had raised about $50,000 to $60,000 from people like Harry Hagerty here in the Washington area that just kind of came in to assist the $130,000 that I had available, but when Herbert committed to – he put in $250,000 I remember. I remember him writing a check for $250,000 and I thought how can anybody write a check for $250,000? I remember bringing it back on the Eastern shuttle, in my wallet I had a $250,000 check. So that was in the spring of '85. When he did that, he also committed to calling some of his contacts who relied on him for investment advice and he raised 2 million kind of quickly in that fashion from people who would... Oh, we had people like Bob Strauss, a friend of his, former head of the Democratic Party. I remember Ray Stark, the producer. So he had a pretty eclectic list of about 15 people, each of whom would put in $50,000 or $100,000, and they were part of the Allen led group, and then New York Life Insurance Company agreed to put in a million, and then they agreed to put in a further million should the launch go well. Then Westinghouse... Allen and Company, I remember the meeting where we convinced Harlan to take some stock if we ran out of funds to pay that transponder. If he really believed in it, why would they not take some stock? And if Allen and Company thought it was a good investment, why wouldn't they?
LAMB: Did they?
HENDRICKS: And they did.
LAMB: Your original transponder costs were $330,000 a month?
HENDRICKS: Right. Original burn rate was about a million, a little more than a million dollars a month, maybe a million one. So I knew with that five million dollars, we were going to run out of it pretty quickly.
LAMB: Let me just once again, the actual launch date was when?
HENDRICKS: June 17, 1985. It was around midday, as I recall, that we went up on satellite.
LAMB: Who were the first cable operators that you remember that actually signed a contract and said, "We're going to put his on all the systems."
LAMB: They actually follow through.
HENDRICKS: Yeah, Storer followed through. A big supporter was a company called ATC. Tryg Myhren really responded well to the contract. He was actually the first big cable operator ever witnessed in a meeting with me signing a contract. He signed it for more than just... you see, a lot of the smaller systems, some of them had delegated power where they could sign a contract. A lot more of them were beginning to be more centralized where they said, "We'll carry it, but we've got to get the home office," the MSO, the multiple system operator, "to sign off on it."
LAMB: Who do you remember being slow on the support in the industry?
HENDRICKS: I couldn't seem to get a good meeting in the early days with TCI. As luck would have it, they were one of the first to respond to the investment opportunity, but I just had a hard time navigating my way through to try to get to the top of TCI.
LAMB: When did they respond to the investment opportunity?
HENDRICKS: Well, we ran out of money, and so...
LAMB: At what point?
HENDRICKS: This was around the November, December timeframe, we knew we needed another five, six million dollars to go another...
LAMB: You're talking about '85?
HENDRICKS: Yeah, this was in '85. So, Allen and Company had a number of prospects and...
LAMB: Before you do that, just a second. When you launched in June of 1985, how much of the company did you control?
HENDRICKS: I think probably around 25% at that time.
LAMB: So your number keeps going down.
HENDRICKS: Oh, yes, it keeps going down. As an entrepreneur, you have to make those decisions of do I want to take this money and see the dream happen knowing that they're taking a big risk and they want equity for this, or do you try to be greedy and try to hang on and never see the idea take place.
LAMB: Who was on your board of directors and what kind of a corporation was it?
HENDRICKS: Well, it was a Maryland company at that time, so we still were a Maryland incorporated company, Cable Educational Network. We hadn't changed the name of the company, but we were trading as the Discovery Channel. Dick Crooks was on my board, from Allen and Company; when Harlan Rosensweig made that commitment to take equity, he also got a seat on the board; and David Glickstein from New York Life Insurance Company was on the board as well; and then I was chairman.
LAMB: If you had 25%, did anybody else have a big chunk?
HENDRICKS: No, at that time I was the... well, no, New York Life Insurance Company I think was the largest shareholder at that time, or getting close to it because they had put in the most as a single unit into the company.
LAMB: The day you launched, how many employees did you have?
HENDRICKS: We had nineteen employees the day we launched.
LAMB: And how many subscribers saw it?
HENDRICKS: 156,000 subscribers had it, as best we can tell, on the day that we launched.
LAMB: The biggest city that first day?
HENDRICKS: I would guess it was somewhere in the Midwest. We weren't on the air more than ten minutes that I remember my excited assistant coming in saying, "John, there's someone on the line who's watching this in Kansas," and I thought that was a miracle. Anyway, it was a teacher, and she wanted to know if she could get Iceberg Alley that she could use in the classroom. I remember our first consumer call was not from someone at home, but was from a teacher who asked that question.
LAMB: What did you say to her?
HENDRICKS: Well, we said, "We don't have the rights, but we'll work on it," because we knew enough about rights that that was deemed to be a public performance. And so it was later that question by that teacher and others led us to create what we called Assignment Discovery where we cleared as much of our material for use in the classroom free of charge as we could and actually dedicate, and still do today, an hour's worth of programming in the morning that's free for teachers to just capture and take. We program that by subject area.
LAMB: How much publicity did you get on launch?
HENDRICKS: Not a lot of publicity in newspapers and general publications, but we had some good coverage, I thought, in all the trade magazines, you know, Cablevision, Cable World, they covered the launch.
LAMB: How many channels of programming were on cable in 1985?
HENDRICKS: Well, I remember we were kind of competing for shelf space with everybody, but the newer entrants were MTV was starting a second channel, VH1; American Movie Classics around that timeframe was coming on board and they were competing pretty aggressively for channel positioning; Headline News was still trying to get a lot of carriage at that point. And so those were the ones I can remember that we were kind of all the time running into trying to get cable carriage.
LAMB: How were you feeling about everything on launch day yourself? Do you remember?
HENDRICKS: I was just very excited, hoping it would work. I still had, kind of in the back of my mind, now I've got nineteen people and now I'm responsible for their paychecks and their mortgages and their car payments, so there was a lot of that, and I knew all the details of how precarious the company was, and try to put on as positive a face, but then strange things started happening. As we got into the November time period, all of our employees remember this, we couldn't get listed. It was very hard for us to get into TV Guides and get in the papers to get our programming, so we started a little magazine called the Discovery Channel Magazine and it had our viewing guide. Well, we found that people were subscribing to that, $11 a year subscription. In the November, December, and January – November, December of '85 and January of '86 – that was paying the payroll. Those checks coming in, $11 from these people, because later we abandoned the magazine because as you're more successful every TV Guide and everybody carries all your listings and there wasn't the demand for it as there was in the early days.
LAMB: How many subscribers did you have at your highest point?
HENDRICKS: At our highest point, I believe about 200,000.
LAMB: $11 a year.
HENDRICKS: $11 a year.
LAMB: Real money.
HENDRICKS: Yeah, exactly.
LAMB: Before we go any farther, look ahead at some time marks. When did you start your second channel, and what was it?
HENDRICKS: Well, we acquire The Learning Channel. It had actually gone on air before Discovery, and so that was our second effort.
LAMB: What year?
HENDRICKS: That was in '91, that was in February of '91 that we completed the acquisition, and then had the idea for a nature and animal channel, which became Animal Planet, and that was in '95, got that on air in '96.
LAMB: And your digital channels?
HENDRICKS: Shortly thereafter, we launched, in late '96 and throughout '97, our full slate of digital channels.
LAMB: As of 2003 this year, how many total channels do you run?
HENDRICKS: Today we transmit, domestically, about 13 channels. Let me see if I can remember them. Our five lead analog services: Discovery Channel, The Learning Channel, Animal Planet, Travel Channel and Health Channel. So, all of those are analog services that should be all fully penetrated within about 2-3 years. At full penetration right now is Discovery Channel, The Learning Channel, and Animal Planet is almost full penetration.
LAMB: And in the year 2003, how many employees do you have?
HENDRICKS: Including retail, because we have some 130 stores nationwide, we have 4,000 employees. About 2,000 involved in television worldwide, and then the other 2,000 are our consumer products employees.
LAMB: And how much revenue do you generate every year?
HENDRICKS: We this year should cross 2 billion. We're about 1.7 billion in 2002. We'll be a little over 2 billion in 2003.
LAMB: Are you still a private corporation?
HENDRICKS: Still a private corporation, and glad of it.
LAMB: How much does John Hendricks have today?
HENDRICKS; John Hendricks, as of today, has less than 1%, but I have liquidated through the years. I had an opportunity in the early '90s... as a private company one has to look at what are the procedures for realizing the value of your shares, and so in 1989, we had a situation where I had a lot of venture capitalists, investment banking money, people who wanted to go public, and even in '89 I saw that over the next ten years we were going to have to make such substantial investments – to number one, continue to develop Discovery Channel, but to look at other opportunities, especially going global, and '89 was our first year, we launched Discovery Europe that year – that the investment required would substantially depress quarterly earnings for a public company, and so I was committed to keeping the company private as long as we could. So, at that time, we're skipping over the biggest investors that came in, the cable operators, and they were committed to the organization as a private company, and so we stayed private but we cashed out so the cable operators bought out all the other shareholders, so that it would create a very simple structure, where it was just five shareholders – myself and the four cable operators, over time two of those merged – and so today, there are four shareholders: myself, Liberty, Cox and Newhouse.
LAMB: And how much does Liberty have?
HENDRICKS: Liberty has today exactly 50%.
LAMB: And Cox?
HENDRICKS: Cox has 24, close to 25%.
LAMB: And Bob Miron?
HENDRICKS: Newhouse has equal to Cox, right at close to 25%.
LAMB: And how big is your board and who sits on it today?
HENDRICKS: It's myself as chairman, and then Liberty has two representatives, John Malone and Dob Bennett; and then Bob Miron represents the Newhouse investment; and then Jim Robbins sits on it from Cox.
LAMB: Okay, let's go back. '85 – you were about to say that you ran out of money at the end of '85. How many employees did you have, say, January of 1986?
HENDRICKS: By that time, about 37-38.
LAMB: How many subscribers were able to watch?
HENDRICKS: We had about 6 million and the word of mouth was real good. There were all these positive things. Consumers were sending thank you letters to cable operators.
LAMB: Who were some of your bigger advertisers then?
HENDRICKS: Well, we ended up getting a lot of the automotives. We got, I think all of the major automotives were on with us. We started life with a lot of the direct response advertising, but by the end of the year we had a some of the blue chips, like General Motors, I recall, was a lead advertiser of Discovery.
LAMB: So you're out of money. What did you do?
HENDRICKS: Well, Allen and Company was searching the world. They would set me up with meetings like the Bob Wright meeting that came out negative.
LAMB: Were you looking for money from Bob Wright?
HENDRICKS: Yeah, at that point – another 40% - again, we didn't think we could get the next 20 million. The business plan looked like we were right on. It would still take about 25 million. We'd gone through five; we needed another 20. It was too much to expect to get 20 million dollars in a short time period, so we were trying to sell five or six million and sell as much as 40% of the company to get that critical... rather than go bankrupt because we were right on the verge. There were a couple of fellows at E.F. Hutton – an investment banking firm, kind of independent at that time – who said they had a client that was interested and that was the Chronicle Publishing Company, which also had Western Communications they owned, which was a cable system, and they had a young guy there by the name of Leo Hindery, who was recommending that they get involved. So, we had lots and lots of meetings with E.F. Hutton and Leo Hindery, and on the day we were to close we got word that Leo had not gotten the approval of his board to make the investment, and that was disaster for us.
HENDRICKS: Yes, this was late January, early February, and that was the closest we came to... my wife calls that "Black Tuesday". It was on a Tuesday we got the word. We were supposed to close, it was in the morning, we were going to close on 6 million dollars.
LAMB: You thought it was a done deal.
HENDRICKS: Yeah, it was a done deal. We'd let all of our other prospects kind of evaporate because we were just concentrating on closing this investment and that was a real tough time for us – everybody involved, not only myself, all of our employees. I tried to shield them from all the bad news, but this was something that we had to be more transparent about because if we were going to go out of business, which it looked like we were going to in the next few weeks, they had to start looking for other jobs.
LAMB: Literally going to shut her down.
HENDRICKS: Yep, because we owed so much money. We owed Harlan Rosensweig a bunch of money at Group W, we owed all my vendors, BBC, everybody. By that time we had done lots of contracts, I think we were up to around 3 million dollars in payables, all of whom – you have to realize – I had called and said, yet again, "It looks good. We're going to close next Tuesday. We'll have the funding. I'll have your check in the mail on Wednesday morning; you should get it by the end of next week," that kind of thing. It was things like owing suppliers $50,000 to run our printer here, $50,000 to some agency who had done advertising support, but most of it was for programming and satellite time.
LAMB: Did you notice any change in people toward you as the money was no longer there? I mean, you notice you go through the excitement of you're on the air and people are all excited and patting you on the back, and then all of the sudden there's no money.
HENDRICKS: Well, I think the real strength was the people within the organization, I thought when I just leveled with them and said that Tuesday afternoon when I had a meeting that the funding didn't come through and they all knew this was kind of THE shot that most of them wouldn't show up for work the next day because I said, "I've got to be honest with you. We don't have the money," except these magazine subscriptions coming in, kind of paying the payroll, and that was the priority. I would let all the other vendors kind of wait because a Westinghouse could wait, whereas my employees, I felt, couldn't wait for their paycheck, and all of them showed up to work on Wednesday morning and said, "We're here until the bitter end."
LAMB: So you're faced with thinking you're going to close with the Chronicle Company and they're going to provide 6 million dollars.
LAMB: Had Leo Hindery told you up to that point, "I've got the money."
HENDRICKS: Yes, yes, it was a done deal.
LAMB: And then at one point and who told you they did not have the money?
HENDRICKS: He didn't call. It was the two very embarrassed bankers at E.F. Hutton.
LAMB: What was the reason given?
HENDRICKS: That in the end the board did not give approval.
LAMB: Why had he told you that they had the money?
HENDRICKS: I guess he thought that he had either sold the board on the idea and had misread the board, but we did not have the money.
LAMB: What was your reaction?
HENDRICKS: Oh, we were crestfallen. It ranged from, I remember Westinghouse said they wanted to sue E.F. Hutton and the Chronicle Publishing Company because they were going to stand a lot to lose. They were counting on, I think, a check of $900,000, you know, three months of satellite time, and so a lot of people were upset. Allen and Company was upset. I guess it was so bad for me because some of the biggest supporters, Allen and Company who had always been up said, "Oh, now you've got to get yourself ready psychologically for the next steps," which was bankruptcy. That was a very painful night, that Tuesday night, and then by Wednesday morning I said, "You know, there have got to be other people out there. We've gone this far." So on Wednesday morning I called Dick Crooks at Allen and Company and said, "You know, I read in one of the trade magazines over Christmas that this guy named John Malone said now that the industry looked like it was going to be deregulated in '87," the '84 Act had passed, and as of December of '86, I believe, in the law, cable operators could adjust their rates for the first time at market prices, and Malone had made a little comment that said, "This shouldn't go to our bottom line. We should think about reinvesting in content, using a portion of these funds to reinvest in content because that's what's really going to drive cable." I remember that little line. So I asked Dick Crooks, "Does anybody up there know John Malone." And Dick Crooks said, "Yeah, one of our associates here, Paul Gould, knows him real well. They've done some deals together." So Paul Gould called John Malone that Wednesday – remember this is the day after – and basically laid it on the line. He told Malone, as I've heard the story from both sides, he said, "John, we've got a problem with one of our investments. It's called the Discovery Channel and it's going to go bankrupt within a matter of weeks if we can't find the next round of financing." The response that John said was "We can't let anything happen to Discovery. This is what cable's all about." So then the next day, John had John Sie, who was his vice-president, on an airplane to Washington and we met here in Washington at one of the hotels, and one of the most remarkable things is that without even a long, formal agreement, just basically on a letter of understanding, TCI, Malone authorized a $500,000 immediate investment just to tide us over so I could send some money out, and that happened within a week.
LAMB: Why do you think he did it, other than the reason that we can't let that place die? Was there any other reason?
HENDRICKS: While I had never met him, he was so well aware of Discovery and had put that in his mind that this was one of the good things on cable. You've got C-SPAN, you've got CNN, you've got Discovery, you've got good things happening like American Movie Classics, reintroducing people to the classic movies. These were going to be the kinds of distinct programming that cable could offer, and so John just wasn't aware of the finances behind it, and just knew that to now take Discovery off would be a step backwards for cable systems to lose that. So that, then, started the process of getting it beyond TCI. I didn't want one big owner, one big shareholder, taking that whole amount, and TCI also wanted to bring in others, as well. So it started with that introduction to TCI and with John Sie, and I remember that meeting here in Washington and he was saying, "Who else do you think we could bring in?" I was asking the same thing, and we thought – the upcoming NCTA convention was going to be in March in Dallas, this would have been the convention in '86 – and we thought if we could just meet with Bob Miron, who was an industry leader, that maybe he would respond to it, and then we thought the people at Cox would be good partners, Comcast, we had a whole list of prospects. We felt that Bob Miron would be a good next step, so it was in Dallas that John Sie, Suzanne Hayes, my programming person, and myself and Bob Miron met at a Chinese restaurant at a mall somewhere in Dallas, and I remember Bob Miron looking over the numbers and thinking – he wasn't presenting anything – but just going through his mind, what would make it a success? He thought the biggest risk is could we get to 20 million subscribers and average a nickel as a license fee, and in the end he thought that was reasonable and that base of support – the advertising would be kind of gravy on top of that – but if you could just get 20 million subscribers paying you that nickel a month, that would be a million dollars a month that you could count on to support your operations. He did that on a napkin as he was going through. I often told him, "Bob, we should have saved that napkin." So, Bob was in. That was very important. So, at that point, things were looking up. Bob said, "I'll help you, like TCI is too, and maybe we can get some other people." And then Bob started making some telephone calls and got a few people that he thought would be right for an investment who declined, who wish they didn't. He called Brian Roberts and Ralph Roberts and they liked the concept of Discovery, but they declined the investment opportunity. He called Continental, called Amos, and Amos regrets that he declined, but he wasn't an interested investor, but was encouraging on the whole channel idea. We found the next investor, which was Cox. I met Jim Robbins at an airport that spring, and he committed to the venture. Right there in Denver, John Sie also arranged for me to meet with Gene Schneider and the people at United Cable and they signed a young fellow, Nimrod Kovach, to the project. So those were the four, then, by mid-summer. They all provided interim financing, but they then closed on a 20 million dollar round commitment in the summer, and that was all we needed to get it to break even.
LAMB: When was the first quarter you made money?
HENDRICKS: It was the fourth quarter of 1988, was the first time that the monthly – for that whole quarter – the monthly revenue exceeded the monthly expenses, and we were just running out of that capital, but then we became positive in our cash, then we had banks lined up because now we had some big players involved they were committed to if we needed additional capital to expand that they would provide the bank financing for that.
LAMB: Before I forget it, go back to Leo Hindery for a moment because of what happened to him throughout the rest of his career in the business. What happened to your relationship with him after that?
HENDRICKS: Well, you know, I'm not a big believer in burning bridges, so every impulse is to just break your relationships with people, but I...
LAMB: Were you mad at the time, by the way?
HENDRICKS: Yeah, I was angry, but I just couldn't imagine that he himself didn't believe that he had the commitment, so I thought this was just a misjudgment rather than a deliberate misleading. So I just thought he thought he had the votes, we thought he'd already gotten the votes, and just something broke down there within the board room at the Chronicle Publishing Company. So, no, we remained friends and on speaking terms. He was kind of out of the business for awhile. He was there at the Chronicle Publishing Company and they did have cable interests, but I remember reading later that he was getting into the business and soon became one of the chief officers of TCI.
LAMB: On a personal level, when did you look at Maureen and say, "You know, we're going to make some money in our lives."
HENDRICKS: I think when there was that first big valuation of Discovery... we knew that this was an economic success in '89. The venture at that time was worth, when Allen and Company and all of them got cashed out, Westinghouse... I mean, here's Westinghouse that had taken, instead of us paying them maybe a million five in transponder time over several months, they took stock and that million five was worth 65 million by late '89, and so even if you have a small percentage of something that's worth 400 million dollars, economically it was a success. So you go to that phase of your life where, okay, we can repay that loan at the bank, and you can kind of relax a little bit.
LAMB: How much did you own percentage wise?
HENDRICKS: I think about 7% at that time.
LAMB: In '89?
LAMB: Did you begin to change your lifestyle?
HENDRICKS: Yeah, we moved. We wanted to get closer to the office and moved first to – I knew long-term I didn't want to get into Washington – we looked at the Bethesda area, and so we moved to the Bethesda area. The kids were getting ready to go to school, start school, and so we just wanted a place where we knew we were going to be in for awhile.
LAMB: Did it start to change your attitude just about how you lived your life, what you did with your time?
HENDRICKS: No. I've discovered that what I like to do is be part of a creative process, and fortunately for Discovery we weren't... if we were just one channel and that was it, I would have been so bored so long ago, I would have gotten out of the business early on, probably in the '90s, but because this was such a growing, dynamic industry that we're part of, and because of the potential to be able to develop and showcase content worldwide and have some impact of what your career is that goes beyond something local to something national to something global is so exciting. So that's been kind of the driving force, at least what gets me to go to work everyday, is being part of a group of people that's kind of on this mission of putting up content that hopefully is valuable.
LAMB: You're how old in the year 2003?
HENDRICKS: I'm 51.
LAMB: How long do you want to do this?
HENDRICKS: I don't see myself retiring. I can see myself maybe having different roles. I think there comes a time when the founder, CEO, whether it's Bill Gates wanting to just be the chief technology officer or chief technology guru at Microsoft, I think there's a time when probably sooner rather than later I'd like to be involved maybe more as founder and chairman rather than having that CEO responsibility. I think that's still in the future.
LAMB: If this company were sold today, I know that we're not negotiating a price here, but what would it be worth, at least at a minimum?
HENDRICKS: Well, there are no sellers, so it's hard to speculate. Something doesn't have value until you do a transaction. Investment bankers have valued Discovery anywhere from... current valuations, I think, are in the 15 to 20 billion dollar range. That's kind of the consensus, at least of Wall Street.
LAMB: Does anybody trigger the sale of it on the board right now? Like, does Liberty have enough power to say, "I'm going to sell." Can they sell?
HENDRICKS: Anybody can sell to another party, but it first has to go to the others inside for that purchase price. There's never been any serious consideration of either a sale or merger of the company or of any of the parties getting out. The one big transaction that occurred was when TCI merged with United and there was that moment in time where that United stake of 25% could have been equally divided up among TCI, Cox and Newhouse, but at that point, Discovery had grown to pretty substantial value, maybe 700 million by that time.
LAMB: One thing I didn't ask you on a date is when did you start your Discovery stores?
HENDRICKS: That would have been, I believe, in the '96 timeframe, and we got into easier than a lot of companies get into retail. We were able to buy a chain of stores that were pre-existing, the Nature Company stores. They had some 130 stores nationwide. The most important thing is they were already positioned in some of the A and B malls, some of the better malls. So we bought that chain. There was another chain in Dallas that actually had the name Discovery, a chain of ten stores that we bought at the same time, so we were able to get in when they were struggling so we got a good price. Our acquisition price was only around 40 million dollars for the Nature Company chain, and then from that we eliminated the stores almost immediately that weren't performing well, and then built back up to the 130 level since that time.
LAMB: You have some kind of a joint venture with the New York Times, and before I ask you more about that, are there any other joint ventures?
HENDRICKS: Well, our largest joint venture is our programming venture with the BBC, and that was something that was crafted about five years ago. The BBC, next to Discovery, is the world's largest producer of non-fiction entertainment, so that was a very important strategic deal for us.
LAMB: How big a deal is it?
HENDRICKS: Well, we committed to buying a large amount of programming from them, millions of dollars a year from them. In return, they provide us first look at all their natural history content and all the kind of content that we'd want. Together we can use their output and ours as we develop new channels around the world, and so we're partners around the world as we create new channels, like People and Arts was a service we created in Latin America. Animal Planet – they are our partners, a lot of people don't realize this, but they're our 20% partner domestically in Animal Planet, so domestically we own 80% of Animal Planet, they own 20%, and that's part of this partnership. Now, I should say, worldwide in almost every market, we will go in, sometimes by government regulation you have to have a partner, like in Canada. Unless it was grandfathered in, like The Learning Channel was able to get into Canada and we own it 100%, we had to have a partner by the time we went in with Discovery, and so we have a partner in Canada. In Japan, we have Jupiter Programming as a partner, and so we typically have partners worldwide, which makes smart business sense because they know that market better than us, so we look for people who are well-established globally. And then with the New York Times – so I didn't finish the array of channels we have – we have the five analog services and then we launched five digital service: Discovery Kids, Discovery Science, Discovery Civilization, Home and Leisure, and Discovery Wings. We took one of the channels, Discovery Civilization, and we partnered with the New York Times, so they bought a 50% non-controlling interest, we control the venture, and they bought into that channel, so that's Discovery Times. That's the venture.
LAMB: And do I remember they spent 100 million on that?
LAMB: And how long a deal is that for them?
HENDRICKS: Well, I think there are some put options years out, but this is something that I think is going to be, at least in my career, fairly perpetual. There are some renewal positions, but I think they see it as a long-term, strategic play where they wanted to diversity from newspapers to get into television. They had actually been a good producer and still have the New York Times Production Company. A lot of people might have enjoyed the Operation shows on TLC; that was a New York Times production. So part of that arrangement is that we also, like the BBC, commit to some acquisitions from that television unit.
LAMB: And how much do they have to say about what kind of programming goes on the channel?
HENDRICKS: Well, it's joint in that we have collaborative meetings, but the final say on programming is ours. That was just part of the deal. We felt comfortable in them having a 50% equity, but because it's so highly branded Discovery we felt that it was important that we always have final editorial on any of the channels that bear our name.
LAMB: Looking back, what did not work?
HENDRICKS: I had an idea early on for a channel focused on people and biography that we just couldn't get off the ground. I remember having a nice promo tape for it and it was called Discovery in Person. CBS had a channel that they converted to Eye on People; we ended up acquiring that and using that to support the travel channel launches and some others. We are convinced that video on demand is the future, and we had that thought early on. We created a research project called Your Choice TV that proves itself in the market, all of the consumers loved it, but it was the right idea but the wrong technology to implement it. We saw it as using digital compression on satellite, being able to take over four or five transponders and converting those to digital signals, so with five transponders you could have eight channels each, 40 channels of content, and why not devote those to the most popular things on television so that if you're a viewer of 60 Minutes you could watch that at any time. If you like Book Notes on C-SPAN, why be wedded to the C-SPAN channel? Be able to access that at any time. So, that's going to happen, it'll just happen with DVR technology, devices like TiVo and it will happen with regional file servers, but that didn't work out as a business, it worked out as a concept that gave us a lot of confidence in the world of video on demand that we think is going to dominate us over the next ten years and change the way we do business.
LAMB: What have you thought as you've gone through this have been your weakest attributes that you needed help on more than anything else?
HENDRICKS: I think probably negotiations. I'm probably non-confrontational by nature and so in business there has to come a point where you're paying somebody x amount for content, and I'm so desperate to have great content I will typically probably overpay in any kind of content arrangement, especially if it's something I'm just convinced would be great on our services. I've learned to leave that to other people who are more skilled in negotiation. I tend to not like meetings over 30 minutes, and so I'm not really good at long management meetings, but you have to have incredible communications within your organization, so you have to find people who are skilled and bring good communications skills and managing the day to day operations. I am not good at that.
LAMB: What are you strongest at?
HENDRICKS: I think creating. Thinking of the next idea for something that will be on one of the channels that's a long running series. I'm fascinated now by high definition. We have a new service called Discovery HD Theater. We're undertaking a new initiative called Atlas, which will be a series. Very expensive when I think back on what it took to launch Discovery – it's a 60 million dollar undertaking – 30 shows about 30 great destinations all over the planet. They can be very country specific like Egypt or China or India, but we want to capture the world in high definition.
LAMB: So you're going to spend 2 million dollars on a show.
HENDRICKS: 2 million dollars each for 30 shows. This will be a project that will clearly take five to six years to do all 30 shows, but I love that. I'm typically the one that will be moving the company toward high definition, so it's those kinds of things where I think I'm best deployed, is thinking up what's the set of channels we should launch on digital, what are the kind of marquee programs that each of the channels should have that will define those services. You can't do any of that alone. We have great people now internally. Billy Campbell, who's president of Discovery Networks U.S., great skill sets and instincts, years at CBS, ABC, Miramax, that brings another dimension to Discovery that's helping us keep the channel fresh, all the channels fresh on a weekly basis.
LAMB: Is there a program you'll never miss on all of your channels? Not each channel, but is there a program every week that your company puts out that you personally will never miss?
HENDRICKS: That I personally will never miss?
LAMB: You'll watch it.
HENDRICKS: I have probably... the one that is the new James Woods show, I don't know if you've seen it, about History's Mysteries that we've got that's all of these little known stories from history, that's something that I'll always catch. There's a series that we've done in the past on The Learning Channel, our Understanding Series, our Great Books series. There are things that I thought that I wouldn't watch that I've gotten kind of engaged with. American Chopper is something that's been very huge as a commercial hit. It was something when I heard about it in the development meetings I didn't see myself watching it, but as you get involved in this family who is in this small business and how dedicated they are, but the conflicts that arise, it's very instructional, and it's something that kind of attracts me now on a weekly basis.
LAMB: What has been the single biggest success in the last almost 20 years of Discovery in programming?
HENDRICKS: It's been when we can use the power of computer animation and graphics, how that's kind of evolved to this current state of art, and we've been able to transport people back to the age of dinosaurs or pre-history. So, Walking with Dinosaurs, Raising the Mammoth, all those have been huge, huge hits for us, and then more recently, Walking with Cavemen.
LAMB: Highest rated program ever?
HENDRICKS: I think was Walking with Dinosaurs. We got an eight rating and I remember one of the remarkable things to me was we outdrew NBC that night. In other words, when you put our audience up against NBC, we had more viewers that night than NBC.
LAMB: Let me make a statement and have you bounce off of it. In watching you over the last 20 years, I don't think you're really surprised at your success, that you had this idea, you thought it was going to work from the very beginning and here we are, it has. How right or wrong am I?
HENDRICKS: Well, you're right. I think to go through that crucible of starting a business, you have to be armed with, I think of it as kind of a naïve confidence that it's going to work. Somehow, someway, you're going to make it work. At some point you've got to convince yourself that the idea, if only it can get into the marketplace, it will be seized upon by the marketplace and there will be a positive response, and I was armed with that. I mean, that got me through the darkest days that you have to go through to start something like this, to just be armed with this confidence. Part of the confidence is because I didn't know all the reasons why it would fail. I think sometimes there's a handicap that if you're immersed in an industry and you start a business within that industry. I think all the broadcasters I met with, number one, they probably saw me as future competition if it did work, but they were so immersed in broadcast they just couldn't imagine the difficulty of putting on 24 hours a day of programming when their big challenge was to do some sitcoms in the evenings and that was all the energy and all the expense just to do 2 or 3 hours a night in original content. So they knew too much. I didn't know all the reasons, so I think that was an advantage coming into the television business totally from the outside, and a lot of times that gives you an advantage. You can see some of the bigger trends that are kind of lost on people who are so immersed in the day-to-day of that industry.
LAMB: Thank you very much.
HENDRICKS: Thank you.