42 Degrees - Business from a different angle

In the summer of 1998, Eileen Gallagher packed in her job as managing director of London Weekend Television to set up a new TV production company with three colleagues. It was a momentous, risk-laden decision. "We called it 'Shed Productions' as a bit of a joke," Gallagher laughs. "We were either going to make shed loads of money or end up living in a garden shed."

The garden shed remains unoccupied. Since its launch, Gallagher's company has become one of the most successful in the history of UK TV production. It has enjoyed a string of incredibly popular, high profile TV hits such as the prison drama Bad Girls and the phenomenally successful Footballers' Wives. Earlier this year, Shed obtained a stock market listing on AIM valuing the company at £44m and Gallagher pocketed the best part of £5.5m as her share of the proceeds.

In retrospect, success stories always sound glib and inevitable – as if nothing ever could really have gone pear-shaped. But the press plaudits do not begin to capture the private, sweaty-palmed moments of high anxiety that led up to what was probably the defining moment in Gallagher's working life.

Gallagher identifies the decision to leave the comfortable, chauffeur-driven, executive lifestyle at LWT as one of the most difficult she has ever taken. "There have been lots of big changes in my career. My decision to leave journalism and become a press officer on Taggart for Scottish TV was important," says Gallagher. "But leaving LWT was the turning point. It was an agonising moment when I rejected the cosy, structured world of employment in favour of the unpredictable world of running my own business."

So what induced her to take the risk? After all, TV production is not a sector in which many large fortunes have been made. "I was sitting pretty with pensions and so on. But my future was already mapped out. I was going to be a chief executive. In fact, I had already been offered the role at Sky. I suppose I also wanted to know if I could run my own business."

In addition, Gallagher was beginning to feel that her contribution was undervalued. "It was programming that made the fortunes of the TV companies. Yet the people who came up with the ideas were comparatively poorly rewarded. I was wondering why I was giving my ideas away so cheaply."

Yet she had at that time ruled out the possibility of starting her own production company. "I had been contemplating going independent for a while – but it was too insecure and too unprofitable. I wanted to be both creatively and financially successful." The problem faced by the entire industry, she explains, was that the BBC buys half of all original programming in the UK. "They would only buy at rock bottom prices and they owned all subsequent programme rights. The alternative was ITV, but they only bought one-offs and short series."

The Eureka moment came when she realised that an independent production company could be very profitable, if it could persuade ITV to buy a big, potentially long-running series. She and her team sweated and worked and polished their idea, which happened to be for the first series of Bad Girls. "Much to our amazement, ITV bought it," says Gallagher. Armed with a one series contract, they raised money and were well and truly on their way. The programme is now in its seventh series.

And fate was to intervene further, turning a good start into something verging on a licence to print money. "The Government was reviewing the Communications Act, although there was no mention of content. However, it seemed outrageous to me that the BBC, which basically controls the market for TV production in this country, was allowed to retain the rights to the programmes it bought. It was a scandal. So I lobbied and lobbied and lobbied against this."

Much to her delight, when the new Communications Bill received Royal Assent in 2003, it contained provision for TV production companies to keep control over the rights to their programmes. The impact was immediate. "It meant we could start selling our programmes abroad and receive money for repeats. Now a third of our profits come from the rights to 150 hours of programming that we have created."

Following the success of Bad Girls, ITV commissioned Shed Productions to make Footballers' Wives, the fourth series of which continued to tickle its many fans. Other dramas are in production. These include Bombshell, an army series, starring Zoe Lucker in her first post-Footballers' Wives role and a new children's adventure series Fugitives. The company's shows have also found audiences in Australia, South Africa, Canada and beyond.

No wonder that last year Shed made profits of £3.2m on a turnover of £15m. This year the company is set to make £4.6m on a turnover of £25m. All the signs are that next year will be even better.

Gallagher confesses that good fortune has played a part in her company's rise: "To some extent I suppose I have been lucky. But I feel I have made a lot of my own luck. It would never have happened unless I had taken that decision to leave my comfort zone at LWT."

Next Page: Comfort Zone