Call Me Ted (38 page)
Networking
E
ven though I felt that Time Warner would continue to block my attempts to buy a network I still thought that merging with one made strategic sense, so I kept discussions quietly going with ABC, NBC, and CBS. My hope was that if I could negotiate an attractive deal I could get Jerry Levin to change his mind or maybe even convince him to cash out Time Warner’s stake in Turner and clear the way for us to move forward.
ABC was off my radar screen for several years after Capital Cities Communications bought it in 1985. But in ’92, when it came time for the networks to pursue the broadcast rights to the 1996 summer Olympics in Atlanta, we did have encouraging discussions with Capital Cities/ABC over the possibility of a joint bid. We reasoned that if we could create the most value—and therefore justify the highest bid—if we aired higher profile prime-time events on the ABC network while also offering daytime coverage on ABC’s ESPN and Turner’s TNT and TBS. Because we already had so much production infrastructure in Atlanta, it made sense for someone to partner with us. But we never did get to the point of putting forth an offer (and NBC wound up getting those rights). Yet through the course of these discussions I got to know Dan Burke, Capital Cities’ CEO, and as we looked at the advantages of a joint Olympic bid, the conversation naturally went toward the synergies we could create if our two companies were combined.
I liked the Capital Cities people a lot. Dan Burke and Tom Murphy, the company’s chairman, really understood the business. They had built their company by buying up TV and radio stations as well as newspapers and magazines and operating them efficiently. They were also straight shooters who always treated people with respect. (That said, our executive styles were definitely a little different. One time, during a closed-door meeting in Burke’s office, my voice got a little louder than they were used to hearing on that floor. When I said something about how cable would eventually “strangle” the networks, Burke’s secretary thought I was threatening her boss personally so she called security! Dan and I had a good laugh when security knocked on the door to make sure that everything was okay and that I wasn’t trying to kill him.)
When Dan Burke retired from the company in ’94, Tom Murphy moved back into the CEO position, and Bob Iger, who had been running the ABC network, was promoted to become the parent company’s COO. One night when Jane and I went out to dinner with some friends in New York, we were seated at a table next to Bob and his wife, Willow Bay, whom I also knew since she was an anchor at CNN.
A TED STORY
“He Just Couldn’t Let It Go”
—Bob Iger
(BOB IGER IS CURRENTLY PRESIDENT AND CEO OF THE WALT DISNEY COMPANY.)
Willow and I were out to dinner in New York and Ted and Jane were seated at the very next table, with Ted and I sitting back-to-back. When he saw us, he got really excited and said, very loudly, “We ought to figure out a way to merge our companies!” This was a crowded New York restaurant but Ted was practically screaming and people could definitely overhear him. He might as well have banged his fork against his glass and said he had an announcement to make. I asked him to keep his voice down but he just couldn’t let it go and was talking to me more than he was the other people at his table. I finally told Ted I’d be happy to come down to Atlanta to talk about it some more in private.
When I did go to meet with him at his office I was shocked by his physical energy. He couldn’t sit still and as we talked through how a merger might work, every time we agreed on something he’d give me a high five! And honestly there really was a lot to agree on. Combining ABC News with CNN made a lot of sense and we could have used Ted’s animation content for the network’s Saturday morning lineup. ESPN and Turner Sports would also work well together and with our ownership stake in Lifetime we probably could have found synergies with TBS and TNT. A merger between Capital Cities and Turner really would have been an exciting combination of assets, and after I briefed Tom Murphy on my conversation with Ted we set up a follow-up lunch in New York to begin more formal negotiations.
Bob Iger and I hit it off and since he was fairly new to his job I assured him that if we merged the companies, I’d recommend that he continue to run the ABC portion. When it came time to take the negotiations up a level, Tom Murphy set up a lunch in New York. He invited Warren Buffett, a longtime investor in Capital Cities, to attend and I invited John Malone. These were two great deal makers, and since a merger couldn’t happen without their agreement, it made sense to involve them early. As Bob Iger and I discussed how the meeting might go, he cautioned me not to say anything about trying to buy a Hollywood studio. It looked like Sony might be ready to sell Columbia Pictures and I’d told Iger I wanted to go after it. “Murphy and Buffett hate the movie business,” Bob cautioned me. “This might be something we could consider down the road after the deal is done but this meeting will go a lot better if you don’t mention it.” I understood, and we had plenty of other issues to discuss, so I didn’t expect this to be a problem.
The lunch was at Capital Cities/ABC’s Manhattan headquarters and the discussion was cordial and positive. Everyone around the table understood the benefits of merging the companies. Then, as we talked about ways we might expand the business down the road I mentioned that Sony might be willing to sell Columbia and exclaimed, “As soon as the ink dries on this deal and the merger is approved we should try to buy a studio.” I was really taking a chance by bringing this up but if we were going to be partners, I felt I needed to be honest with them. Unfortunately, Iger’s prediction was right, and immediately, Buffett said, “I don’t like the motion picture business. I’m a director at Coke and when we owned Columbia it was a disaster.”
I said, “Well, movies might not be a good business for a soft drink company, but if you’re in the broadcasting business it makes all the sense in the world! If you don’t want to be in the movie business, you don’t want to be in the television business because this industry is going to go vertical. The first network and studio merger will have the first mover advantage and the company that gets there last is going to be playing catch-up.”
When Tom Murphy joined in, agreeing with Warren, I could tell that the meeting had taken a bad turn. It might have been different if I’d backed right down but I couldn’t. “The reason we’re all here,” I continued, “is because our industry is moving quickly and we want to anticipate the future. I’m telling you now about my interest in a studio because I want us to have a harmonious relationship and I want you to sign off on this because it’s the last piece of the big puzzle that we really need.”
The conversation remained polite after that, but their enthusiasm dropped when they saw how serious I was about acquiring a studio. Iger called me a few days later to tell me they’d decided not to move forward. While Murphy openly disagreed with me in the meeting, I thought that Warren Buffett was the one who really killed the deal. Ironically, it was only about a year after that lunch that Capital Cities was bought by the Walt Disney Company. Today, every single broadcast network is aligned with a studio (ABC with Disney, NBC with Universal, CBS with Paramount, and Fox with 20th Century Fox). Sure enough, the industry did go vertical—I just wish I’d been able to convince them do it with me, first.
At NBC I stayed in regular contact with Bob Wright, the CEO. I’d known Bob from all the way back in the late 1970s when he ran Cox Cable in Atlanta. In 1980 he was among our invited guests at our CNN launch ceremony, and at one point, when CNN was having financial struggles, I spoke with him about the possibility of Cox making an investment with us. Bob and I had also been hunting together and we’d become pretty good friends.
A TED STORY
“You Shot My Deer!”
—Bob Wright
(BOB WRIGHT SERVED AS PRESIDENT AND CEO OF NBC FROM 1986 TO 2007.)
Ted invited my wife and me down to his place in South Carolina for a weekend to go hunting. I had shot a gun before and had killed some birds but this was deer hunting and I really didn’t know anything about hunting. So it’s in the fall, it’s cool, and on the first morning there we go out and it’s like 5:00 and Ted sits me in this tree. “This is your tree,” he says. “You’ve got to climb up the tree and sit in that stand.”
So I do it, and I’m sitting up there with my rifle and I’ve been there just ten minutes and I look down and there’s a deer—not seven hundred yards away but right below me. I said to myself, “That’s a pretty big deer!” So I take the gun out and I point it down and shoot the deer. This wasn’t exactly the way I pictured it would be, but less than an hour into the trip I’ve shot a deer. About five minutes after my gun went off, one of the Jeeps we’d driven out in comes rolling around. Ted’s in it and he sees me standing there looking at the deer and he says, “I’ve been hunting that deer for two years! You shot my goddamn deer!”
“How do you know it’s your deer?” I asked.
“Look at it—it’s a ten-point buck!”
So I said, “You mean those things on the top?” and I counted them—one, two, three, four, five, and said, “Yeah, there are ten.”
And he yelled again, “You shot my deer!” He was really upset.
So we go back to the house and have something to eat and he’s all wound up about this deer and says, “I want to go back out and do some more shooting.”
I said, “Shooting what?”
“Wild hogs! We’re going to shoot wild hogs!”
So my wife, Suzanne, and I get in this big Jeep. We’re sitting in the back and conveniently I don’t have a rifle but Ted has two. So we get out a ways and he stops the car and these huge hogs are coming through this high grass and he starts shooting away! They’re really big and they’re all around us and he’s shooting them and they’re running, running left and right. One’s coming at us, shoot ’um. One’s going away. He’s getting them every which way. The changing rifles, the smell of smoke is all over the place. He clearly had to go after these hogs to get that deer off his mind!
With his background in cable, Bob Wright seemed eager to diversify NBC beyond the broadcast business. They owned CNBC but as far as cable networks were concerned that was it, and many of the same synergies that would have existed with a Turner-ABC deal were also there with NBC. There were different ideas floating around about how a merger with NBC might work, ranging from Turner Broadcasting being acquired directly, to NBC being spun out from GE and merging with Turner to form a new, separate entity. Either way, valuations, structure, and responsibilities were issues to be resolved. Conversations grew serious enough for Bob to fly down to Atlanta with his boss, General Electric CEO Jack Welch, for a meeting with me.
We met in secret at a suite in the Ritz-Carlton in the Buckhead section of Atlanta—myself, Bob Wright, and Jack Welch. I knew Welch by reputation but didn’t really know him personally and I looked forward to meeting with him, but from the beginning of this conversation, I was disappointed. It seemed clear to me that Welch either didn’t understand or appreciate our business or he hadn’t done his homework for the meeting. Whenever he referred to a valuation of our company it was very low and when it came to corporate structure and reporting lines I could tell that if we ever were to do a deal I’d be just another employee of General Electric.
A TED STORY
“He Really Struggled with Ted”
—Bob Wright
Jack Welch was pretty open to a deal with Turner but he really struggled with Ted and the perception that we would be buying Ted and his company. Nevertheless I convinced Jack to actually get on a plane with me and go to Atlanta and pitch an offer to Ted. Jack and I flew down to Peachtree-DeKalb Airport and met with Ted at the Ritz-Carlton Hotel in Buckhead. We sort of came in the back door and went upstairs to meet in a suite. We spent about an hour and a half talking and Ted never sat down. He tried to sit down but he was really antsy. I was used to Ted’s behavior, but for Jack it was new. I said I really thought we should do this deal but Ted said we weren’t offering the right price. I think he wanted $30 a share and we were offering something like $25.50. Ted said he also had some other concerns and asked about whether Jack would want him to be a vice chairman of GE and Jack said, “No.” When Ted asked him why, Jack said, “Because I don’t want you to be a vice chairman, I want you to run CNN.” Jack was very straightforward about it and said he didn’t think Ted would add anything to GE at the corporate level and he worried that he would be too difficult to work with.
By the end of the meeting, Ted said, “You know what? I don’t think I want to do this.”
So I said, “Don’t let that be your final answer. We’ll talk when we get back.” So I called him the next day and he said, “I don’t think there’s a place for me at GE and Jack didn’t offer enough money.”
I said, “Well, is it that he didn’t give you enough money and there’s no place for you or is it there’s no place so he didn’t give you enough money?”
And Ted said, “Well, it’s six of one, half dozen of the other.”
A TED STORY
“Jack Welch Wouldn’t Be Jack Shit!”
—Tom Brokaw
I went out to spend the weekend with Ted in Montana and Jack Welch had just walked out on him. They had been talking seriously and they came that close. It’s a shame but in the end Jack just didn’t think he could be in business with Ted. So Ted was fit to be tied and we got in the Land Rover and we’re bouncing across the landscape with Chris Francis, the fishing guide, and Gordy Crawford, a major investor in Ted’s company, in the back seat. Ted is going on, “That Jack Welch, he wanted me to be vice chairman of this and the honorary chairman of that. He didn’t give me the respect I deserve! I built this company from nothing! I’m worth billions of dollars and they want me to be a vice chairman? I’ll tell you something, Tom, if it had been for . . . hadn’t been for . . . what’s the name of that guy who invented the lightbulb?”