Call Me Ted (9 page)
Regrets about missing signals and not connecting dots naturally follow tragedies like this and I’ve done my best to try to put them behind me. My memories of the hours and days after learning of his death are hazy. I was in tremendous shock. I remember his funeral as a simple one, held in Savannah at the Episcopal church. He had many friends and admirers in town and the turnout was big.
I’d already been a nervous wreck for the past several weeks but now my head was really spinning. As confused and startled as I was about my father’s death, there was one thing I knew for sure—the man who agreed to break up his company was not the real Ed Turner. He had been running himself ragged. He had replaced two addictions, smoking and drinking, with prescription pills. His behavior was manic, and in a way I had never seen before, he was scared. I also knew he wouldn’t have wanted me to spend my time grieving. Turner Advertising represented my father’s life’s work. He loved the company, and what he’d really want me to do was save it.
But first we had to sort out his estate. Unbeknownst to me my father had named me executor of his will, a document we discovered to be fairly straightforward. When he died, my father had a net worth of about $2 million (more than $13 million in today’s dollars). Roughly $500,000 of that went to pay estate taxes. To my stepmother he left $500,000 worth of company notes that were to be paid out over ten years. My mother would continue to collect her note payments, while the rest of the estate—worth a little less than $1 million—was left to me.
Outside of his blood relatives, Jimmy Brown was probably closer to my dad than anyone, and after rushing to find him in that bathroom he’d also been given the grim task of cleaning that awful mess after my father was gone. Jimmy loved and respected my dad and on top of his grief he was now faced with an uncertain future. Sometime during those difficult days he came to me and said, “Mr. Ted” (he always insisted on addressing me in that formal fashion), “your father told me once that if anything ever happened to him, you’d be sure to take care of me.” I told him he had nothing to worry about. After my father, Jimmy was my closest friend in the world and without hesitation I assured him he’d always have a place in the Turner family. (As testament to the admiration Jimmy had for my father, years later and after I had become well known, Jimmy was asked, “Why aren’t there more people like Ted Turner?” and he responded, “Because there aren’t more fathers like Ed Turner.”)
With these personal issues ironed out, I turned my attention to the company. My father’s accountant, Irwin Mazo, confirmed that my dad had in fact agreed to sell the General Outdoor assets he had acquired less than a year earlier. The deal document was informal—just a handwritten note—and my father signed it the day before he killed himself. Bob Naegele would pay the original purchase price plus $50,000. It was a great deal for Naegele and most people probably saw it as a good deal for me. Naegele would take away the big markets of Atlanta and Richmond, but in the process he’d remove our heavy debt load and put an additional $50,000 of cash in our account. Yes, I would have to move back to Macon but I’d still have a business to run, albeit a significantly smaller one. I could have made this all work, but it just didn’t seem right.
A day or so after the funeral I explained to Irwin Mazo that I intended to try to keep the company together. He was polite and appreciated my desire but explained that the deal was done and given my youth and lack of track record with banks or access to capital there was no way I could come up with enough money to change Naegele’s mind. Truth be told, I doubt he thought I was up to running the business anyway. After all, it wasn’t long before that my father had declined to give me even the top job in the Atlanta operation. It didn’t matter. I was determined to see if I could save the company.
The first thing I figured I had to do was buy some time. I contacted my father’s lawyer and doctor to see if they could help me make the case that my father was not of sound mind when he entered into this agreement, therefore making it null and void. Neither of them thought this argument would hold water. Despite this discouragement, I knew that Naegele was fond of my father, and I hoped that his friendship and closeness would make him more sympathetic to my plight and more aware of the fact that my father’s behavior had been out of character. He agreed to meet with me.
His billboard success had made him a wealthy man, and as it was still March and cold in his hometown of Minneapolis, we met at his vacation home in Palm Springs, California. Naegele made it clear to me that while he admired my father and mourned his death, he had no intention of going back on the deal. My case about my father’s mental state didn’t move him a bit. Naegele was a huge player in the billboard business and I’m sure part of him was wondering, “Who does this twenty-four-year-old kid think he is?” He probably thought that if he held firm, I’d fly back home, realize I had a pretty good thing going with the old Turner Advertising, and leave him alone.
If he thought that, he was wrong. In fact, heading back to the airport, instead of giving up I kicked into a higher gear and came up with another way to complicate the sale. It was aggressive and hostile, but it was the only card I had left to play. Before boarding my plane, I called the head of our five-man leasing department back in Atlanta. This group had grown loyal to me and I knew they’d help me out if I asked them to. Fortunately, Naegele neglected to place noncompete clauses on any of our employees so there were no legal issues holding us back. In the billboard business, a company’s leases are its most valuable assets, and if you really wanted to foul up a competitor, “jumping” the leases was a great way to do it. I explained my plan to the team in Atlanta and they agreed to help me execute it.
To understand lease jumping, let me explain how billboard leases work in the first place. Back then, about 95 percent of a typical company’s signs were on leased ground: someone else’s parking lot, the roof of a tire company, and similar such sites. You paid the owner of the property a certain amount of money each month to maintain the lease but the termination triggers on the property owners’ side were generally pretty short, and most leases could be canceled within sixty or ninety days. This left billboard companies vulnerable to a very destructive competitive tactic known as lease jumping.
To jump a competitor’s lease, you’d call the owner of one of his billboard sites and find out what he was being paid. If he tells you it’s $50 per month you tell him that as soon as he’s able to cancel—which often would be no more than ninety days and could be as soon as tomorrow—you’ll pay him $75 to take over the location. No matter what the property owner does next, the current lessee gets hurt. If the property owner agrees to your price, he cancels the current deal. If he doesn’t cancel, he goes back to the sign owner and tells him there’s a new rate he has to match. As a result, the company’s cost structure gets thrown out of whack. Lease jumping was an effective tactic to disrupt a competitor but since it virtually guaranteed a deadly price war, it was rarely put into practice.
The first step of my plan was to take the leasing team off the Atlanta payroll and make them employees of our company in Macon (an operation that was not included in the pending sale). These same guys could now call their Atlanta contacts but now they’d be doing so on behalf of a different company. In the case of leases that were expiring within the next few days, they’d tell the property owners that they’d like to transfer the lease over to a different company—a simple act of changing some paperwork. For leases that had several weeks to run, they would offer a higher renewal price to move the lease over to our Macon company. My team and I worked the phones feverishly and within a matter of days we caused significant damage to the assets Naegele hoped to acquire. He could now tell that I didn’t intend to go quietly into the night.
With that in mind, he met with his advisers and came up with a new offer, presented in the form of two $200,000 alternatives. If I agreed to return all the leases and simply go away, he would pay me $200,000 cash. This was 1963, I was twenty-four years old, and that was a ton of money (more than $1 million today). My other option, if I wanted to retain the General Outdoor assets, was to pay $200,000 to Naegele and for this price he would tear up the agreement he had reached with my father. I’m sure Naegele thought I’d jump at their offer to buy me out. But without considering how in the world I would come up with another $200,000, I agreed on the spot that I would take the second option. This was my chance to save the business and I wasn’t going to blow it for $200,000.
They were so surprised by my response that they asked for a few days to think about how they wanted the deal for tax purposes. Now they were the ones who were stunned and I had them back on their heels. After further consideration they said they’d accept my $200,000 but I had to make the payment within ninety days. If I defaulted, the deal was off and they’d keep the company.
Suddenly, I was like the dog that finally catches the bus—I had a deal but what could I do next? My recent inheritance came in the form of company equity and personal property, not cash. Turner Advertising had very little disposable cash, as we’d been making capital investments and had just six months to come up with $600,000 to make our first debt payment to cover the General Outdoor acquisition. Working through these challenges, I learned a lesson that would stick with me throughout my career. When the chips are down and the pressure is on, it’s amazing to see how creative people can be. And with a ninety-day clock ticking, we had to get really creative very fast.
I was very fortunate to have Irwin Mazo on my side. He was an accountant, and he realized that nearly all of the $200,000 cash payment to Naegele and his other partners would go straight to the government. Since their deal with my father was only a couple of weeks old, this payment would be treated as a short-term capital gain and would be taxed as ordinary income. Back then, guys like Naegele would have been in a 90 percent tax bracket so taking the cash would not have been much of a deal for him. Armed with that knowledge and short on cash, we went back and offered to pay them $200,000 in Turner Advertising stock. That way, they could hold their value in equity as long as they needed to shield themselves from the heavy tax on short-term gains. By the time I presented this proposal, they’d figured out these tax issues themselves and they probably assumed they’d have another shot at our company in six months after I failed to make our first big debt payment. Who knows—but at that point they may have simply had enough of me and wanted me to go away. Regardless of the reasons, they accepted my offer.
So far so good. I had kept the company out of Naegele’s hands and it didn’t cost me a single dollar of cash. Energized by this victory, I went a million miles an hour sorting out solutions to keep the company on track and to make sure we made that big first payment. We created an employee stock purchase program, convincing as many employees as we could to invest their money in the company’s shares. I also convinced some big advertisers like Coca-Cola and Anheuser-Busch to pay cash in advance in return for discounted prices. Turner Advertising owned some small pieces of commercial real estate that we could live without, so I sold them off. Part of my inheritance included my father’s 1,000-acre plantation in South Carolina. It was mostly cattle farm. After he died I’d gone there once to collect some of his personal items. Given what had happened there, I never wanted to go back again and it was put up for sale.
Eventually, somehow, we managed to keep it all together and we made that $600,000 payment in September. It was beyond my control to save Dad, but I’d done everything I could to save his company.
I knew he would have been pleased.
On My Own
D
ad died on the fifth of March, 1963, and by the end of that month I’d managed to keep the company together and assumed the roles of chairman and president. During this intense stretch, Judy was in Macon taking care of Laura Lee and preparing to deliver our second child. A beautiful baby boy arrived on May 23 and less than three months after his grandfather’s passing, I was proud to name my first son Robert Edward Turner IV. We called him Ed after my father (he would later become known as Teddy) and we both loved him dearly. Adding a second child to our family, though, would not change the dynamics between Judy and me. Our marriage was simply not going to work.
Ironically enough the very thing that brought us together—the sailing competition—would ultimately be the setting for our final straw. It was late in 1963 and we were racing against each other. I had developed a lead over Judy’s boat and when she thought the time was right, she made a move to pass me to windward. Judy was a great sailor, but her pass was made so close to my boat that she violated the rules. Just like in a car race, when you overtake someone in a sailboat you have to keep a safe distance. We were really at each other’s throats at this point so when I saw who was making this move I figured “all is fair in love and war” and I gave her a sharp luff and tapped her boat out.
When the contact drew the attention of the judges, they realized that Judy’s pass was illegal and they disqualified her from the race. She hurled insults at me like you wouldn’t believe. After the race she packed her sails as quickly as she could and we parted for good. Judy decided to move back to Chicago to be closer to her family and while divorce is never easy, it was particularly hard for me to be separated from my two young children. With everything I was trying to do at the company and with racing taking up so much of my time, I knew I wouldn’t see them very much.
I wasn’t looking to marry again anytime soon but with Judy and the kids gone I found myself needing companionship. Despite the fact that I was now a divorced father of two I was still just twenty-five years old and Atlanta was a great place to be young and single. By this time, my old college friend Peter Dames had transferred to our Atlanta sales office. Young, single, and knowing his way around town very well, Peter told me that if I really wanted to meet smart, good looking women I needed to go to one of the Young Republicans cocktail parties. I wasn’t involved in politics at all back then and my worldview was still very conservative, so I figured I’d get along well in a room full of Republicans, especially attractive female ones.