by Ted Turner
CNN was still far from being a financial success but we were gaining attention and it wasn’t long before we heard whispers about rival news networks being planned. The most persistent and logical rumor ultimately turned out to be true. Just over a year after CNN’s launch, ABC and Westinghouse announced that they were forming a joint venture to enter the cable news business. This alliance made sense, as Westinghouse was operating an all-news radio station and ABC already had a full-scale television network news division. Their plan was to create two different channels and to launch them sequentially. The first, to be called Satellite News Channel, or SNC, would feature an eighteen-minute “wheel” of short news stories that they would update and repeat throughout the day. The second would be a longer-form news channel patterned directly after CNN. At the time of this announcement, we had already invested about $100 million in CNN and were still far from breaking even. Now, two multibillion-dollar corporations were coming at us with a dagger pointed at our heart.
I began to contemplate how we could combat such a competitive threat. I had purchased a 4,200-acre property in South Carolina called Hope Plantation in 1979, and it became a perfect place for the long walks I take when I need to clear my head and to think through strategic challenges. Sometimes I walk by myself and on other occasions I engage in debate with people whose opinions I value. One such person is Taylor Glover, my financial adviser and good friend.
A TED STORY
“He Was Driven”
—Taylor Glover
(TAYLOR GLOVER SPENT NEARLY THIRTY YEARS WITH MERRILL LYNCH BEFORE BECOMING PRESIDENT AND CEO OF TURNER ENTERPRISES, INC., IN 2002.)
In the late 1970s, Ducks Unlimited was trying to bring a chapter to Atlanta and I volunteered to help them out. They were planning an auction banquet and I agreed to be in charge of securing items to put up for bid. We were hoping to get a set of season tickets to the Atlanta Hawks and since I’d heard that Ted was an outdoorsman, I decided to call him directly. He didn’t know me at all but I got right through and he put me on his speakerphone. He told me that he thought Ducks Unlimited was a great organization and that he’d be happy to support them, so I asked him about donating Hawks season tickets.
“No problem!” he said, “How many do you need and which game do you want?” When I explained once again that I wanted season tickets, not just seats for one game, he said he couldn’t give away that much. He told me that two season tickets were worth $700 and that was more than he could contribute. I tried to convince him that since they weren’t selling out, it would benefit him to have some more fans in those seats, plus they’d buy beer, souvenirs, etc. I also challenged him about whether they were even worth that much and told him they’d probably only go for about half that amount, or $350 at the auction.
He didn’t buy that argument so I finally proposed a deal. I said, “I’ll tell you what. If you give us those tickets and they sell for more than $350, I’ll personally buy four of your best tickets.” He said, “Okay, you’ve got a deal. I bid $351, now you have to buy four seats down on the floor!”
I said, “No, no, no, you have to be present at the banquet to make a bid.” So he asked me when it was and said he’d be there.
We sat together at the dinner and Ted wound up bidding high on everything, including guns, paintings, a canoe—he even bought two hunting dogs. One of the final items put up was a trip to a plantation owned by Rankin Smith, the owner of the Atlanta Falcons. When they announced this trip, Ted leaned over to me and said, “I own the best duck hunting place there is. It’s over in South Carolina—a whole plantation—and since this is a duck function, I could have given a trip there.”
I said, “Well, I’m in charge of prizes and you’re in charge of your plantation, we could work out a deal right now.” He agreed and a few minutes later I got up on the stage to describe this new item on our agenda and to try to get everyone excited. Of course I barely knew anything about it so Ted jumped up and gave me the hook. He got everyone so fired up about this place that it finally sold for a bid of $10,000.
I thanked Ted and on the way out he asked if I could bring everything he bought over to his office the next morning. So I left there with several shotguns in my car, two dogs, paintings, and a canoe sticking out the back—everything he’d won that night—and I drove over to his office the next morning. He invited me to go hunting with him on his next trip and it was then our personal friendship began. After that first weekend I knew that Ted was somebody really special. As a broker I’d worked with a lot of smart people but he had one of the brightest, quickest minds I’d ever been around. On top of that, he was driven way beyond anyone else I’d ever met. He was also very open about sharing his thoughts with me. He’d use me as a sounding board on everything from what he was doing in Washington to his strategic plans for CNN. He always did most of the talking but appreciated the questions I asked and the holes I tried to poke in his arguments.
I once again thought in military terms and reasoned that I could not afford to engage in a long, protracted war against opponents with such superior resources. I had to knock them out, and quickly. I viewed CNN as our beachhead, and I figured the only way we could keep them from taking this territory was to create our own headline service and fend them off. Around Labor Day of 1981 we decided to create CNN2, an all-news channel with a thirty-minute cycle of headline stories. With Satellite News Channel planning to launch in June of 1982, we announced that our new service would begin six months before theirs, on January 1. We had to get the new channel on the air in just four months.
Fortunately, we had purchased the Progressive Club property in part because it had plenty of land for expansion. Bunky Helfrich decided that for CNN2 we could take the space where the swimming pool had been and put up a Butler Building (this is essentially an aluminum Quonset hut). Launching CNN had been a more extensive undertaking, but with CNN2’s compressed timetable the pace of our challenges was incredible. This was the greatest threat that our company had ever faced, and every one of us knew it.
One of the main reasons SNC was such a challenge was that its presence would make it more difficult for us to collect license fees from cable operators—and without these payments, CNN would never be profitable. At the time, we were charging 15 cents per month per subscriber for one service, but ABC/Westinghouse was going to offer both of their channels for free. Their plan supposed that the scale advantages—both in production and their ability to sell advertising—would allow them to make money without license fees. We realized this meant that SNC’s distribution might surpass our own and that CNN might even get dropped from cable systems that would switch us out in favor of a free competitor.
While we couldn’t give away both our channels for free, and I didn’t like the idea of dropping our price for CNN, I thought we could win this battle if we kept CNN’s rates where they were but offered CNN2 free of charge to those cable systems that carried CNN. As part of our sales plan, I also made every effort to remind cable operators that while ABC and Westinghouse were newcomers to cable, I had been there from the beginning. I was even featured in a promotional music video. The song’s title was “I Was Cable When Cable Wasn’t Cool,” and it served as a pointed reminder to the operators of our long-standing partnership. In addition to circulating copies of the song we took out trade ads and even a billboard at the national convention in Las Vegas. I was standing there with my cowboy hat and guitar and everyone seemed to appreciate my spirit and showmanship and this campaign definitely helped us.
Another welcome opportunity presented itself in the form of a boast from an ABC executive shortly after their launch announcement. He told a newspaper reporter that this was going to be like General Motors going after Studebaker, and was quoted saying something to the effect of “we have deep pockets and Turner doesn’t.” This comment, coupled with the fact that they were coming after us with well-below-market prices, gave us a great case to accuse them of predatory behavior in violation of antitrust laws. This wo
uld be no small deal—in antitrust cases the aggrieved party can sue for treble damages, and since our CNN investment to date was upward of $100 million, we could sue for $300 million. Their executives claimed publicly that this threat didn’t concern them, but privately we knew they were worried.
The battle became increasingly costly for both sides. Having learned our lesson from the SATCOM III disappearance, the minute we decided to launch CNN2 we focused on securing a transponder. Since none was on the market we had to work out a deal with Warner Communications, who had a lease on a transponder but with no immediate plans to use it. When we told them we couldn’t afford to pay cash they came back and countered with the idea of taking over our ad sales operation. Essentially, they would merge Turner Broadcasting’s sales team into their own and collect a royalty on the revenue generated from our networks. This was not a great solution for us—it’s a very risky thing handing your sales efforts over to someone else—but we needed that transponder and we made the deal. (It would be another two years before we could unwind this relationship and once again took over the selling of our own advertising time.)
On the SNC side, their business plan had never contemplated the launch of CNN2 and now that we would be effectively splitting the market for a headline service, their losses would be larger than they anticipated. Struggling to gain distribution against CNN2, they had to pay up-front fees to cable operators in exchange for inclusion in the lineup. We countered with what we called our “$3 Plan.” At 15 cents per month we were getting $1.80 per subscriber for CNN, and we told cable operators that if they carried both of our news services we would pay them back $1 per year for three years. This was a very costly exercise for us—effectively lowering our sub fee for both channels by nearly 70 percent—but it was an effective tool in slowing SNC’s distribution efforts.
After CNN2 had been on the air for several months and shortly after SNC launched—and as all of our losses continued to mount—we heard that ABC and Westinghouse had decided to delay the launch of their second channel. With this development, Turner was now the company with two networks to their one. We also heard rumors that they might be open to settling our antitrust claim. I could sense that we were winning.
Our lawyers met with theirs to discuss a settlement. ABC and Westinghouse said they were willing to exit the cable news business if we agreed to pay them $25 million. We might have been able to win our antitrust case but that could have dragged on for several years. Twenty-five million dollars was a lot of money, especially on top of the other millions we had invested, but Bill Bevins, my top financial person, reasoned with me that fighting it out with SNC was costing us $4 million a month, so for the cost of about six months of more fighting, we could buy them out altogether. We decided to settle for the $25 million. It was a costly sum but a big win nonetheless, and it would be thirteen years before we faced another twenty-four-hour all-news channel.
CNN2, later renamed Headline News, went on to be a successful service and an important part of our overall business. Fending off ABC and Westinghouse, though expensive, was a huge shot in the arm for our company. I’ve told people that Turner Broadcasting’s defeating ABC and Westinghouse in the early 1980s was like Luxembourg going to war with both the United States and the Soviet Union—and winning.
Launching the SuperStation and CNN and winning the America’s Cup and Fastnet were major achievements, but this was my biggest win so far.
By the time I gave up racing, my children were well on their way to becoming adults. For their high school years, both Teddy and Laura went away to private school. Given the ongoing tensions between them and their stepmother, this made the most sense. After returning from Cincinnati, Laura went to a boarding school in Texas, before coming back to Georgia to attend Rabun Gap School, from which she graduated in 1979.
With Teddy away at McCallie, this left our three youngest children at home, and as they grew older, Janie and I became increasingly concerned about the public schools in Atlanta. Since we weren’t sure that their grades would get them into Atlanta’s elite private schools, Janie and I came up with an idea. Why not move our family to South Carolina and live at Hope Plantation? This was a beautiful property, about thirty miles from Charleston, and there was a good private school in Walterboro named the John C. Calhoun Academy that they could attend. I couldn’t commute to Atlanta from there but I was spending so many nights sleeping in my office that this wouldn’t change our routine and I could still make it home on weekends.
The move seemed to work well and having our home base near Charleston also wound up influencing where Teddy was to attend college. I believe in the value of a military experience, so when Janie pointed out that since it was so close by, Teddy should consider The Citadel, I liked her idea a lot. I knew it was tough but I thought it would be good for his development.
A TED STORY
“I Can’t Believe My Dad Sent Me to College”
—Teddy Turner
When people sometimes say to me, “I can’t believe your dad made you go to The Citadel,” I say, “You’ve got it a little wrong; I can’t believe my dad sent me to college!” He was so cheap I actually wasn’t sure if he’d pay my tuition, but he did like the idea of me going on from McCallie to get my military education in college. His father was not a big fan of military colleges, from what we understand, because he wanted Dad to go to an Ivy League school so he could have a higher standing and stature both educationally and socially and Brown seemed like a better thing to do for a successful businessman’s son. But I think that when Dad went to Brown he realized that that might have been true in general but that it wasn’t a place that worked for him.
The Citadel was not an easy school by any means but I had it a lot easier than most kids. I grew up in a household that was a tight ship, then went to McCallie, which, having just changed from being military a couple of years before, was still a tight ship, so the environment at The Citadel was not completely foreign. I felt sorry for kids who came there straight from home.
When Teddy came home for Thanksgiving his freshman year, the changes in him were remarkable. He went there with long curly hair and they cut it all off. He must have lost about thirty pounds and he sat bolt upright at the dinner table. He looked fabulous and every time we talked to him it was “Yes, sir” and “No, sir.” He set a great example for his younger siblings. All three of my sons wound up attending and graduating from The Citadel.
A TED STORY
“He Makes You Want to Be Better”
—Beau Turner
Despite my two older brothers going to The Citadel, I still had trouble getting in. I had been diagnosed as dyslexic and was screwing off in high school. I could tell my dad was disappointed in me and I told myself I was going to get into that school. I kept trying to get a meeting with the colonel in charge of admissions but they kept throwing me out, saying I wasn’t getting in. I finally literally barged my way in one time and when I sat down, I noticed that the colonel had a hunting bow on his desk, so I started up a conversation about hunting. He had heard about Hope Plantation and what a great place that was, and after we started to hit it off I asked if he would consider accepting me conditionally, essentially the same deal the athletes got, and he finally said yes.
Once I got in I really busted my butt and wound up getting good grades and making the dean’s list a couple of times. Basically, I didn’t want to disappoint my dad. He always has a way of making you want to work harder. Whether it’s his kids or his employees, he makes you want to be better.
One of the reasons I like military schools was I wanted my boys to be tough and self-sufficient. I also tried to set a personal example for all my children when it came to hard work and appreciating the value of hard-earned money. My kids obviously saw the hours I put in at the office and at the height of my wealth I still drove around Atlanta in a Ford Taurus and bought my clothes off the rack. In fact, I was so thrifty that someone at the company once said, “Ted Turner could squeeze Lincoln off a
penny!” During my sailing career and my time at Brown, I’d seen plenty of wealthy people’s children who were spoiled and didn’t have much of a work ethic. I didn’t want to see my kids end up like that and while they certainly enjoyed some of the fruits of my success—whether that was my boys hanging out with Braves players at spring training or Laura and Jennie owning horses when they were teenagers—I made it a point to be sure that they didn’t get too much handed to them on a silver platter.
A TED STORY
“I Did That for You Guys”
—Rhett Turner
I remember we would go duck hunting in South Carolina in December and January and my dad would drive us out in his Jeep. It had a cover and heating, but instead of using either of those Dad kept the top off and the windshield straight down. We had our jackets and warm clothes on but it was still really cold and he’s up there shivering while he’s driving the car and Beau and I are sitting there freezing, thinking, “Jeez, can’t he at least put the windshield up?” I never understood why he did this until finally, several years ago, I asked him. I said, “Dad, when we were down at Hope Plantation I don’t understand why you drove that Jeep with the top and the windshield down. Remember? You’d be freezing, with snot going down your mustache and gloves; you could hardly hold on to the steering wheel.”
He said, “Son, I didn’t do that for me. I did that for you guys. I was working on making you tough.”
It was never as bad as in The Great Santini but life with my dad was a little bit like being in the Meecham family from that book. Their dad was really tough, but no matter how hard he was on them they loved him. It’s the same way with my dad. The hardness was difficult but the reward is he’s made us very competitive to want to succeed in the world, whereas a lot of wealthy people don’t raise their families in an environment that makes them competitive and they don’t succeed on their own.
