by Ted Turner
John’s first discussion with the other cable operators began in January of 1987. By June, the deal was in place and more than thirty cable companies invested a total of $565 million for 37 percent of Turner Broadcasting System, Inc. For a number of reasons, we felt that this was a good transaction for Turner shareholders. I still controlled a majority of the company’s voting shares, we raised the capital we needed, and we had a dream team of industry partners invested in our company. As part of the deal, seven of our fifteen board seats went to representatives of our larger cable investors, including TCI, Time Inc., and Continental Cablevision. I liked the idea of having smart cable operators on our board so much that I filled one of my eight seats with Brian Roberts of Comcast. (Comcast’s investment wasn’t large enough to earn a seat but I wanted him and his company to be involved.)
While they didn’t own a majority of our voting shares, our new investors did attach strings to the deal. For example, TBS could not make expenditures of more than $2 million without board approval. But with that first restriction came a second. Both Time Inc. and TCI each had the right to veto any of these activities, so for any meaningful strategic moves or acquisitions, we had to get the approval of both TCI and Time Inc.
By the time we got to negotiating these finer points, not only did we not have a whole lot of leverage with our prospective investors, but both Bill Bevins, my vice president of finance, and I were exhausted. Between the planning for CBS, then negotiating to buy MGM, selling it back in pieces, and now this new arrangement, we were simply burned out. (Bevins, in fact, had a mild heart attack in my office and wound up leaving the company shortly after this deal was finalized.) Handing over veto power to Time and TCI would ultimately become one of my greatest regrets.
I’d been working with a board of directors for many years but these first meetings with this new group were an eye-opener. Not only had my authority been limited, I was now presiding over a board that included successful, strong-willed entrepreneurs who were also our biggest customers. It was a collegial group, but we all knew that there was some real competition and tension across their various companies. Recognizing that our arrangement was unusual, everyone worked hard to make sure we were acting in the best interest of our shareholders and trying to avoid conflicts of interest.
A TED STORY
“Not at All Shrinking Violets”
—Brian Roberts
(BRIAN ROBERTS IS CHAIRMAN AND CEO OF COMCAST CORPORATION.)
Back when I was a sophomore in college my father took me to the NCTA convention. At one point I walked by a room and saw a sign about the launch of a new network. I looked inside and there was a handful of people and there’s this guy Ted Turner up there talking about this new thing that was going to change the world. He was discussing the launch of CNN and at first I thought the guy was crazy but I realized that the business was changing from just transmitting broadcast signals to delivering original programming. It was going to make cable very interesting.
Years later, I was working for the company full-time and had been assigned to be the person at Comcast who worked most closely with the programmers. When John Malone came around looking for investors in Turner I thought it was a great opportunity and recommended to my father that we put in $100 million. He couldn’t see the benefit of such a big investment for a minority stake, so we wound up putting in about $5 million. Our investment was too small for a board seat but a little while later, Ted called up and asked me to join his board as one of his directors.
So there I was, in my late twenties, sitting on this board that was full of very strong-willed entrepreneurs who were very colorful characters—not at all shrinking violets. It was not a textbook Harvard board but it was a great education for me and the dynamics were fascinating. I used to joke that our meetings themselves would have made a great cable channel!
At our first board meeting I pushed hard for us to develop a new entertainment channel. My idea was to compete directly with the networks with original programming and while the SuperStation relied primarily on reruns and sports, this channel would make original movies and pursue big, high-profile events. Our management team, led by Gerry Hogan, put together a list of the top one hundred events on television—everything from the NFL to the Olympics, the Oscars, the Emmys, Miss America, and Wimbledon. This collection became our shopping list and we used it in sales pitches to advertisers and cable operators to give them an idea of how ambitious we planned to be. Filling out the schedule would be movies, series, and cartoons drawn primarily from our library. Because we would target the networks directly, when deciding on what to call the channel I felt we should use the word “network” and came up with Turner Network Television, or TNT. We planned for this channel to be dynamite!
Advertising revenue alone would not be enough to finance such an ambitious channel. We needed subscription fees as well and we targeted 15 cents per month. While 15 cents might not seem like much, when you multiply that by twelve months and spread it across millions of subscribers, the numbers get big pretty quickly, and these revenues would provide a strong, steady foundation for our continued investments in original, high-quality programming. CNN had gone on the air in 1980 with about 2 million subscribers, but cable penetration had grown dramatically since then, and with our operator owners in agreement with our plan it looked like we would launch TNT with much wider distribution.
In addition to high-profile events and original programming, I envisioned TNT as a vehicle to maximize the value of our newly purchased libraries. We continued to invest in the preservation and colorization of our older films. In fact, the first step in the colorization process is restoring the original print to the best state possible. Colorizing movies was not inexpensive—it cost about $2,000 per minute or about $200,000 for the average length film. But updating these older titles helped us earn new syndication revenues, especially overseas, where many television stations had stopped buying black and white product. It also gave us the opportunity to “premiere” these newly colorized classics on TBS and TNT.
The publicity we generated from colorization was tremendous. It was more controversial than I had anticipated and when we announced our colorization plans, there was backlash from the Hollywood community. Some directors and producers—everyone from Martin Scorsese to Billy Wilder—were outraged that we would colorize classic films without input from their original creators, who were mostly deceased. We were accused of “cultural vandalism.” Woody Allen said that what we were doing was “criminal” and showed “a total contempt for film, for the director, and for the public.”
I was undeterred. It was okay for people to write negative things about me just as long as they spelled my name right—and I really didn’t think we were doing anything wrong. After restoring original black and white prints the colorization was done on a duplicate video copy, so the originals themselves weren’t altered, and by breathing new life into these old movies we attracted audiences that wouldn’t have seen them otherwise. Besides, movies had been altered ever since they were first shown on television. To fit a square television, widescreen feature films had to be squeezed and clipped, and they were edited for content (such as removing nudity or obscene language), and some were even sped up or slowed down to fit precise time slots on TV station schedules. What we were doing wasn’t any worse than what had been going on for the past thirty years and besides, if a viewer really didn’t like these changes, he could turn down his TV’s color knob and watch it in black and white!
The colorization controversy grew so great that Roger Mayer, the MGM executive that I had put in charge of managing the movie library, was asked to go on shows like Today and Good Morning America to defend our position. Roger had an excellent reputation in Hollywood but that didn’t keep people from getting angry. Eventually, we even had to make our case before Congress, and every time we were challenged, the laws were interpreted in our favor because we owned the films’ copyrights.
These victories were reassuring to
me as they supported one of my fundamental beliefs about running a business: when you own an asset, your job is to maximize its value. For Turner Broadcasting, that might mean using unsold billboards to promote our radio stations, airing the Braves on the SuperStation, or disappointing some film purists by updating old movies. Our competitors had more resources than we did and we had to do everything we could to get the most out of what we had. While colorization wasn’t accepted in certain circles, TV audiences responded well. We had run Miracle on 34th Street on the SuperStation at Christmastime for years, and when we first showed the colorized version it did nearly six times its average rating (and when we added color to Santa’s outfit we had a high degree of confidence that we were getting it right!).
Over the years, the colorization debate quieted down, and ultimately our extensive film preservation work earned the approval of even our staunchest critics. Nearly twenty years later, partly in recognition of these efforts, Roger was given the Jean Hersholt Humanitarian Award from the Motion Picture Academy. The prize was presented during the 2005 Oscar telecast, and the man who volunteered to introduce him and did so with the highest of praise was none other than Martin Scorsese. No one deserved that award more than Roger, and it was a proud moment for all of us.
TNT debuted on October 3, 1988. We signed on with my favorite movie, Gone with the Wind, and our signal reached an amazing 17 million households, making TNT’s launch by far the largest in cable history. We didn’t charge a subscription fee for the first three months, but in January of 1989, we began collecting a monthly rate of 15 cents per household. By spring, we were up to 24 million households and by TNT’s first anniversary it was carried in 50 million homes and generated nearly $100 million in subscriber revenue alone. It would be a while before we landed any of the targets on our “Top 100” list but we did produce some great original movies—a first for basic cable—and viewers and advertisers responded well to the channel. TNT would eventually become home to telecasts of the NFL, the NBA, Wimbledon, PGA Golf, and other major events, and today it remains one of television’s most valuable channels.
While TNT was a major success, due in large part to cooperation from our cable operator partners, they did stop me from pursuing another cable channel that I really wanted. By 1988 the Financial News Network (FNN) had been on the air for a few years and was headed toward bankruptcy. FNN was an independent channel that delivered twenty-four-hour business news. They struggled to build an audience and were now threatened by NBC’s plans to launch a rival service named CNBC. Word got out that FNN could be purchased for as little as $100 million and I wanted it badly.
We already carried business news on CNN and extending that coverage on a twenty-four-hour channel would be easy. The cost efficiencies of such an acquisition were compelling and I thought that if we moved quickly to purchase FNN and strengthen the channel, CNBC would be dead on arrival. Unfortunately, the board did not agree, and for the first time since investing in Turner, they kept me from making a deal I really wanted to make. While they raised questions about the viability of the concept of twenty-four-hour business news and had concerns about the fact that NBC was planning a competitor, I think they worried that I was trying to do too much. This troubled them not only because it might cause us to become stretched too thin but also because we were growing too powerful. I was very disappointed. NBC wound up purchasing FNN in ’91, which, after changing its name to CNBC, has been a success ever since.
The final years of the eighties were exciting for our company and we enjoyed tremendous growth. With cable distribution expanding rapidly and the industry supporting subscription fees, our businesses were sailing along. And while my cable operator directors frustrated me on occasion, in general our arrangement worked well for everyone and their investment in Turner Broadcasting was paying off handsomely. From the time between the stock market crash of 1987 and the end of 1989, our stock price went up by more than 500 percent, and while I owned a smaller percentage of the company, the value of my holdings had skyrocketed. Heading into the nineties, my Turner Broadcasting stock was worth more than $1 billion.
While I had never been in business primarily for the money, when I became a billionaire, it did feel good. My pleasure came not only from a sense that this was a measure of achievement, but also because I’d reached this point while still young and feeling like there were plenty of opportunities ahead.
22
Meeting Jane Fonda
I didn’t set out to become a billionaire. I wanted to be a success, but learning from my father—whose life reached its crisis point at the very height of his net worth—I didn’t set my goals in monetary terms. But many people do keep score this way and when you become well known for achievements in business, people often ask, “What’s the secret?”
In addition to luck, there were a number of different factors and personal behaviors that worked in my favor, but none of them is really a secret. For one thing, I’ve always had a lot of energy. Ever since I was little, my mind and body were active and I couldn’t stand sitting around. Even today, I’m constantly moving. Purgatory for me would be spending twenty-four hours with nothing to do but to be alone with my thoughts. I do a lot of thinking when I’m out walking, riding horses, or fishing, and at mealtime debating and discussing ideas with others. (This might explain why I used to have a problem with the popular view of heaven. Sitting around on a cloud playing the harp all day always seemed more like hell to me!)
I also keep my sights set on the future and don’t spend much time dwelling on the past. I’ve had some tough experiences as a child and have had my share of business and personal setbacks, but sitting around thinking about them isn’t going to change anything. Someone once said that I was a good winner but a better loser. When I have a setback, I put it behind me as fast as I can and keep moving. I don’t play golf but I compare the way I respond to disappointments to the way a golfer does after he hits his drive into the water. He doesn’t walk down to the pond, dive in, dig out his ball, examine the ball, and ponder what happened. Instead, he takes another ball out of his bag, tees it up, and keeps on playing. After a disappointment I always try to bounce back and I’ve no doubt that this has helped me tremendously. I also have a strong work ethic. From my earliest days pulling weeds in the yard to working for my dad out at the billboard company, nothing was handed to me; I always had to work for it.
There probably are some ways that I work and live that might be a little different from other people you come across. For one thing, I go to great lengths to be efficient with my time and try to make the most of every minute of every day. When I run meetings, they start on time. A lot of that came from my father and punctuality was stressed at McCallie and the Coast Guard. For much of my career, I didn’t even waste time getting to and from work. There were long stretches when I spent most of my weeknights sleeping in my office, and later, when I could afford to, I built an apartment on the top floor of CNN. So when millions of Atlanta drivers were wasting their time sitting in traffic, my commute was nothing more than walking up a flight of stairs, and I had that much more productive time to work every day.
My desire to use time wisely has even extended to what I wear on my feet. For most of my adult life, I’ve never worn lace-up shoes. Most of my shoes are slip-ons, so instead of spending time stooping over tying my shoes, I do something else that’s productive.
Another way I save time is by managing information efficiently. A lot of people become inundated with paper and e-mails, but I make a point to keep a clean desk. I never let things pile up. I couldn’t do this without a great executive assistant and for the last twenty years, it’s been Debbie Masterson. She is invaluable, and in addition to keeping me on track and on schedule, I’ve always counted on her to screen out correspondence that I don’t need to see. (Incidentally, Debbie handles all my electronic correspondence—I don’t use e-mail myself.) The volume of mail I receive is tremendous—from business reports, solicitations, and so forth—but over
90 percent never makes it to my desk. For most requests, Debbie knows how to respond. The 10 percent that makes it to my desk still amounts to a lot and I try to answer it all that day so that I don’t get bogged down with unanswered messages.
Some of my passion for efficiency comes from my experience in sailboat racing. Races are won and lost by picking up a second here and a second there, and I learned a lot about how small things matter. Racing also contributed to my skill at delegation, an ability that’s been of vital importance to my business success. Once you begin racing bigger boats, it becomes impossible for one person to do it all. Instead, you have to have good people, assign them responsibilities, and then let them do their jobs. As skipper, you steer the boat, plot strategy, and issue orders.
Basically, I ran my company the same way I ran my boat. I found the best people I could to run our businesses while I stepped back to keep an eye on our overall strategy and what our next move should be. A lot of entrepreneurs and company founders have trouble leading as their company grows. Part of the problem is that they become so used to having their hands in everything when the company is small that they find it difficult to delegate successfully once the business gets big. I stayed on top of key issues relating to our individual businesses, but I let my managers manage. This gave me time to focus on the big picture.
Another quality that worked to my advantage was my ability to create a fun, exciting environment. Everybody worked hard, often for less pay than they might have made elsewhere, but at Turner Broadcasting there was always a sense that we were the underdogs and we were motivated by the opportunity to prove the naysayers wrong. I certainly had a temper and there’s no doubt that I yelled at people on occasion, but I was good at putting those disputes behind me and the next time I saw the person I’d been angry with, we usually shared a laugh and a pat on the back.
