Call Me Ted

by Ted Turner

  That same night Ted was being interviewed on stage at the Museum of TV and Radio and there were a lot of important people there from the media industry and I was sitting in the audience when he started to tell the story about our meeting.

  “I was meeting with Jeff Bewkes, who’s sitting right there,” he said, pointing at me in the audience, “and he was telling me all this new digital stuff so I just rolled on the floor,” and he literally threw himself out of his chair onto the stage at the Museum of TV and Radio and reprised his fetal position, covered his ears and yelled, “It’s too hard, too complicated, don’t tell me!”

  The audience loved it, and so did I. To me, he was telling me that he appreciated that what we were trying to do at HBO was complicated and that he wasn’t going to try to do my job. I remember going back to my staff and telling them that Ted was going to be a great boss, and he was.

  Jerry Levin and I worked well together during those first few years. I’d known of his reputation for being pretty astute in the ways of corporate politics but I saw him more as a hardworking, shrewd businessman with whom I’d been collaborating successfully for the past twenty years.

  Now that he was officially my boss we spoke in person or on the phone almost daily—generally updating each other or talking about strategic issues—and for the most part he let me do my job. When we gave our presentations to employees and investors about the virtues of our companies coming together they were well received. People on the Time Warner side, who were used to seeing a more sedate leader like Jerry, seemed to respond well to my energy and enthusiasm. Our fellow employees saw us working as a team and no one could argue that the assets of the two companies didn’t make for a powerful combination.

  In the months following the merger, we pushed each operating division to find cost savings, and we did everything from laying off nonessential employees to closing entire companies in the case of overlapping operations. These cuts weren’t easy and in one case, my own son was a casualty. Now that we were part of a company that owned Warner Brothers, having a second home video division was redundant and when we closed Turner Home Video, my son Teddy was laid off. Prior to this, he and I were having dinner with Jane and some friends at a big restaurant in Atlanta. At one point during our meal, Teddy asked me, “What happens to us after the merger?” He was referring to the Home Video division and I responded, “You’re toast.”

  My hearing has deteriorated over the years and as it has, my speaking voice has gotten louder. Apparently, unbeknownst to any of us, there must have been a reporter near us in that restaurant, since just a day later articles appeared describing this exchange, but making it sound like I was singling out Teddy. Actually, I was just answering his question honestly and when these stories ran, the two of us got a laugh out of it.

  I think the story actually helped our terminated employees understand that we were making tough decisions and weren’t playing any favorites—even with my own son. (By the way, while all of my kids worked at least some time at the company, and I helped them get jobs there in the first place, once they were hired I never believed in giving them special treatment. Some other businesses are run like family dynasties but as the CEO of a publicly traded company, I didn’t think it was appropriate to favor my children.)

  As a businessman, I believed in running a lean operation and I accepted these post-merger cost cuts, but it really bothered me when I saw how much money was being spent at the higher corporate levels. Time Warner executives ate in fancy private dining rooms and their offices and boardrooms were full of expensive artwork. When I found out that the value of these paintings ran into the millions, I was upset. At one of our board meetings I said, “So while we’re laying off $30,000-a-year employees in Atlanta, we have million-dollar oil paintings hanging on the walls in New York?” The contradiction was plain to everyone and soon the paintings were removed and sold. For months thereafter, dark rectangles on the faded walls served as a reminder of the expensive artwork that used to be there.

  I also spoke up whenever I saw a lack of cooperation between divisions. I was used to running a business where everyone worked together, but at Time Warner the corporate culture was different. There, the division CEOs generally ran their individual businesses as they saw fit, but I merged with Time Warner with an understanding that this would change. In particular, I expected our entertainment networks to have access to newer programming being produced at Warner Brothers. Historically, after theatrical movies ran on pay channels like HBO they were then licensed to the broadcast networks, and I wanted TBS and TNT to move into that advanced position.

  I knew that by doing this we could grow the ratings of TBS and TNT and increase their overall value. We had done these deals with New Line and Castle Rock on some hit movies like Dumb and Dumber and The Shawshank Redemption and the results were positive. But the Warner Brothers people had been doing business with the networks for years and didn’t like the idea of changing. I thought I’d been clear with them about how this strategy would work and when I found out that a package of movies was instead being sold to CBS, I was furious. I called Bob Daly, co-chairman of Warner Brothers, and explained again that we were now part of the same company—one that I happened to own about 10 percent of—and he needed to get with the program.

  Daly didn’t like it but I hadn’t sold my company to Time Warner so we could continue to do business as usual once the deal was done. Jerry Levin generally supported me and I think he appreciated my speaking. The role of CEO at Time Warner had been weakened so much over the years and the division heads had been allowed to operate so freely that it would have been hard for Jerry to change his behavior suddenly and become more assertive after our merger. I filled that role on occasion instead and it all came naturally to me.

  Jerry and I worked well together even though there were times when our differences were apparent. The corporate floor at Time Warner headquarters in New York was a pretty staid environment. Between his secretary’s area and his office Jerry had a meeting room. Once I got my own office on the floor and started to spend more time in New York, whenever I wanted to see Jerry I simply walked through the meeting room and right into Jerry’s space. This always seemed to surprise him and I never understood why until someone explained to me that he rarely let visitors into his own private office. So, unbeknownst to me, I’d been violating some unspoken corporate protocol.

  Despite our differences and the fact that we never became particularly close personally, Jerry would often describe me at public events as his “best friend.” After doing this several times I finally asked him, “Jerry, if I’m your best friend, who’s your second best? I’ve never even been over to your home for dinner.” Looking back with 20/20 hindsight, I can see that the personal differences we experienced when business was good should have warned me about how we’d get along when times got tough.

  But there were plenty of issues on which Jerry and I agreed. Shortly before our merger officially closed, in the fall of 1996, the two of us were united in a dispute with Rupert Murdoch’s News Corporation. Rupert was launching Fox News Channel and was trying to get distribution on cable and satellite systems. When you roll out a new advertising-supported cable service like Fox News you want to be available in as many households as possible. You also need to be carried in major markets if you want to attract national advertisers, and for a news channel, no market is more important than New York City. It so happened that the bulk of the cable households in New York were owned by Time Warner Cable, and when the system managers balked at carrying Murdoch’s channel, war broke out.

  I’d never made a secret of my dislike for Murdoch’s business practices, and given the poor journalistic standards his newspapers exhibited, the idea of his getting into television news didn’t make me happy. From CNN’s earliest days I was concerned that someone would come after us with a right-wing network and now it was happening. But when Time Warner Cable originally passed on carrying the Fox News Channel, I had nothing to do with t
he decision. Back then, there were several new services trying to get launched, and channel slots were scarce. They already carried CNN, Headline News, and NY1 (Time Warner’s own local news channel), and they were being actively pitched by MSNBC (the channel that Microsoft launched with NBC after their deal with us didn’t materialize). Given all the news programming they already carried they probably wouldn’t have added any more but when the Federal Trade Commission approved the Time Warner–Turner merger, Time Warner Cable had to pledge to carry a CNN competitor on at least half their systems. After looking at both Fox News and MSNBC, they decided to take the latter.

  It’s important to understand that the programming people at Time Warner Cable were tough negotiators and even after our companies merged, it was difficult to get them to carry newer Turner channels like the Cartoon Network and Turner Classic Movies. Once the Time Warner–Fox dispute became public, it was portrayed as if we were picking on Fox and that the behind-the-scenes battle was really between Rupert Murdoch and me. While that wasn’t true I figured out that the press attention would give me the opportunity to explain to people that Rupert had a history of manipulating his media’s coverage to advance his political purposes. At the height of this public feud I even went so far as to challenge him to a boxing match in Las Vegas. He declined. (By the way, professional wrestling was popular on our entertainment networks at this time and one of our executives suggested that instead of boxing Murdoch, I should wrestle him on a pay-per-view event. But I passed on this idea. I didn’t want to wrestle Rupert, I joked, I wanted to hit him!)

  Murdoch didn’t respond to me directly; instead, his media outlets started to go after me. That October, when the Braves were playing the Yankees in the ’96 World Series on the Fox Broadcasting Network, I learned that the producers of those games were instructed not to show me on camera unless it was unflattering. The first three games they never put me on the air, and when they did finally put the camera on me, with Jane and Jerry Levin during game 4, the announcers didn’t say a word. When the Braves went behind 8–6 in the tenth inning, they put me back on to show how upset I was. After that, whenever they showed me they tried to make me look silly, like when I turned my Braves hat into a rally cap—upside down and sideways on my head—or the time I dozed off a little during a game.

  Murdoch’s New York Post also made fun of me. They doctored a picture to show me in a straitjacket with a headline that said, “Is Ted Turner Crazy?” Instead of letting this bother me I decided to have some fun. Shortly thereafter I gave a speech in New York and I told the audience that I was still mad at Rupert and now I was considering shooting him. This was a sophisticated New York crowd and they were startled until they realized I was joking when I added, “I figure that now that his own paper says I’m crazy, I can kill him and get off by reason of insanity!”

  The negotiations over Fox News were further complicated when New York mayor Rudolph Giuliani got involved on the side of News Corp. I don’t know what kind of deal those two had together but Giuliani pressed the case that Time Warner needed to carry Fox News and even offered up one of the city’s channels as a slot they could use. (Local communities have the right to a certain number of public access channels when they allow a cable company to serve their market.)

  I stayed out of the way while a deal was worked out in the summer of 1997. Fox wound up being very aggressive with launch fees, ultimately offering to pay Time Warner Cable more than $10 per subscriber to gain carriage in New York. This was an expensive strategy but it certainly proved helpful in gaining national distribution quickly. Before long, Fox News was in millions of homes and, sadly, their ratings eventually surpassed CNN’s. While we tried to stay true to our mission of delivering news stories in an unbiased fashion, their strategy of reporting and airing talk shows with a right-wing slant proved to be popular.

  Throughout this period I continued to spend time with the divisions that reported to me, and I enjoyed working with Mike Lynne and Bob Shaye at New Line Cinema. They were great entrepreneurs and while they had built their business primarily with smaller budget films, I challenged them to spend more money on bigger projects.

  A TED STORY

  “You Guys Should Make Really, Really Big Movies”

  —Michael Lynne

  Ted was significantly influencing our decision making going back to 1994 and 1995 when we were doing The Mask and Dumb and Dumber. We were still committed to modest budget films—I think Dumb and Dumber cost $16 million—it’s what we had always done. But there was a time when we were down in Atlanta for a management meeting and in the course of talking about the movie business, Ted said, “You know what the problem is? We’re not making enough hundred-million-dollar movies.” He turned and he looked at Bob and me across the table, and with everyone else in the room, he said, “You guys should make really, really big movies; maybe the most expensive movies that have ever been made!” We all laughed because at that point we probably had never made a movie for more than $35 million.

  This was not really an actionable plan but in a funny way this statement stayed in the back of our heads and from time to time Ted would reiterate this point and keep pushing us to stretch and do the kind of big blockbusters that he had in mind. He really believed—maybe a little more than we believed it at that time—that we could deliver at the level of any major that was out there if we had the wherewithal to do it. So when The Lord of the Rings came along, the idea and the concept and the potential was so extraordinary that we decided that it was the right thing for us to do.

  Disney’s Miramax had controlled the rights to The Lord of the Rings trilogy, but when director Peter Jackson wanted to shoot the first two movies at the same time, they balked. When Jackson had brought the project to New Line, Mike Lynne and Bob Shaye had a different idea. After seeing a demo tape of how he envisioned mixing real people with hobbits and showing the new technology he planned to use for the big crowd scenes, the New Line executives encouraged Jackson to consider shooting all three films at once. Jackson loved that idea and when the concept was finally brought to me for approval, I loved it, too.

  Mike and Bob were very creative but they were also great businesspeople; over the years they had figured out a way to lower their risk on movies by getting up-front advances from international distribution partners. Moving forward with an unproven, expensive trilogy was a major gamble, but when Bob and Mike told me that they wanted to do it I enthusiastically agreed. It turned out that I was giving a green light not only to what was by far New Line’s most expensive venture ever, but a project that would become the most successful trilogy in movie history. Even after the efficiencies gained by shooting the three films at once, the total production expense was more than $300 million (only slightly less than what three individual Star Wars movies might cost), but taken together these movies grossed nearly $3 billion at the worldwide box office and generated an even greater amount in home video and merchandise sales.

  When the third of these films won the 2003 Oscar for Best Picture, I was right there, cheering!

  Through the first three quarters of 1997, Time Warner’s stock started climbing. As Jerry and I made our case for how well the two companies—and the two of us—were working together, investors understood. Whether I was encouraging better cooperation between divisions, raising concerns about expensive artwork, or fighting with Murdoch, Wall Street analysts appreciated seeing a new level of energy at what Jerry often referred to as “The New Time Warner.” We also focused on plans to improve the company’s performance. One of these was to turn TBS from a superstation to a pure cable network. The details of this conversion are complicated but essentially we were able to move from a situation where we generated revenues from advertising only to one where we collected subscriber fees just as we did with CNN and TNT. In exchange for these fees we provided cable operators the ability to insert local ads, and given TBS’s strong ratings, this was valuable inventory. When we netted out the value of that lost inventory from the new
revenue we would generate from subscription fees, we would add about $100 million a year to Time Warner’s bottom line.

  Within the first nine months of 1997, Time Warner stock jumped by about 50 percent. The ramifications of this growth became clear to me when I was flying to New York for business meetings and to receive a special award from the United Nations. Looking through my monthly financial statements I realized that since the start of 1997, the value of my Time Warner stock had increased from roughly $2.2 billion to $3.2 billion. I’d made a billion dollars in just nine months. At that same time, I had been considering ways that I could make a meaningful statement at the upcoming United Nations event. That’s when it hit me. I would donate a billion dollars to the United Nations!

  29

  Billion-Dollar Gift

  In addition to being active with Rotary and other civic organizations, my dad was also philanthropic with his own small resources. Not only did he make contributions to causes that he cared about, but I also discovered after I left Brown that while he never paid for my full four years, he did support the tuition of two African-American students at his alma mater, Millsaps College. It made a big impression on me to see someone as hard-charging as my father take the time to quietly help out two young people like this. Sometime during the 1970s—years after my father’s passing but before I had made a significant amount of money—I attended a seminar on philanthropy in Washington, D.C. At dinner I was seated next to a man who was quite a bit older than I and we began discussing charitable foundations. He told me that his father had been wealthy and that he had set up a family foundation when he was still a relatively young man. His children at the time were already young adults and he made each of them members of the foundation’s board of directors. This man described what a wonderful thing his father had done because it brought his family together. He and his siblings learned about what their father wanted to do with his fortune—what kinds of things he was interested in supporting—and it was fun for them to gather at regular times throughout the year to sit around a boardroom table and decide what good things they wanted to do with his money.