Call Me Ted

by Ted Turner

  Dick moved quickly to assure Wall Street that he would be transparent and realistic when it came to reporting on the company’s performance. In March of 2002 he made it clear that our first quarter results would fall well short of projections and when these disappointing numbers were announced in late April, the stock dipped below $20. Realizing that my days of having a meaningful say at the company were over and with philanthropic and other commitments, I decided to start liquidating some stock. In May I sold 10 million shares of AOL at about $18.50 a share. This netted me almost $190 million and while it was a relief to pay off most of my bank debt, it hurt to know that just a year earlier these same shares were trading closer to $50.

  The price kept falling as we headed into the summer and by early July it fell below $13. Then, just as things couldn’t get any worse, The Washington Post ran a story describing accounting irregularities on the AOL side of the company. The piece accused management of artificially inflating revenue numbers to meet the company’s aggressive sales targets. When analyzing dot-com companies, Wall Street focused almost entirely on revenue growth and keeping these numbers high was vital to maintaining a healthy stock price. The Post article accused AOL management of maneuvers that wouldn’t necessarily change the bottom line, but would present a misleading revenue picture. For example, they described AOL winning legal disputes with other companies and instead of taking cash as their settlement, they would “sell” them AOL advertising inventory of equivalent value. They’d then record this dollar amount as ad revenue, thus artificially boosting their top-line numbers.

  Coincidentally or not, Bob Pittman resigned the day the story broke, and shortly thereafter, the Securities and Exchange Commission announced a full investigation of the company. On this news, the stock hit an all-time low of $8.70. It had been hard enough watching what I felt to be mismanagement of the company, but when I first heard of these allegations, my disappointment reached new levels. Throughout my career, I had run the company aggressively but I always demanded that we be honest. At Turner Broadcasting, we worked hard and overcame huge obstacles, but we always played by the rules. From my upbringing with my dad to the military schools I attended, honor and integrity were paramount with me. To be associated now with a company accused of dishonest behaviors left me disappointed and angry.

  Meanwhile, over the past two and a half years my net worth had gone from nearly $10 billion down to about $2 billion. To put this in perspective, I lost nearly $8 billion in roughly thirty months. This means that, on average, my net worth dropped by about $67 million per week, or nearly $10 million per day, every day, for two and a half years. Losing that much money so quickly might have been a record, but it obviously wasn’t the kind I was hoping to set.

  But what could I do about it? No one wants to sell at a low and when the stock fell below $9.00 it was hard to imagine things getting any worse. The company was being punished for not making its numbers and the SEC investigation hung over us like a cloud, but when you looked simply at the asset value of the Time Warner side of the company, the stock was clearly worth more than where it was currently trading. Wall Street realized this, too, and buyers slowly returned to the stock as we moved toward the end of the year, eventually heading back into the low teens.

  As time passed I could see few reasons to hang around. Shortly after the start of 2003, Walter Isaacson resigned from his position as CNN’s chief executive. When the decision was made on his replacement I wasn’t even consulted. I didn’t necessarily have an issue with their selection of Jim Walton—he’s a good guy and a longtime CNN employee who worked his way up through the ranks—but watching this move get made without any of my input really hurt and drove home the fact that they were paying me $1 million a year to do nothing (my salary practically amounted to hush money). It was time for me to move on.

  But as I contemplated this move, something still didn’t feel right. I had lost all this money, been fired from my job, and now I was going to resign from the company, while the mastermind of this disastrous merger—Steve Case—was still the company’s chairman? I didn’t think it was good for the company. Dick Parsons was running the company day to day but Case’s presence as chairman was enough to bring out a lot of bitterness and resentment in many of our executives and employees. While I never got to know him very well, I was in some ways sympathetic to Steve. His brother had recently passed away from brain cancer. I knew how painful a loss like this could be and I felt sorry for him. Like me, he was an entrepreneur who had built his company, not a corporate executive who had businesses handed to him. Still, I was a major shareholder and believed it was in the best interest of the company for him to be replaced as chairman.

  A TED STORY

  “Steve Case Had to Go”

  —Gordy Crawford

  When everything was crumbling at AOL and the stock was collapsing I would increasingly talk to the friends I developed over the years, at Turner and particularly at Warner Brothers. These guys had had their personal fortunes wiped out. The stock had collapsed and they were furious—but nobody had laid a glove on Steve Case, who was the architect of all this. He may say he never knew it was going on—which I always found hard to believe—but even if he didn’t, it was definitely his kind of cowboy culture that he set up that allowed it all to happen. The guys at Warner Brothers would tell me how Steve would come out to the West Coast as chairman of the company and have a meeting at Warner Brothers and they all had to sit around the room, kowtowing to the chairman who had brought this calamity upon them.

  It was just horrible for the culture of the firm, so I thought, “We’ve got to get rid of Steve Case.” I called Ted and I called John Malone because they were the two other significant holders of Time Warner stock and I said let’s get together and talk about what we want to do. Everyone agreed, so Ted and I both flew out to Malone’s and we had a meeting in John’s office that lasted most of a morning. We talked about a wide range of things that needed to be done at Time Warner, but the one piece of actual business that came out of the meeting was that Steve Case had to go. John said, “He’s got to go but I’m not doing it,” and Ted said, “I’m not doing it.”

  “Okay guys,” I said, “I’ll do it.” So my next trip back to New York I went in and did my usual thing, seeing two or three Time Warner people, going over the numbers with CFO Wayne Pace, and then I saw Steve Case. I told Case about the meeting with John and Ted and said, “I want you to resign.”

  “No,” he said, “no way, I’m not going. That’s fine you feel that way, but I’m not going anywhere.”

  I said, “Well, you know we may have to vote against you. We’re probably not going to do a proxy fight but we’re definitely going to vote against you when it’s time for the annual meeting and I’m going to encourage other investors to do the same.” As I recall I actually ended up making half a dozen calls to other large investors and proposed that. Over the next three or four months there was more noise and people talking about Steve leaving and that’s when he finally decided not to run again.

  Steve announced his resignation from the company in the middle of January, and shortly thereafter I decided to do the same. We would both remain on the board but would officially step away from our management positions at the directors meeting in May.

  If you included my time mowing grass around my father’s billboards, I’d been working for the company for about fifty years. Knowing it was coming to an end, I was in a somber mood as I approached that May board meeting. Dick Parsons was assuming Case’s role as chairman and when it came time to recognize our resignations, he went on for several minutes about Steve’s contributions to the company, his founding of AOL, and so forth, but I didn’t get much more than a quick mention. I don’t think I was snubbed intentionally. There had been so many other high-level changes and departures that mine was considered to be just one of the latest, but this company had been my life. Moving on was a momentous thing for me and I left that meeting a little bit sad.

 
As I’ve said, I try to move forward from setbacks as quickly as possible. I also know that things don’t always work out the way you want them to and I’ve always tried to have a Plan B. In 2000, when I realized I was being pushed aside, I purchased a small office building in Atlanta, just a few blocks from CNN Center. Given its location adjacent to Centennial Park, it looked like it could be a good investment, and I wanted to have a place to go if and when I was either forced out or resigned from AOL Time Warner. I had the place furnished so I wouldn’t have to wait for movers when the time came to leave my office in CNN Center.

  Immediately after announcing my resignation, my assistant, Debbie Masterson, and I moved to the Turner Building (which was suitably located on Luckie Street—at this point I needed all the luck I could get!). My office window looked out at the CNN Center. I was now on the outside but it was refreshing for me to be in my new location as I was turning this page in my life.

  Even though I was nearly sixty-five I had no plans to retire. Part of my Plan B was to be sure that if I left the company I had a business to work on in addition to my philanthropy. Around the same time I bought the Luckie Street property, George McKerrow, Jr., the founder of LongHorn Steakhouses, came to me with a concept for a new restaurant chain. He wanted to create a place that served great, fresh food in a casual, western-themed environment and he suggested that we include bison on the menu. I liked the idea a lot. By the year 2000 the various bison herds on my properties numbered about forty thousand. I loved these animals and while it took me a while to warm to the idea of serving them as food, I realized that helping consumers develop a taste for bison would not only increase the value of my herd, it would be in the best long-term interests of the bison. Bison meat is a lot healthier and leaner than beef. With so much less fat it can be a little tricky to cook but I knew that once people tasted bison prepared properly they would love it, and once bison ranchers realized they had a viable market, they’d want to raise more. The best way to ensure that bison would increase was to get more people to eat them!

  George and I agreed to go into business together and we decided to name our restaurants Ted’s Montana Grill. Our first location opened in January 2002 in Columbus, Ohio, and after all that had transpired over the past couple of years it was exciting to be creating something new. I’ve relearned that it’s almost as much fun to be running a small company as a big one. The same challenges are there and succeeding with restaurants is really tough. Entry barriers are low (anyone with $500 and a kitchen can open one) and consumers’ tastes are fickle, but my partner and his team have done a great job. Within our first five years we opened more than fifty restaurants, created about three thousand new jobs, and had a lot of fun and excitement. It’s been a new challenge for me and we’re almost breaking even!

  In December of 2003, Taylor Glover and I were driving to a planning meeting for Ted’s Montana Grill when Debbie Masterson called me with the news that Jimmy Brown had died. He was seventy-nine years old and had been ill for some time but his passing was still a surprise and a shock. Sitting there in the car, tears streamed down my face as and, instinctively, I started to sing “The Three Bells,” a song I used to sing to Jimmy. The words go like this:

  From a village hidden deep in the valley

  One rainy morning dark and gray

  A soul winged its way to heaven

  Jimmy Brown had passed away

  Just a lonely bell was ringing in the little valley town

  ’Twas farewell that it was singing to our good friend Jimmy Brown

  And the little congregation prayed for guidance from above

  “Lead us not into temptation, may his soul find the salvation

  Of thy great eternal love”

  Jimmy had been critically important to me and my family and the only constant in my life over the past fifty years. When he first went to work for my dad, he was like a big brother to me. We sailed together, fished together, and most of all spent hours with each other as good friends. Jimmy was the first to get to my father after hearing the gunshot that took his life. Then, after having had such a major impact on me, Jimmy played a key role in helping raise my children. While I was busy sailing and Janie was home with five young kids, Jimmy was part of the glue that kept it all together.

  Jimmy used to tell me that when he was a small boy growing up, he’d look through the windows at the country club at the fancy black-tie parties and wish to himself that someday he could wear a tuxedo and go to a party like that. When he turned seventy, my kids and I decided to throw him a formal birthday party at the Capital City Club in Atlanta. Jimmy got his wish, and not only did he attend a black-tie dinner, it was in his honor. It was a wonderful evening, the very least we could do for someone who’d done so much for all of us.

  My entire family was there for his funeral and Jane Fonda flew in as well. He had a huge impact on her just as he had on everyone he’d ever met. It was a beautiful event, held at the church at Avalon in Florida. As Jimmy had requested, we had a New Orleans–style procession with musicians and a horse-drawn casket.

  My family and I loved Jimmy a great deal and to this day I still feel his loss tremendously.

  When I resigned as vice chairman of AOL Time Warner, I considered leaving the board at the same time. I decided against it because I still loved the company, I still owned a significant amount of its stock, and I hoped that I might have some influence if I continued to be involved as a director. I was also concerned that there wasn’t anyone on the board with any experience in journalism or the media business. The other directors were all smart, accomplished people but they’d all achieved their success in other fields. Perhaps I was spoiled by the old Turner Broadcasting board. That group was unusual, with all of the members holding key positions in the cable industry. I had suggested that they consider people like Tom Johnson or Tom Brokaw to be directors (the former having recently retired from CNN and the latter preparing to leave NBC) but my advice wasn’t heeded.

  Going to these board meetings became a painful chore for me. After so many years of enjoying tremendous growth, working with an AOL Time Warner board that was trying to get things stabilized, shedding assets and laying people off, was hard. Slowly loosening my ties to Time Warner (the “AOL” part of the name was dropped in late 2003), I continued to sell my shares. In February 2003, a month after my announced resignation as vice chairman, I began to sell more stock and by May of 2003, I was down to about 7 million shares—a significant stake but well down from the nearly 100 million that I had once owned.

  I kept up with the media business by reading the industry trade magazines and the usual board materials the company sent to its directors, but increasingly the bulk of my time and energy was focused on my philanthropy and helping Ted’s Montana Grill get going. I was moving forward but still wrestled with occasional bouts of anxiety and frustration.

  Even with my hard-charging lifestyle I’ve managed to take care of myself and have enjoyed reasonably good health. But in late 2004, shortly after my sixty-fourth birthday, I started having trouble with fibrillation in my heart. The first time it happened my heart started racing and I didn’t know what was wrong. In hindsight, the best thing I could have done would have been to simply lie down until it passed, but the symptoms scared me so I raced to the emergency room to make sure everything was okay. After trying different procedures for two years I had two catheter ablations that so far seem to have taken care of the problem. I had to slow down for a few weeks and I slept more than usual, but then, when I was starting to feel better, I broke a bone in my shoulder skiing in Montana and needed surgery.

  Over a stretch of about six months I was seeing so many doctors that I started to refer to myself as the “Phantom of the Hospital.” I tried to keep my sense of humor (whenever I walked down the hospital hallways I enjoyed sticking my head in other people’s rooms and ask, “Hey, what are you in here for?”), but my health problems did slow me down and since my affiliation with Time Warner continued to cau
se me a fair amount of stress I decided that I’d had enough. I made the announcement that our annual shareholder meeting in May would be my last. It was nice that the event was held in Atlanta. They played a flattering video of my career and gave me a warm send-off. That August, with Time Warner stock back up above $16.00, I sold my final 7 million shares.

  When I took over my dad’s billboard company, I was determined to make it a success. I managed to do that and was fortunate enough to have a great time and make a lot of money in the process. Along the way I also began to realize there were a lot of problems in the world that needed solving. I started to focus on these, and these efforts gave me an even greater sense of satisfaction than I’d achieved in business.

  I was sixty-seven years old when I stepped away from Time Warner. I had been through a lot but I still felt I had plenty of time and energy left and I was determined to put it to good use.

  33

  Onward and Upward

  Over the years, I’ve visited more than sixty countries in every part of the world. In addition to making a lot of friends I’ve also seen firsthand the desperate challenges facing so many people. It’s been eye-opening for me and I’ve discovered that the more people you meet, the more you learn, and the more you learn, the more you want to help, and the more you help, the better you feel.

  Stepping away from my business career wasn’t easy, and the circumstances of my departure left me with lingering sadness, but being free from those responsibilities has allowed me to concentrate my energies to work on solutions to the world’s more pressing problems. Instead of worrying about overnight Nielsen ratings for the Turner cable networks I spend more time reading magazines like The Economist and books about the future of the planet. Early in my career I didn’t have much money, but I did have cable networks, and I tried to air positive, informative programs with partners like the National Geographic Society, Audubon, Cousteau, and the National Wildlife Federation. These days I have some money but no networks, so I’m putting my resources and energies toward tackling the important issues. Today, the three problems that concern me the most are the threat of nuclear annihilation, climate change, and the continuing growth of the world’s population.