by Gail Sheehy
But egos had been too bruised for healing. Glaser later lamented to me, “Clay and I weren’t wise enough to make that board of directors feel part of our community. They always felt on the outside. That guaranteed that they would act only in their own financial interests; they would have no family ties.”
WHO WOULD HAVE GUESSED what unpredictable forces would come together in the same week of November 1976? Murdoch, recoiling from his humiliation at the hands of the British upper class in refusing his bid for the Observer, collided with Felker, wrestling with hostile directors over control of his three periodicals.
But Murdoch was first to seize his moment.
Clay had been trying since the start of summer to coax Burden into naming a price for his shares so Clay could make an offer. Burden’s mode for dealing with stress was avoidance. At the first hint of the necessity to make a tough decision, he would start rolling up into a ball and the ball would wedge itself into a corner until there was no way at all of getting at it. “I couldn’t fish or cut bait,” Burden himself told me later.
But Patricof knew he had a live buyer. He gave Murdoch’s investment banker, Stanley Shuman, the names of all the major stockholders and told him who was particularly unfriendly to Clay. The backroom deals between raider and insiders had begun.
Sensing connivance in the making, Clay grew rigid with paranoia. At this very same moment, Clay’s father was slipping away in a blanket of minor strokes. After flying home weekends to Webster Groves, Clay would return on Sunday nights, sad and shaken. I would coax him to go to a movie and we’d come home to warm milk and brownies. Chocolate always worked on him.
But one Sunday evening, Felix Rohatyn, Clay’s financial guru, came over. Clay loved learning about finance from the senior partner of Lazard Frères’s investment bank, who was successfully maneuvering to save New York City from bankruptcy. Rohatyn enjoyed being exposed to the world of ideas from the man whom many were now calling “Mr. New York.” We sat in the living room while Clay told Rohatyn he was worried about the sudden increase in trading of New York Magazine Company stock and the rise in the price. He was worried that one of his unfriendly directors might be making a market on insider information. And he was uneasy about Murdoch.
“Uneasy?” Rohatyn said. “Have no illusions. Murdoch is a ruthless man.”
“Who can we find to buy out Burden?” Clay asked.
“Kay Graham.” Rohatyn knew how close Clay was to the publisher of the Washington Post.
“I can’t ask Kay,” Clay said.
“She would be hurt if nobody did,” Rohatyn said. “I’ll call her.”
CHAPTER 24
Murdoch Makes His Move
ABOVE THE JOLLITY OF FRIDAY NIGHT at P. J. Clarke’s tavern on Third Avenue was a no-nonsense law firm where the lights burned all night. Skadden, Arps specialized in the traumatic law of tender offers. It was the home of Joe Flom, the groundbreaking attorney who made Skadden, Arps the go-to firm for clients enmeshed in hostile takeovers. Steven Brill, the lawyer who had written the prophetic piece about Flom for New York, walked Clay into the Skadden, Arps office late one night. Lawyers there quickly developed a cynical view of human nature. People came at their worst. Either they wanted to learn the art and artifice of being a raider, or, in a panic, how to save their hides as victims.
This is where I found Clay in the dying hours of that fateful year of 1976. To me, the inside of the building felt like a hospital. Meals were served on trays from a twenty-four-hour kitchen. A limousine waited perpetually just outside, ready to rush clients to court or pick them up from a bloody board meeting. The attorneys slept on couches, the floor, or not at all. They sent out for cigarettes, aftershave, clean shirts from Brooks Brothers.
Clay smiled as I slipped a cup of strong coffee and a crème-filled pastry lobster tail in front of him. He was on the phone with his friend and advocate, Rohatyn. “Burden has been screwing around with my offer for a month,” Clay muttered. “Of course he can make up his mind. I told him we were prepared to raise our offer above Murdoch’s and give him $7.50 a share.” Rohatyn himself was ready to kill. Once again, he dialed Carter Burden’s lawyer:
“Get that yo-yo off the slopes!”
All day the lawyer for Burden, Peter Tufo, had been telling Rohatyn that his client couldn’t be reached—he was in Sun Valley, skiing.
“Peter,” said Rohatyn, “there is no snow on the slopes out there. Stop bullshitting me.”
“You’re just going to have to give me more time,” the lawyer said.
“We’ll give you till four,” Rohatyn said darkly.
He was sitting in Newsweek’s Manhattan offices with Katharine Graham and her attorneys. Over the next two hours, the humiliation level in the room rose considerably. As queen mother of one of the most highly respected publishing organizations in the world, the Washington Post Company, Graham had been trying for two days with increasing desperation to buy New York Magazine Company. Clay and Rohatyn had been trying with mounting frustration to sell it to her. Burden was treating them all like pathetic passengers on the wait list for a flight that was never going to take off.
At 4:45 Tufo called back to tell Rohatyn, “Look, I’ve talked to Carter, and it cannot go your way.”
“You mean it can’t go our way at any price?” Rohatyn asked in astonishment.
“I can’t tell you more than that,” Tufo said.
The people in the room could not believe what they were hearing. They had been working around the clock to prevent the great magazine raid. If it went through, it would be the first hostile takeover of a publication since the 1920s.
What none of us knew was that between Christmas and New Year’s, Murdoch had obtained oral “understandings” from enough board members to sell to him if the price was right. Graham took the phone with its last feeble connection to Tufo. On a conference call connection we heard her implore: “What is it you really want? Should I fly out to see Carter, is there anything humanly possible?”
When no answer came back, she whispered, “What can I do for my darling Clay?”
“Kay, don’t,” we heard Rohatyn say. “It’s demeaning to you, the whole thing is obscene; at least keep your dignity.”
In the virgin hours of 1977, Murdoch and his forces sped by private jet to Sun Valley to start the New Year by sewing up Carter Burden.
IN THE MIDST OF ALL THE CHAOS, I decided to move back in with Clay. He was always there for me when I was being attacked, well, almost always. He needed me now. We needed each other. I knew Clay was still under the illusion that there were people who would commit to him and save the company out of loyalty. I was doubtful.
We spent the rest of New Year’s Eve cuddling up with Maura and soberly watching TV while the ball dropped in Times Square. On the first morning of the New Year, Clay seemed to awaken inside the body of a fallen man from whom he felt peculiarly detached. Propelled into a role he didn’t understand, he picked himself up, splashed water on his slugged face, climbed into the saddle of his Exercycle and rode for a hard hour until his juices began running and he was ready to give his lawyer a decision.
“Clay, don’t you have a right of first refusal?” I asked.
“It expired at midnight.”
“No, it didn’t, you weren’t allowed to exercise it.”
“Still? Are you sure?”
“I’m no lawyer, but your own lawyer at Skadden, Arps—what’s his name?”
“Pirie, Bob Pirie.”
“He said you have fifteen days to match any offer by a third party.”
“Jesus, why didn’t I remember that?”
“You never thought you’d have to. Pirie told me you could get a temporary restraining order.” All at once he snapped into command. He reached for the phone.
“Bob! Clay here, let’s go for a TRO.” The old leonine confidence surged in his voice. Pirie called back to let us know he’d found a judge at home, playing the harpsichord, and persuaded him to interrupt his baroque pleasures
to execute a temporary restraining order. It would block Burden from selling to Murdoch on the basis that he and his lawyer, by refusing to accept Felker’s $7.50 offer, had denied Clay his right of first refusal.
The stakes were control of a company that in 1976 had had revenues of $26 million. Burden owned 24 percent of the stock. Clay’s equity had been diluted to 10 percent when he bought the Village Voice. The battle was on.
Overnight, three posses of urban cowboys were headed for a showdown—the moneymen, the lawmen, and the pen men and women. The members of each posse rode into the showdown, saw into one another’s minds, and were shocked at how different were their values, their conduct, and their codes.
Two of the magazine’s top political writers, Richard Reeves and Ken Auletta, spent the siege week of January 1 getting in direct touch with key board members. The moneymen showered the writers with praise. “We’re such fans!” They sounded positively starstruck.
“Fools, you’re fools!” Byron Dobell told the writers each time they called in to report on conversations with moneymen who assured them the board would love to meet with the writers to resolve this thing. “You’re talking to the enemy!” Byron shouted into the phone. He was histrionic, but he was right. “These people are in on it.”
Hard news first came in late Sunday, January 2. Even as board members were mollifying Auletta by phone, Rohatyn called to notify Clay that Patricof and those same board members had just sold. They were on their way to a gala signing party at Murdoch’s Fifth Avenue apartment.
That weekend the moneymen learned how easy it is to play to the narcissism of “talent.” And the writers learned a phrase that helped us to understand the moneymen: “On Wall Street, loyalty is a quarter of a point.”
CLAY AND I WALKED INTO the bite of winter’s morning on that first Monday of January with a buoyancy that had something of our old frontier spirit in it. Clay was off to meet with the lawmen, I to meet with the journalists.
“Well, sweetheart,” he said at the corner, “we may have to start from scratch and put out a little country journal.”
“I’m with you,” I said.
A summit of the magazine family had been called for 8 A.M. at New York’s new offices on Second Avenue. One hundred twenty-five people filled the room, faces of underpaid staff regulars, secretaries, people who had medical bills, mortgages, and new babies to worry about. A great deal was made over the fact that no pressure would be put on anyone to quit. If and when the moment of truth came, it would be up to each person to make the best decision. All this did was insult people’s loyalty. Mailroom people, clerical newcomers, switchboard operators, all wanted to be given the chance to act as few of us ever have the opportunity to do—on principle.
I read a statement from Clay: “Despite recent developments, I intend to fight and fight as hard as I can to keep what we have all built from being damaged. And I expect to win.” It cheered everyone. In the first half hour we arrived at a definition of ourselves. We were a “talent package.” We were not up for “barter.” And we meant to demand our right to “protect the company from deterioration.” Our support was behind the editorial leadership that had brought us all together.
Steve Brill, the lawyer-writer, was asked to work with me to draw up a statement for a press conference. From the moment we turned into activists we also grasped a reality that continually eluded our brethren. Phrases like “editorial integrity” and “creative community” stuck to the roof of the mouth with their piousness. What bound this family together was too emotional to be expressed. It was loyalty, self-respect, and, yes, love. By noon we had closed ranks around a clear consensus. It startled many of us to discover how intimately our sense of self-worth was tied to New York, New West, or the Voice. Our extended family was under siege.
When we met the press, it was not as pals, not even as colleagues. From that first news conference, the story was covered like the Super Bowl of publishing. A decisive board meeting was set for 7 P.M. that evening. The writers were jumpy. What did we know about takeovers and the rights of employees? Martin Lipton, a wizard of tender-offer law, agreed to advise us gratis. The rumor reached us that a lynching party was waiting at the offices of Clay’s company lawyer, Ted Kheel. The board of directors was set to meet there. Brill, Bernard, Auletta, and I rushed into the canyon of Park Avenue and began half running uptown. Dusk had swallowed the light. It was cold. I had forgotten my coat. Entering the reception area, it was impossible not to feel the suspense of walking into the OK Corral.
“Clay’s in the back,” someone said.
The writers’ delegation was escorted to a holding room. Kheel sent in a half gallon of Chivas Regal. We waited to see if the directors would hear us. Restlessness in the holding room bubbled up like gas in a shaken bottle. A runner from the boardroom gave us a blow by blow. “They” had thrown Kheel out as corporate counsel; two of Felker’s directors had been kicked out; Rupert Murdoch and his banker took over those seats. Clay and Milton had just had their balls crushed. The raiders—by some arcane maneuver—had dissolved the board meeting altogether and were now holding a stockholders’ meeting. Blood was running in the halls. Events were becoming deranged.
At 8:05 P.M. Auletta picked up the phone. He dialed New York State’s attorney general Louis Lefkowitz at home, hoping to initiate an investigation. Patricof walked by and darted in. “Ken, don’t be upset. You have to understand.”
“Hello, Mr. Attorney General,” Auletta said into the phone.
A spasm shook Patricof. He walked away twitching like a marionette. Five minutes later he was back. “We’ll take the writers now,” Patricof announced. “Do there have to be so many?”
Five people rose, including me. The body-heated boardroom temperature was in the mideighties by the time we were admitted. Everyone was in shirtsleeves. Another door opened. Murdoch. He stood with one hand in the pocket of his black suit, his voice utterly composed. Everyone began speaking heatedly. Except Rupert Murdoch. With the calm of the conquerer, he said, “I quite understand why there would be some nervousness on the part of the staff. It’s natural to be concerned about their jobs with a new owner . . .”
“Patronizing,” I hissed under my breath.
“He can’t conceive of people acting on principle,” Auletta fumed to Reeves.
Byron Dobell was the keynote speaker. “I don’t know you people,” Dobell fervently addressed the antagonists, “and I don’t want to know you. But I do know you people have been living off Clay Felker’s genius for eight years. Going to your cocktail parties and pretending you had something to do with building this product. You don’t have the right to sell people!”
The man was on fire. Murdoch’s face registered no reaction.
“It’s not even a question of genius,” Byron went on. “It’s a question of skill. This man is a tremendously skillful person and he’s put together the fragile structure of a magazine—the writers, editors, artists, photographers, everybody is in tune with one another. And you’re going to smash that.”
When he sat down, not a person spoke. Auletta finally talked out the options. His speech built power as he came to the point about staff feelings. “You can’t treat us like widgets, or pieces of meat.” Nervousness and sweating increased.
“Now wait a minute,” interrupted Robin Towbin, a prominent investment banker on the board. “I was trying to do the right thing. You know how hard Clay is to deal with. You know,” he addressed the writers with an injured tone, “it was me who tried to work this thing out . . .”
“You’re a liar.” Clay glared at Towbin.
“I will ignore the attack.”
Auletta pushed the board member hard. “You told me Sunday you wanted to do business with the Washington Post. And you would delay any action until you had the session with the writers we kept talking about. Even as you were giving us that story, you were selling your stock.”
Towbin tried to wiggle out. “But events forced me—”
“You f
ucking liar!” Clay escalated. It was not the first time this manner of address was used, but this was the only time when the addressee confirmed its accuracy.
“Well, you’re right . . .”
Stan Shuman, Murdoch’s investment adviser, a sequoia of a man with an incongruously gentle voice, tried to tamp it all down by repeating the phrase he had used throughout: “Nothing has happened. Relax. This is just some paper changing hands.”
“What do you mean nothing has happened!” Clay shouted. “You’ve humiliated my board members. Two of the finest people I know.”
Patricof rose. “Whoa, whoa now, let’s not go into that! Let’s not go into that!”
“Shhhh! Shhhh!” Now Shuman came off his chair with his big arms fully extended, the lion tamer, calming the crowd. Dramatically, he announced, “Rupert wants to speak.”
Murdoch injected a sedative tone of voice. “This is very unfortunate,” he said. “Can’t we get together, Clay?”
Clay was sitting right beside him. “Rupert,” he said quietly, “you and I once talked about this and agreed we could never work together, right?”
“Yes, but I meant we could never work together as publishers,” Murdoch replied. “We could work together if I were publisher and you were editor.”
This civilized intermission was brief. Burden cut through the cordiality between Murdoch and Clay with the accusation, “Clay, you went behind my back and tried to sell the company to Murdoch yourself.”
“Carter, you’re a goddamned liar,” Clay replied.
I was shaking with rage, but I had never heard Clay talk this way. Murdoch affirmed that Clay was correct.
“He knows what you are,” Clay said matter-of-factly to Carter. “An incompetent dilettante. No one is going to give you what you want, a tin star marked ‘publisher.’”
Murdoch went back to wooing Clay. He needed Carter on Saturday, the other players on Sunday, but this was Monday and now he needed an editor. “Clay, I think you’re an editorial genius. I want you to stay and run the magazine.”