A Hollywood Player Who Owns the Game

By Meg James

June 20, 2006 12 AM PT

Times Staff Writer

During five decades as one of Los Angeles’ shrewdest businessmen, A. Jerrold Perenchio has perfected the art of spotting -- and then exploiting -- potential.

In 1971, the man whose friends call him Jerry did something no other boxing promoter had done: He guaranteed a $5-million purse to get two heavyweight champions into the ring. Then, he made the Muhammad Ali-Joe Frazier fight available on closed-circuit TV not just to cover the costs but also to reap a couple of million dollars’ profit.

In 1981, when he was a business partner with TV producer Norman Lear, he negotiated a deal to buy a second-tier movie studio, Avco Embassy Picture Corp., for $25 million. Four years later, just as the home-video business was taking off, boosting the value of film libraries, Perenchio and Lear sold the studio to Coca-Cola Co. for $485 million.

Now, the mercurial 75-year-old is poised for his biggest payday yet. After running Univision Communications Inc. for 14 years, Perenchio has put the Spanish-language media behemoth on the block.

With bids due today, Wall Street analysts say the company, whose television ratings among younger viewers often rival those of ABC, CBS and NBC, could fetch as much as $13 billion. Perenchio, whose initial investment was a mere $33 million, stands to make about $1.3 billion.

“For a long time, I thought he was lucky,” said singer Andy Williams, who is Perenchio’s best friend. “But how could somebody sustain a lucky streak for so long? Finally, I realized that he wasn’t lucky. He was just smart.”

Ask those who know Perenchio to sum him up, and they all describe him as prescient. Whether booking bands in the 1950s, launching Elton John’s career in the U.S. in the 1970s, co-producing blockbuster films like “Blade Runner” and “Driving Miss Daisy” in the 1980s or buying (in 1985) and then quickly flipping at a huge profit the Loews theater chain, Perenchio has made a fortune sensing trends.

“Jerry has always been ahead of everyone else,” said Warner Bros. President Alan Horn, who moved to California in 1973 to work for Perenchio when he was managing Lear’s business. “He has a great nose. Great instincts. And the guts of a lion.”

Perenchio has something else, too, that he believes is key to staying on top: a set of 20 tenets, typed in all capital letters on a single page. Known to everyone at Univision as “The Rules of the Road,” they have been Perenchio’s compass and have helped make him one of the most powerful forces in Hollywood and one of the wealthiest men in America.

Forbes magazine estimates his net worth at $2.9 billion.

Tough negotiator, inflexible tyrant, brilliant marketer, control freak, financial wizard, blunt-talking s.o.b. -- Perenchio has been called all these things and more. His response? Determined silence.

The rules prohibit talking on the record.

Stay clear of the press. No interviews, no panels, no speeches, no comments. Stay out of the spotlight -- it fades your suit.

Last month, at the television industry’s annual presentations of its new shows for Madison Avenue, hundreds of advertisers jammed into a Lincoln Center theater to hear Univision’s pitch: This year, the more than 43 million Latinos who live in the United States will spend some $760 billion, a parade of executives proclaimed, and Univision can deliver those viewers better than any other network.

The only awkward moment came when Ray Rodriguez, Univision’s president, gave a shout-out from the stage to his boss. Typically, such a gesture is choreographed with a roving spotlight, which settles on the honoree, who basks in the attention.

Not Perenchio. At the mention of his name, the crowd shifted as row after row of advertisers turned around, craning their necks for a glimpse. Perenchio didn’t even wave, leaving some to wonder whether he was actually in the room.

Perenchio is serious about keeping a low profile. It’s not modesty that motivates him. It’s control.

In a rare interview in 1981, Perenchio told a Times reporter: “I really don’t want my name in the goddamn paper. I really don’t mean to be rude. I just don’t want to give out interviews. I just hate them. Inevitably, I ended up hurting some people or leaving some names out, or getting quoted out of context.”

Similarly, he won’t pose for photographs, and Univision won’t release any. (The only recent photo available is on the website of his third and current wife, Margaret, an artist, at www.margaretperenchioart.com. The shot of him in a blue sweater and white sneakers is the basis for a painting she calls “Weekend in Malibu.”)

Perenchio holds his employees to the same standard, punishing those who violate the rules. In 1995, when Rodriguez was interviewed about Univision by a trade magazine, Perenchio fined him $25,000.

Just a year earlier, another top executive, Carlos Barba, had paid a much stiffer penalty. Barba, who had worked for Perenchio for years, was fired after he was the subject of a glowing profile in the New York Times.

“Jerry was like my father, my mentor, my brother. But it was like he pulled a gun and shot me,” Barba said from Miami, where he now markets slot machines that feature the likenesses of such fading celebrities as Tito Puente and K.C. and the Sunshine Band. “It was a business decision without any human consideration.”

Rely on your instincts and common sense. If you go against them you generally regret it.

The idea was brilliant in its simplicity. Pit an aging trash-talking male tennis pro against a younger, female champion. Market it as a “Battle of the Sexes.” Then sit back and watch the dollars pour in.

It was 1973 when Perenchio masterminded the on-court clash between Billie Jean King and Bobby Riggs. The event became a cultural milestone. It also was a moneymaking machine.

“He said, ‘We have to market this as a confrontation between male chauvinism and women’s liberation,’ ” Horn recalled. “He has that vision thing.”

It would be difficult to find a more Zelig-like character than Perenchio. Whether it’s sports, entertainment, politics or philanthropy, he has had a hand in many of the major events of the last half-century.

By some estimates, he has given away about $50 million, benefiting UCLA and Walt Disney Concert Hall, among other nonprofits. And records show that, since 1998, he and his wife have contributed an additional $18 million to politicians -- Republicans and Democrats -- and their causes.

“Jerry is the walking embodiment of the history of Hollywood and modern Los Angeles,” said Henry Cisneros, a former Clinton administration Housing secretary who was Univision’s president for four years. “He has been present in the worlds of many of the most prominent people.”

Perenchio and his wife are the largest landholders in Malibu. And remember the Bel-Air mansion that the Clampetts inhabited in the 1960s TV show “The Beverly Hillbillies”? They live in it, though it is far more grandiose than it was when Granny ruled the roost. The couple has spent tens of millions of dollars buying adjacent lots and fashioning the home into a Versailles-like palace adorned with Diego Rivera and Frida Kahlo paintings.

Nancy Reagan is his next-door neighbor. Former L.A. Mayor Richard J. Riordan is a friend, as is tenor Placido Domingo.

His poker buddies include CBS Corp. Chief Executive Leslie Moonves, DreamWorks Animation SKG Inc. CEO Jeffrey Katzenberg, Bob Daly (a former Warner Bros. studio chief and Dodger chairman), producer Larry Gordon, retired music executive Mo Ostin and actor Dustin Hoffman.

Hollywood players call him for advice. Producer Brian Grazer, for example, who with director Ron Howard made such movies as “The Da Vinci Code” and “A Beautiful Mind,” said he relied on Perenchio’s blunt counsel.

“There are these Perenchio-isms,” Grazer said. “He’ll say things like, ‘Look, you guys are in a tough spot. It’s going to be rough but you’ve just got to strap your balls on.’ ”

Cisneros agreed.

“Jerry always told us: ‘Aim for the center of the bull’s-eye. Don’t look for the general proximity. Aim for the center, and you will likely hit your target,’ ” Cisneros recalled. “Even though he might want something really bad, he was very disciplined. He would take a pass rather than do a deal that wasn’t right.”

Perenchio’s patient pursuit of Univision illustrates that point. He first became interested in 1986, when the Federal Communications Commission threatened to revoke the licenses of the stations that formed the Spanish International Network, which was controlled by Emilio Azcarraga Milmo of Mexico. The U.S. prohibits foreigners from owning broadcast stations, so Azcarraga had to sell.

Perenchio didn’t speak Spanish (and still doesn’t). But with opportunity knocking, he tried to buy Azcarraga’s five stations north of the border, then balked when bankers were brought in to round up other bidders. Perenchio, an associate said, does not participate in auctions.

Instead, Hallmark Cards Inc. bought the stations and network for $550 million, renaming it Univision. But quickly, Hallmark found itself drowning in debt.

Azcarraga saw a chance to get back what he’d lost. He teamed with Venezuelan media magnate Gustavo Cisneros, but as foreign citizens, they needed a U.S. partner. The pair invited Perenchio to lunch at Azcarraga’s Hollywood Hills home. Between sips of tequila and spicy soup, the trio came to terms, according to people who were there.

In 1992, they bought Univision from Hallmark for $550 million.

Azcarraga was already Mexico’s only media mogul -- his Grupo Televisa empire is the world’s most prolific producer of Spanish-language programming. But those who thought he would rule Univision didn’t know Perenchio.

Although he was just a one-third partner, Perenchio’s U.S. citizenship put him in the driver’s seat. It had taken six years, but he was now the boss.

Typically hands-on, Perenchio helped draft the partnership agreement, which laid the groundwork for Univision to become the dominant Spanish-language network in the U.S.

That pact also set the stage for a tumultuous relationship among the partners, and is one of the reasons that Perenchio is selling Univision today.

Take options, never give them.

Univision’s corporate suites, in a Century City high-rise, are tasteful, if slightly formal. Communication between executives takes place not just via e-mail but over an internal message system that announces who wants your attention. “Mr. Perenchio is calling,” it will say.

That’s how even some longtime employees refer to him: Mr. Perenchio. It’s polite, if old-fashioned. And so is the unwritten dress code: Top women executives are discouraged from wearing pants or perfume, according to one former executive.

These days, Perenchio cuts a grandfatherly figure (he’s got six grandchildren) with his white hair and cardigan sweaters. The top executives who make up his loyal inner circle are intensely protective of their boss, whom they describe as generous but demanding.

“He has a reputation for being a very tough fellow in the world of business, and he is,” Warner Bros.’ Horn said. “He’s not afraid to say no, not afraid to take an unpopular position.”

When he took over Univision, for example, he made sure the partnership agreement ensured the company’s profitability by getting Azcarraga, who died in 1997, and Gustavo Cisneros, chief of Venezuelan media conglomerate Venevision, to provide their programming exclusively to Univision in the U.S.

That gives Univision an edge over its competitors because it can cherry-pick Televisa and Venevision’s best shows. The agreement effectively blocks Televisa from joining forces with anyone else in the U.S. and runs an unheard-of 25 years, through 2017.

Azcarraga’s son, Emilio Azcarraga Jean, now runs Televisa. He has long felt that Perenchio took advantage of his father, locking him into an ironclad contract before Univision’s revenue began to skyrocket. After all, Televisa’s telenovelas have driven Univision’s huge ratings; the shows are hugely popular among the two-thirds of U.S. Latinos who are natives of Mexico or are of Mexican descent.

Televisa, which owns about 11% of Univision, supplies programming that brings in about 40% of Univision’s revenue. But Televisa receives only 9% of Univision’s net ad revenue.

In 1996, Perenchio further cemented his control when Univision became a public company. Though he owns nearly 11% of the company’s stock, Perenchio received special shares that gave him more than 60% of the shareholder votes and let him pick a majority of the board of directors.

But with little more than a decade left to run on the programming pact, Perenchio knows he must sell sooner rather than later. Potential buyers will need time to make a return on their investment before Televisa can begin shopping its shows to competitors such as Telemundo.

The man known for spot-on timing knows it’s time to act.

Always, always take the high road. Be tough but fair and never lose your sense of humor.

Perenchio was born into a family of Fresno vintners in 1930. He loved working in the vineyards alongside his grandfather, an Italian immigrant who founded the Fresno Grape Exchange, a major fruit brokerage that served Central California and the Midwest.

In the late 1940s, Perenchio attended the Black-Foxe Military Institute, a boarding school in Los Angeles’ Hancock Park. Students were expected to shine their shoes and march with precision. As a senior, he was voted “teller of tall tales” and “biggest showman and promoter.”

While a business major at UCLA, he formed a company that booked bands and catered parties. After graduation, he joined the Air Force and became a flight instructor.

In 1958, he was hired by Lew Wasserman’s Music Corp. of America as an agent. It was Wasserman who helped transform Hollywood’s studio system, allowing the talent, and their representatives, to share in the riches.

In 1962, however, the U.S. Justice Department used antitrust laws to force the breakup of MCA, which had just acquired a studio and then had to divest itself of the talent agency. Perenchio, then a 31-year-old father of three, launched his own firm, siphoning off some of MCA’s marquee clients, including Henry Mancini, Johnny Mathis and Williams.

Friends say Wasserman’s continuing influence on Perenchio cannot be overestimated.

Howard Rose remembers going to see Perenchio about a job in 1968. Perenchio asked what salary he wanted.

“Whatever’s fair,” Rose said, hoping to impress his prospective employer.

Perenchio offered $65 a week -- $1 less than minimum wage. Rose took the job, and he soon got a raise. “He was more than fair.... I’ve been connected to him, one way or another, ever since,” Rose said, recalling that years later, he asked why Perenchio had low-balled him.

“Usually, when you overpay you don’t get results,” Perenchio answered. Besides, he added, $65 a week was “what I got when I started at MCA.”

When you suit up each day it’s to play in Yankee Stadium or Dodger Stadium. Think big.

By the late 1960s, Perenchio owned one of Hollywood’s top boutique talent agencies, with such headliners as Glen Campbell, the Righteous Brothers, Sergio Mendez, Richard Burton and Elizabeth Taylor.

Perenchio then tasted even greater success. In 1969, he played the middleman in his first big deal, finding the buyer for Caesars Palace, the Las Vegas casino. Perenchio received $800,000 for an afternoon’s work.

Two years later, Rose called to relay a message: For $5 million, a Chicago promoter was offering the right to promote the fight between Ali and Frazier. Without hesitation, Perenchio told Rose: “Tell them I’m in.”

Perenchio turned to Jack Kent Cooke, then owner of the Los Angeles Lakers, for the money. Then he set out to cover the “bet,” tacking a big map of the U.S. on the wall and putting dollar amounts on each state.

“Jerry’s philosophy was to sell it just as we sold concert attractions,” Rose recalled. “He put $1 million on the state of New York and said, ‘Go sell it.’ ”

Perenchio branded the Madison Square Garden event “The Fight of the Century” and sold it to regional concert promoters, who in turn lined up local theaters that could receive the closed-circuit feed. To attract the media, he recruited Frank Sinatra to shoot photos ringside for Life magazine and Burt Lancaster to serve as an announcer.

Not only did they raise enough to cover the fee, but Perenchio and his partners also made about $2 million in profit, a lofty sum in those days.

In 1973, Perenchio teamed up with TV producers Norman Lear and Bud Yorkin at Tandem Productions. Lear had the landmark TV sitcoms “All in the Family” and “Sanford and Son” and was preparing to launch “Maude.”

“Neither one of us were businesspeople,” Lear said. “Guys like us were writers for hire. We didn’t control the downstream [revenue]; we didn’t even know what that was. Jerry made it a business.”

Two years later, with $50,000, Lear and Perenchio formed T.A.T. Communications, which produced “The Jeffersons,” “One Day at a Time” and later, “The Facts of Life” and “Who’s the Boss?” Perenchio sold the shows to the networks and resold them in syndication, reaping millions.

Before meeting Perenchio, Lear said, he believed that entertainment people were on either the creative side or the business side. Perenchio showed him something new, he said: “the creative nature of the business side.”

Never lose sight of what business you’re in. Stick to your “last.”

When Perenchio gives to charity, he’s usually quiet about it. Daly, the former Dodgers executive, said, “He’s not the kind of person who puts his name on buildings.”

But when it comes to Univision, Perenchio wants his company to get its due.

Under him, Univision has become a juggernaut that generates nearly $2 billion a year in revenue from its TV and radio stations, two TV networks, a cable channel and a music division with four record labels.

Its flagship is now the nation’s fifth-largest TV network and regularly delivers three times the young-adult audience of MTV. More men watch prime-time telenovelas than ESPN.

No wonder so many people, including Microsoft founder Bill Gates, are eager to buy a piece.

Two groups of investors are expected to enter bids today. One consists of Azcarraga’s Televisa and Venevision and the private equity firms Kohlberg Kravis Roberts & Co., Bain Capital, Blackstone Group, Carlyle Group and Gates’ investment arm, Cascade Investments.

The other group consists of Haim Saban, who scored big on the “Mighty Morphin’ Power Rangers” cartoons, and the investment firms Thomas H. Lee Partners, Texas Pacific Group, Providence Equity Partners and Madison Dearborn Partners.

If the sale goes through, friends say, they are not sure what Perenchio will do next.

“I wish I knew,” DreamWorks’ Katzenberg said, “because I would bet on it.”

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Perenchio’s Rules of the Road

1. Stay clear of the press. No interviews, no panels, no speeches, no comments. Stay out of the spotlight -- it fades your suit.

2. No nepotism, no hiring of friends.

3. Never rehire anyone.

4. Hire people smarter and better than you. Delegate responsibilities to them. Doing so will make your job easier.

5. You’ve got to know your territory. Cold!

6. Do your homework. Be prepared.

7. Teamwork.

8. Take options, never give them.