Ted Turner: Star of Hollywood’s Big Cliff-Hanger

Ted Turner, who is expected to become the controlling stockholder of MGM Entertainment Co. in the next few weeks, could be a Hollywood movie mogul right from Central Casting. Handsome, charismatic, flamboyant and daring, he is every inch a leading man.

But “Turner in Tinseltown” is one drama that may never make it to the silver screen.

Because of the monumental debt his company is taking on as a result of the $1.25-billion deal, the broadcasting maverick may not even take a screen test. He has said he may only hang onto MGM’s film library and sell off the rest.

Despite all that, however, Turner’s image and personality have evoked intense curiosity about what kind of mogul Turner may be.

For instance, would he be an improvement over his predecessor, Kirk Kerkorian, the publicity shy financier who has been little involved in MGM’s movie-making? How would Turner, whose experience is in broadcasting, run a movie studio? If he sells control of the movie-producing apparatus, will the buyer be able to run a first-class studio without a library of old films to help it through the slow times?

An examination of the Atlanta entrepreneur’s business history offers some clues.

Perhaps the most widely held observation cited by those who have dealt with him is that Turner’s brash personality is intertwined with his business decisions to degree unseen in most business executives.

Gets Mixed Reviews

Turner admirers spoke of him as a visionary, almost a genius; others described him in recent interviews with The Times as irresponsible, an egotist who has had more failures than successes.

Unquestionably, he is a flamboyant and impulsive media baron. He is credited with revolutionizing satellite and cable-TV broadcasting in the 1970s. That is largely because of his success with the nation’s first TV “superstation” and 24-hour cable news network.

Those who have come into his orbit are almost never neutral about him. In the entertainment industry, sharply divergent impressions are voiced.

One who hopes Turner will actually go into film-making himself is a long-time associate, cable television pioneer Bill Daniels of Denver. He recently said of Turner: “You’ve got another Darryl F. Zanuck, another Louis B. Mayer. . . . Ted would love it, but. . . . “

The rest of Daniels’ thought was that “he may have to take some partners (and) do some clever financing, but he can do that.”

However, Rich MacDonald, a professional watcher of Turner, founder and 81% stockholder of Turner Broadcasting System, has a different view. MacDonald says Turner “doesn’t have any desire to” be a Hollywood mogul.

“He’s a mogul in his own right already,” adds MacDonald, a media industry analyst with First Boston, an investment firm, who points out that Turner is chiefly interested in MGM’s film library.

Valuable Film Library

Turner has made it plain that he expects to hang on to the Culver City-based studio’s crown jewels: its prodigious film collection. Turner covets it as a rich treasure house of movies that will feed his satellite broadcasting Atlanta superstation, WTBS, for years and years.

As for the rest of MGM, Turner has declared in public documents that he “plans to pursue the sale of all or part of” it--including production facilities and the 44-acre lot.

Whether Turner produces movies at MGM or someone else does, the film industry is curious to see if the future MGM will be a major Hollywood studio or merely a shadow of its one-time eminence.

Actually, some industry observers believe that MGM was already reduced to a shadow during the 15 years of control by Kerkorian, who owns 51% of its stock. Mighty box-office hits have eluded the studio under a series of top managers during the Kerkorian years, while the studio largely lived off of its patrimony--exploiting the library of old hit films and selling off some of its valuable real estate.

One thing is certain: Turner could hardly be more of a contrast with the quiet, authority-delegating Kerkorian.

The popular image of Turner as a devil-may-care, swashbuckling yachtsman, broadcasting entrepreneur and professional sports impresario (Atlanta Braves baseball and Atlanta Hawks basketball teams) has emerged over the past 15 years.

The media has fostered that image through major articles in national magazines and appearances on national TV, including a feature on CBS’ “60 Minutes.” Turner has almost always cooperated.

Availability Curbed

But his availability has been limited for much of the past year. That is because of the restrictions that the federal law puts on persons and firms with pending registration of new securities. During much of 1985 and continuing in 1986, Turner has been under wraps (except for an occasional speech on topics unrelated to his business).

First, it was his attempt to take over CBS against its will, the failure of which was almost immediately succeeded by his move to buy MGM/UA with the blessing of Kerkorian.

Despite the amity of the parties, financing difficulties to complete Turner’s MGM purchase has turned the deal into a cliff-hanger. Until recently, the on-again, off-again atmosphere had gone on since last August.

And during it all, the Wall Street pundits and arbitrageurs speculated on whether Turner could pull it off and whether he should if he could.

Even considering that MGM’s United Artists unit is being sold back to Kerkorian simultaneously for $480 million, Turner Broadcasting System will be saddled with about $1.7 billion of debt, counting $617 million of prior MGM debt and about $224 million of TBS debt.

Besides Ted Turner’s financial resources, the situation has sparked talk about his style of operating businesses.

“He’s been a very good operator,” is the simple assessment of Steven Rosenberg, analyst for Paul Kagan & Associates of Carmel, Calif.

Called an ‘Adventurer’

Noting the reputation of Turner for impetuous decisions and heedlessness for risks, Rosenberg enthuses: “His moves are not always thought out 17 steps ahead. He’s an adventurer, an explorer.”

Turner’s reputation as a visionary is largely grounded in his inspired use of satellite communications (he has freely said he got the idea from Home Box Office’s satellite service) to beam his once-mediocre Atlanta TV station’s programs to the entire nation.

Thus in December, 1976, he created a national advertising medium outside the national TV networks. It has multiplied in value, with estimates now running from $500 million to $1 billion.

Turner’s next outstanding accomplishment was to create a 24-hour cable news operation named Cable News Network in June, 1980. Although it has never shown an annual profit, it is widely considered a frontier-breaking operation. Its value is indicated by the reports that he turned down $300 million for a one-half interest in recent months.

Those who profess to be less than admiring of Turner point to such things as his defeat in an unfriendly buy-out attempt against CBS last year, which was preceded by the failure of his Cable Music Channel and before that by his unsuccessful attempt to buy ESPN, the sports network.

Some claim his MGM undertaking, which had been an object of some scorn in Wall Street until he twice negotiated a lower price, was undertaken while he was on the rebound from those misadventures.

Wreaked Economic Havoc

Furthermore, critics point out, he has often wreaked economic havoc on those he has selected as targets or competitors. For instance, CBS paid a giant price to fight off Turner, and the repercussions have included layoffs in its news department and sales of assets.

Critics, often his competitors or former competitors, also note that these forays have cost Turner tens of millions, even hundreds of millions of dollars, that could have been put to much more efficient use in his existing business.

“His history since he has leaped to prominence is one of major decisions that appear to have been made sometimes on a whim and sometimes for revenge, but rarely on astute business planning,” said one person who has been a competitor of Turner’s.

He is Lloyd Werner, a senior vice president of Group W Satellite Communications, and he ran the ill-fated Satellite News Channel for Group W and the ABC network.

Werner says Turner even started a news headline service called CNN2 “as a preemptive strike against us” after Group W said in August, 1981, that “we were going to do the Satellite News Channel” and “be the KFWB of TV,” by offering cable operators brief news roundups similar to those on all-news radio.

Turner was in a hotel room in Boston when he decided to start CNN2 “against the wishes of all his subordinates,” Werner said.

Satellite News Channel finally was born in June, 1982, but folded after after two years of competing with Turner for a limited market. One insider said SNC offered to buy out Turner or sell out to him.

Still Losing Money

Some observers have told The Times that they thought Turner proved himself foolish when he paid the defeated service $25 million to go out of business, since it would have had to fold anyway. One of those, Werner, says it cost Turner a lot more besides that, adding that CNN and CNN2 are still losing money.

Werner also contends that Turner’s announcement in late summer of 1984 that he would launch Cable Music Channel to compete with MTV was done on “the spur of the minute” and on the same day that MTV was to go public.

This caused MTV’s stock to drop substantially, he said, adding: “It cost MTV $20 million. It appeared to be done out of spite, out of pure meanness.”

As it turned out, Turner’s music enterprise ended ignominiously 35 days after it started--and 21 days after it admitted that it was reaching only 400,000 cable-TV households instead of the 2,309,874 it had claimed earlier.

Although critics of Turner sometimes also say some complimentary things about him, mostly they talk about him only on condition that their names not be used.

For instance, a top broadcasting executive (as well as a Turner competitor) said Turner’s “personality of derring-do” carries over to business and has led him into areas “where timid types would not have tried.”

“It was a good thing for starting the superstation,” the executive said, but he added:”That same derring-do led him into the totally ill-conceived move on CBS.”

Cable system operators, a major element in Turner’s world, are divided in their outlook on Turner. Some of them swear by Turner, despite a good deal of chagrin at his precipitous raising of CNN’s fees just after he bought out Satellite News Channel.

NBC More Cautious

Other cable operators have been supporting NBC as it pondered whether to start a competing cable news set-up in competition with CNN. After much thought, NBC announced Jan. 31 that it will not go forward with such a move, because it couldn’t whip up enough subscriber support.

Therein lies the difference between NBC and Ted Turner, says Daniels, the Denver cable operator.

While NBC would not go into the business without at least 13.5 million subscribers, Daniels said: “Ted had zero when he started. High risk, high return; low risk, low return.”

Industry sources familiar with the situation say Turner in fact pulled a coup on NBC. While he dickered with NBC to sell the network a one-half interest in CNN, he went out and “locked up” as CNN customers some major cable operators who might have defected to NBC. He did so by giving some bulk discounts, according to sources. NBC and Turner failed to agree on going partners in CNN, and the network was hung out to dry.

One who thought that was smart is Reese Schonfeld, the man who started CNN with Turner and ran it for years before they parted company in a dispute over Turner’s interference in a firing of a key staff member by Schonfeld a couple of years ago.

“He’s tremendously effective; he fought NBC brilliantly in the last three or four months,” Schonfeld said. “NBC hurt itself a lot by talking with Turner. Whether Turner had any intention of selling, he played NBC like a fiddle. Cable operators thought NBC was going to provide competition, and suddenly they were talking about being partners (in CNN).”

Strong Supporter

Daniels, who also was the first owner of the Los Angeles Express football team, doesn’t disguise his enthusiasm for Ted Turner. Noting that he has been a “middle man” on some deals of Turner’s, Daniels said in a telephone interview a few weeks ago:

“He is extremely bright . . . not only on day-to-day business matters, but . . . on world affairs and what’s going to happen to our world in the future if we don’t do something about it.”

Some persons who have dealt with Turner often volunteer that Turner displays vindictiveness and meanness and exhibits erratic behavior at times.

Schonfeld, who had a lot of opportunity to study Turner, and others have described Turner as putting a lot of pressure and occasional abuse on subordinates, as well as making a habit of having executives fetch and carry for him.

He also has vivid memories of Turner’s unique way of making business decisions.

When Westinghouse (Group W) “came down to threaten us” in 1981 about starting its Satellite News Channel, Schonberg recalled, this ensued:

“Ted Turner walked into my office and says, ‘I want to upgrade the service.’ I said it would take about $1 million a month. He said, ‘Spend it.’ We spent $1 million a month. No one knew it but Ted and me.”

Michael Brown, managing director in Los Angeles for the Drexel Burnham Lambert investment firm, who is heading the financing push for Turner’s MGM purchase, says the deal is “another major strategic move” by Turner, aimed at providing film product for his superstation for a long time to come.

Could Lose Control

Right now Turner does not have a lot of choice about reducing debt following his MGM purchase. As reported, if Turner Broadcasting has to hand out common stock in place of cash for dividends on the special preferred stock issued to MGM shareholders in the deal, Kerkorian could end up in control of Turner’s empire in several years.

One way to avoid it is to sell assets. Daniels and analyst Rosenberg are among those who believe that he could manage to sell MGM movie production setup without its film library, although the question is how satisfactory a price could be received.

And to be sure, he has the advantage of solid assets as his underpinning, Schonfeld says.

“His basic business is enormous. I’m sure he’s been offered $250 million to $300 million for half of CNN. His superstation is worth at least $1 billion.”

Daniels has his own recipe for ironing out Turner’s problems with the debt being incurred with MGM, and he says he passed it along to Turner.

“Ted has got one way to go, in my opinion, that he hasn’t explored yet. He didn’t want to give up his control of CNN. Ted may find he can’t have the best of both worlds.. . . He can sell off stock in Turner Broadcasting and hold 51% and still maintain control.

“If I were Ted, that’s the way I’d do it--but I ain’t.”

TED TURNER’S CAREER

Here are highlights of Ted Turner’s career as a businessman and sportsman:

Nov. 19, 1938 - Born in Cincinnati.

1963 - Inherited father’s businesses, except for an outdoor advertising firm, which soon he bought back and made the keystone of his business.

Jan., 1970 - Acquired Channel 17 in Atlanta and named it WTCG. It later became “superstation” WTBS

Sept., 1976 - Acquired the Atlanta Braves professional baseball team, and later acquired the Atlanta Hawks professional basketball team.

Dec., 1976 - WTBS became first to broadcast via satellite to cable systems around the United States.

Sept., 1977 - Successfully defended the America’s Cup in yachting.

June, 1980 - Started Cable News Network as first 24-hour news broadcaster.

Jan. 1, 1982 - Started CNN Headline News

Oct. 12, 1983 - Bought out Satellite News Channel for $25 million, winning a 2-year battle against CNN’s competitor.

April, 1984 - Unsuccessfully bid to buy ESPN, the all-sports cable TV network, which was sold to ABC.

Oct.26, 1984 - Launched Cable Music Channel.

Nov. 28, 1984 - Sold Cable Music Channel, three weeks after disclosing it had 83% fewer subscribers than it had claimed the previous week.

April, 1985 - Launched unfriendly $5.4-billion attempt to take over CBS.

Aug.7, 1985 - Agreed to buy MGM/UA for more than $1 billion and simultaneously ends unsuccessful bid for CBS., JIM OWENS / Los Angeles Times