Lust does funny things to a fellow. How else to explain Ted Turner’s wild weekend--in which he pledged continuing fidelity to New Line Cinema and Castle Rock Entertainment, while also telling friends that he’s “hellbent” on scoring with Paramount Communications?
Turner’s current paramours have to be a little put off by the whirlwind courtship of Paramount, which doesn’t even want him and which already has overtures from Viacom Inc. and QVC Networks Chairman Barry Diller. But people close to the Atlanta cable mogul insist he’s serious about making all three marriages happen, at least until a better idea comes along.
During a promotional event in New York this weekend for the upcoming four-hour Civil War saga “Gettysburg,” Turner could barely contain his enthusiasm.
“Did you read the newspaper this morning?” he exclaimed privately, the day after his board gave him approval to make a competing bid for Paramount. “By God, we’re gonna get it!”
Turner’s game plan for getting Paramount is still cloudy, though most analysts assume he would partly do it with stock from Turner Broadcasting System, of which he controls 51%.
Turner is being advised by Merrill Lynch’s investment bankers. But he also is in discussions with Apollo Capital, the merchant bank operated by Leon Black and Art Bilger, two star takeover veterans from defunct Drexel Burnham.
With substantial bids from Viacom and QVC on the table, Turner is seen as the dark horse in the Paramount derby. Some observers even expect him to walk away from the bidding now that the price has reached $9.5 billion. Sources say the cable mogul was rebuffed when he suggested a combined offer with Diller over the weekend. Turner A shares eased 12.5 cents to $25.625 on Monday.
That he’s taken seriously at all is a measure of how far Turner has come since the mid-1980s, when he tried a junk bond-financed hostile bid for CBS Inc., then nearly lost his empire in a $1.4-billion gambit for MGM/UA Entertainment.
Last year, Turner had an operating profit of $289 million on revenue of $1.7 billion. The company has about $1.9 billion in debt and interest expense costs of about $180 million annually. Significantly, Turner also has more than $500 million in operating cash flow.
One setback for the Atlanta-based mogul came Monday, when Diller received the backing of Tele-Communications Inc. and Comcast Corp., which both hold minority interests in Turner.
“Ted’s strategy was going to be the white knight,” said one knowledgeable investment banker. But when TCI and Comcast swung their support behind Diller, “that plan was sabotaged,” the source added. “It was a good strategy that lasted about a minute and a half.”
But others say Turner remains just as determined to put an offer together following Friday’s board approval to explore such as option. One associate warns against underestimating Turner, saying he’s “hellbent for leather” to make it happen. Another likens Turner to a child who settled for a lesser toy because he couldn’t afford the one he wanted, only to learn later that he could have had his dream toy after all.
In an interview, Turner declined to comment. “I wish I could talk, but I just can’t. I’m forced to give no comment by corporate counsel,” he said.
The cable mogul theoretically has plenty of time to chase after Paramount without having to worry about the impact on New Line and Castle Rock. Those acquisitions, which are valued together at about $750 million, aren’t expected to close before the end of the year.
“In the meantime, he has to forge ahead with both, because if he doesn’t get Paramount, he needs to fall back on his original strategy,” said one source close to Turner.
Castle Rock Chairman Alan Horn is publicly optimistic that Turner will make good on his proposal, with or without Paramount. Sources close to the companies say the acquisition process was scheduled to continue this week. There’s been no comment from New Line Chairman Robert Shaye, even though he is also said to have received similar assurances from Turner.
That may be because New Line is in the more precarious position of the two. As a distribution company, it has more overlapping businesses with Paramount. Its stock is also sensitive to any rumblings of spent passion on Turner’s part. New Line, in fact, dropped $2.25 a share Friday, closing at $20.125. But it rebounded Monday, rising $1.50. New Line President Michael Lynne remains upbeat about the deal, according to one friend who spoke to him Monday.
At the same time, however, there’s no definitive agreement in place. “When all you have is an agreement in principle, you can walk,” said one source.
All eyes will be on Turner’s steps for the next several days. He’s told friends that his bid would follow Diller’s, which came in Monday. With a battle royale developing over Paramount, some already see comparisons to the rambunctious 1980s.
“Paramount is one of the last great entertainment companies,” said one Turner associate. “If it happens to be in play, you have to think twice before letting it go. It’s a valuable prize. Every entertainment company would have to be taking a hard look at it.”