COMPANY TOWN : Entertainment Powerhouse : Quiet Investment Manager Is Major Hollywood Force

By SALLIE HOFMEISTER

Sept. 8, 1995 12 AM PT

TIMES STAFF WRITER

If the select group of Wall Street institutions that hold big chunks of broadcast, cable and entertainment stocks are known as the “media mafia” because of the behind-the-scenes power they wield, then Gordon Crawford is the media don.

“People used to say that Michael Ovitz was the most powerful man in Hollywood,” said Raymond Katz, a managing director at Bear Stearns & Co., referring to the Hollywood super-agent and soon-to-be president of Walt Disney Co. “I always thought it was Gordy Crawford.”

Virtually unknown to the public, Crawford is a Los Angeles investment manager who sits among the big-league powerbrokers now reshaping the media landscape. Through the Los Angeles-based mutual fund firm of the Capital Group Cos., which manages $200 billion in investments, Crawford holds major long-term positions in Time Warner Inc., Turner Broadcasting System Inc., Tele-Communications Inc., Walt Disney Co., Viacom Inc. and News Corp.

There are few major cable, broadcasting and entertainment companies in which the 48-year-old entertainment analyst and portfolio manager does not own an equity stake of between 5% and 10%.

Crawford has earned millions for his clients and for himself since joining the firm in 1971, straight out of the University of Virginia business school. He may even have had a role in bringing Time Warner and Turner Broadcasting together in the proposed $8.5-billion merger.

“He was the driving force,” said one leading investment banker who refused to elaborate.

Crawford denies having any role, though he admits that he has served as matchmaker in other deals. “I’m always trying to promote marriages where they make sense,” he said.

Since the merger news broke, his Turner shares, which traded in the low $20 range, have shot up $6--an overnight appreciation of about $100 million on his 13% stake. He also holds 9% of Time Warner.

The perception of his role in making the match partly stems from his close friendship with Ted Turner, the head of Turner Broadcasting, and John Malone, the head of Tele-Communications, a large shareholder of Turner Broadcasting. Malone has a pivotal vote in approving the merger, whose negotiations have slowed to a crawl in the last few days.

Some believe that Crawford is also among the Time Warner institutional shareholders who have grown impatient with the slow payoff of Chairman Gerald Levin’s bold bet on cable systems. The stock has under-performed the market for two years.

But Crawford’s whereabouts when the merger plan was hatched led many on Wall Street to jump to the conclusion that he played a critical role. When Levin showed up at Turner’s Montana ranch in mid-August to propose buying the Atlanta-based cable company, Crawford and his wife, Dona, were there spending a four-day weekend.

He says it was just a coincidence. “We go up there every year to fish,” said Crawford, who has become a Zen master fly fisherman by some accounts since he picked up the sport 12 years ago at the annual Allen & Co. media gathering in Sun Valley, Ida.

Whether or not Crawford was involved in brokering this deal, he has been on the inside loop since. Malone and Turner call to inform him and seek his advice, as do other chief executives.

“If you run a company dedicated to the creation of shareholder wealth, then Gordy is your collaborator and partner,” said Peter Barton, president and chief executive of Liberty Media Corp., which is controlled by Malone. “He acts like one of your best directors and is always thinking of ways to make the company more valuable.”

Crawford is not your typical fund manager who pores through quarterly reports, gauges performance according to standard profit ratios, and hedges his positions, bobbing in and out of stocks. Rather, he holds his positions for years, sometimes decades, looking for “tailwind investments” where the wind is in his back.

He puts entertainment stocks in that category because “two-thirds of the world is barely penetrated and American companies dominate. The industry’s growth is still ahead.” He started investing in cable when fewer than 35% of the homes were wired, seeing the future of putting a wire into the home.

He also tries to zig when others zag, buying Turner in 1987 when the company was verging on collapse and accumulating Seagram Co. when investors were bailing because of its purchase of MCA Inc. In fact, he said he cut his teeth in 1972 on MCA, which he bought when other investors were skeptical of the mounting deficits as the studio entered the television business. He’s had few dings: Since losing money in Carolco Pictures, he has stayed away from independent studios.

As an investor, Crawford is known for his studious approach and keen sense of the business. But it is his unassuming style that is the source of much of his power.

“He is the kindest man associated with the business” were the first words out of Herbert Allen, the media investment banker of Allen & Co., which has structured a slew of media marriages. “The respect he gets goes more to his humanity than to the amount of money behind him. He’s never outspoken or pushy. That’s not Gordy’s style.”

Crawford says his investment style, along with a deliberate effort to stay out of the public eye, stems from the culture of his firm. “We don’t cajole or threaten or make pro-active moves,” he said. “We are long-term investors. The average stock in our portfolio is held five to six years.”

While many money managers use their investments to grandstand at analysts’ meetings and to bludgeon managements into submission by criticizing them in the press or through other public means, Crawford’s fingerprints are rarely seen. He picks up the phone instead.

That is why many on Wall Street were taken aback in May when Crawford refused to vote his 5% interest in CBS Inc. in favor of management’s slate of directors to show his disapproval of Chairman Laurence A. Tisch. CBS executives say Crawford disliked Tisch and thought he was dismembering CBS.

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The Crawford File

Though little known to the public, Gordon Crawford has become one of the most influential figures in the entertainment industry. He has gained this influence quietly and behind the scenes through the investment of billions of dollars for the Capital Research and Management Co., which is a Los Angeles-based money manager. Rarely does Crawford use the clout from Capital’s holdings to bludgeon company management, but he has become a key adviser to many of the major entertainment moguls.

* Sources say Crawford played an influential role in the proposed merger of Time Warner Inc. and Turner Broadcasting System Inc. Though Crawford maintains it was a coincidence, he and his wife, Dona, were at Ted Turner’s ranch in Montana when Time Warner Chairman Gerald Levin showed up to suggest the merger. Says Crawford: “I was there to fish.”

* Though he prefers operating behind the scenes, Crawford on rare occasion has used his power as a dominant shareholder to put public pressure on managements he believes are misbehaving. In May he refused to vote his 6% interest in CBS Inc. in favor of management’s slate of directors to show his disapproval of Chairman Laurence A. Tisch.

* A conscientious investor, Crawford is known to pore over offering documents until he understands even the most arcane transactions. His deciphering the 400-page circular of Liberty Media Corp. when Tele-Communications Inc., the leading cable operator, spun it off in 1991, left him holding 40% of the stock while many other investors stood on the sidelines, confused. The shares he purchased for $2 apiece grew in value more than fifteenfold.

* He is the only investment portfolio manager on Vanity Fair’s current list of 50 New Establishment power brokers.

* Much of Crawford’s influence stems from the fact that he has the confidence of the biggest entertainment moguls, who often seek his advice. When the Seagram Co. began accumulating shares of Time Warner Inc., Crawford had a role in persuading the entertainment company to adopt a poison pill to prevent the beverage maker from quietly acquiring control without paying shareholders, as Tisch did with CBS.

Personal:

* Dona Crawford is as popular among media moguls as is her husband. Sources say those invited to the exclusive annual media outing in Sun Valley, Idaho, in July seek out the Crawford table because of Dona Crawford’s charm and wit.

* His younger son, Brett, died at the age of 21 in a hiking accident in Taiwan two years ago. His older son, Jeffrey, works for New Line Cinema, a Turner company.

Crawford’s entertainment holdings through the Capital Group Co.:

Company Percentage held by Crawford’s company

Turner Broadcasting Inc.: 13%

Seagram: 5-10%**

News Corp.: 5-10**

Time Warner Inc.: 9%

America Online: 8%

Comcast: 8%

Tele-Communications Inc.: 7%

Capital Cities/ABC Inc.: 5%

CBS Inc.: 5%

Walt Disney Co.: 3%