The Ritz-Carlton, Buckhead
Atlanta, Georgia
January 13, 1995
The luxury suite at the Ritz-Carlton, Buckhead in Atlanta where Jack Welch and Ted Turner met to size each other up turned out not to be big enough for the both of them.
Jack and I had traveled by corporate jet from New York that morning to meet the free-spirited Turner on his home turf. My team and I had negotiated a deal for NBC to purchase Turner Broadcasting System for $23 a share. It was structured as a reverse merger that would have made TBS a publicly traded company under the new name Turner NBC, controlled by GE. Turner would remain on the new company’s board as an advisory vice chairman. It was a fair offer that would give Turner scale, if not the independence or control he craved. After years of false starts with Turner, this was my best shot to bring our companies together.
The only thing left was determining whether Welch, GE’s acerbic chairman CEO, and Turner, cable’s most enigmatic entrepreneur, could coexist and avoid getting in each other’s way. It took less than an hour for them to demonstrate that was impossible.
Everyone, including Jack—and maybe even Ted—had difficulty visualizing how an impetuous guy like Ted would fit into the GE culture. Top-ranked executives at GE and NBC were used to seeing their work as an extended part of their social structure and family life. Playing weekend golf and dining or meeting Saturday mornings around the kitchen table in my Connecticut home for an informal work session was all part of the GE/NBC protocol. Was that Ted’s way? We were about to find out.
During the flight to Atlanta that morning, Warren Jenson, NBC’s chief financial officer, reviewed a letter of agreement he had prepared for Jack to sign. The last line just above Jack’s “all the best” sign-off and bold signature read, “Looking forward to working with you for many years to come.” Jenson had added it as a friendly gesture, something he routinely did for Jack.
“I’m not saying that!” Jack bellowed. He had just spent half the plane ride doubled over in laughter with me and Jenson as they tried imagining how Turner could fit inside GE’s buttoned-up corporate ethos. It was an uneasy precursor for the Ritz-Carlton exchange to come. Removing that line from the letter wasn’t an easy task for Jenson in those days before digital correspondence. All he had available was a small bottle of Wite-Out in his briefcase and a copy machine at the Ritz to reconstruct the letter.
As it turned out, all the fuss was for naught.
I was the only person in the room to witness the surreal encounter. These two enterprising, outspoken empire builders had stark stylistic differences and a strong dislike for each other. Welch had set disciplined expectations for executive behavior and financial performance inside his sprawling global conglomerate with such textbook metrics as Six Sigma. Turner had revolutionized television by executing his vision for 24-hour cable news at CNN and mainstream entertainment at TBS. But his unpredictable, free-spirited nature often got him into trouble with even his closest, most forgiving constituents. Ted had been sharing his grandiose NBC takeover plans with me for years.
Jack was very interested in an NBC-Turner merger, but he didn’t want to bring Ted Turner anywhere near the GE board. It was still early in Jack’s GE chairmanship, and he didn’t want to deal with disruptive influences. And Ted, known for outrageous statements, could certainly be disruptive. Welch decided that day he would not negotiate with Turner about an appointment to the GE board or a higher position in the organization if he asked for it. In fact, Welch wasn’t going to give an inch on anything the relentless Turner requested.
For his part, Ted had already decided he would push for more money and a vice chairmanship that would assure him a prominent place on the GE board. He had worked hard to boost TBS’s value to $30 a share and wanted a golden parachute. Welch wouldn’t hear of it. The minute Ted opened his mouth, Jack immediately cut him off. And that annoyed Ted. And that’s when the trouble began.
Turner insisted he deserved extraordinary consideration given the entrepreneurial firepower he was bringing to GE’s rigid corporate ranks. His ideas, contacts, and name brand were as valuable as the hard assets NBC was buying. “I’ve earned it,” Turner demanded, looking Welch straight in the eye and leaning far across the cocktail table separating them.
“We can’t do that! We’re just not set up for that!” Welch snapped. What Jack was really saying was that Turner was a loose cannon. He inevitably would say something outrageous that would anger shareholders and investors. Welch and the GE board were already uncomfortable with the corporation’s exposure to the erratic, high-profile media world of fickle patrons and roller-coaster revenues. That uncertainty would be exacerbated by expanding NBC’s portfolio to include Turner’s cable networks and recently purchased MGM studio, and Turner’s own element of surprise.
As the tension mounted, Ted began barking like a dog. It was his very Turner-like way of demonstrating that he could, when pushed, be subservient to Welch and GE’s conservative board. It took even the extroverted Welch by surprise. Ted wanted a platform to speak from and not have to worry about managing a company anymore. But he wanted to speak on any subject at any place and any time. And that wasn’t what GE was prepared to give him.
Finally, an exasperated Welch and a ramped-up Turner gruffly shook hands and bolted for the door, leaving me and my team to pick up the pieces. The outcome might have been different that day had Welch at least given the appearance of courting Turner. But he didn’t even try. So we lost that one.
◆ Warren Jenson. All Ted wanted was for Jack to embrace him and make him feel welcome into the GE family. But the meeting was not about charming Ted. We could have collectively romanced Turner a lot better than we did. Too much of it depended on Ted having to prove that he was GE-worthy. If we had really figured out a way to make him feel welcome, we could have done the deal. If it wasn’t for that very tense encounter between Welch and Turner, NBC would own Turner Broadcasting System today.
The Turner people always thought they were buying us and we thought we were buying them, and no one just wanted to say outright what was going on because nobody wanted the dialog abruptly cut off. I think Bob and Ted knew how much sense it made to bring NBC and Turner together. I don’t know why we didn’t circle back with Bob about it to continue to work the deal after that failed meeting between Jack and Ted. The combination would have been pretty powerful. It probably would have made a huge difference in both companies and both men’s lives. Ted would have been better off with NBC than how he turned out with Time Warner. Bob could have consolidated NBC’s power sooner, although he still could have done the Universal deal later. ◆
A week later at a Los Angeles press conference, Turner very publicly announced that merger talks between our companies had been “terminated very amicably.” The talks died, he said, because GE refused to relinquish control of the broadcast network. GE immediately fired off a clarifying statement that it had always planned to retain 51 percent control of a merged NBC-Turner, which it estimated would have been worth about $6 billion.
In a sea of media consolidation that was creating competitors with more clout and resources, I wasn’t willing to close the door on eventually achieving some Turner alliance. With $2.4 billion in debt and $427 million in annual cash flow, Turner’s hand would soon be forced, and I wanted NBC to be the one to take advantage of it. But Ted and Jack always got in the way.
◆ Ted Turner, founding chairman CEO Turner Broadcasting System and creator CNN. I felt Welch’s proposal was inadequate, and I was surprised he didn’t know more about our company. I really like Jack, but I was disappointed that he didn’t do his homework, and he really didn’t make much of an effort to get me. Welch was running a big conglomerate, but he didn’t understand media and he had no appreciation for what we had created globally with CNN. They decided to come after me in a serious way because I kept coming after NBC. But I wasn’t about to compromise my company or who I am.
All the television networks now are part of other companies. Not a single one stands alone. At one point, I had a handshake deal to buy every one of the broadcast networks, including NBC. I either could not arrange the financing or got vetoed by the cable operators—usually Time Warner—who had a majority interest in my company. I couldn’t get permission. They told me that I had enough networks, that I had enough leverage.
If I had acquired NBC, I would have merged CNN and NBC News, and my Goodwill Games and the Olympics. I would have doubled them and marketed the daylights out of them. We could have combined resources, saved a lot of money, and made a lot of money. We could have redefined the economics of television, and nobody would have been able to come close to outbidding us for the right to the Olympic Games telecasts. There is no point in sitting around and dreaming about what could have been. It was great while it lasted, and I hope we did some good. I think we did. ◆
I wasn’t ready to give up completely. So a month later, on February 14, 1995, we all met up again, this time in GE’s executive conference room at Rockefeller Center. Ted, Jack, and I were joined by Tele-Communications chairman CEO John Malone, a savvy, soft-spoken PhD engineer, who was arguably the most powerful man in cable. We were there to discuss NBC’s proposed minority investment in Turner Broadcasting. Any such alternative alliance required the blessing of TCI and Time Warner, among the dominant cable system operators who had a collective 37 percent veto control of Turner’s company. We knew we had a problem with Time Warner’s veto and first option on the sale of Turner’s company. Time Warner and TCI were afraid to let us into the tent because it would interfere with their own agendas. So we were denied the opportunity to become a TBS minority owner.
Malone wanted to squeeze a premium out of Time Warner in exchange for TCI’s stake in Turner. Time Warner Chairman CEO Gerald Levin wanted to acquire all of Turner Broadcasting because of the strategic fit of assets. Levin and Malone simply did not want Turner to become a more powerful cable player by aligning with NBC. The meeting did not go well.
On October 10, 1996, Time Warner made Turner Broadcasting a private subsidiary by converting Turner’s shares in a $7.5 billion merger that combined Warner Bros. film studio, Time Warner Cable, HBO, New Line Cinema, Hanna-Barbera, and Turner Broadcasting System entertainment networks. Turner became vice chairman overseeing his TBS assets. (In 2001, Time Warner famously merged with AOL, and Turner helplessly watched while his personal wealth plummeted by $8 billion and his AOL Time Warner stake dwindled to barely 4 percent in 2 years. He resigned from the company in January 2003, when AOL Time Warner reported the single-largest annual loss in corporate history—$99 billion.)
In late 1999, Turner tried turning the tables by convincing Time Warner to make a run for NBC, and unabashedly declared his intentions publicly at the Western Cable Show. At the time, Jack Welch was vehemently denying that he had offered to sell NBC to Time Warner for $25 billion. All through the 1990s, Welch was rumored to be exploring the network’s sale to interested parties. Ted was always a willing buyer. But this turned into another dead end.
◆ Ted Turner. The combination with NBC would have made us stronger, quicker than we were with Time Warner. At the dawn of multichannel television, it was all about who got the most networks the quickest would win. I couldn’t do that alone. My biggest regret was selling control of CNN. Any of the deals I could have done with NBC to merge our two news organizations would have been my best, most lucrative option. Jerry Levin vetoed our proposal to acquire NBC. I had a handshake deal subject to board approval, and Gerry had control of the Time Warner board. It was the closest we came. ◆
I knew that contemplating a merger with Ted Turner back in the day when he fully lived up to his reputation as “the mouth from the south” was not for the faint of heart. Everyone in the media world wanted his assets, the most sought after of which was CNN. But no one wanted Ted to be part of an acquisition package. His extroverted, bigger-than-life manner was the main impediment to getting anything done. It’s also what attracted people to him: the creative, spontaneous, electrifying force. It was an innovative spark and catalyst to a fledgling cable industry. Few media peers appreciated his genius more, or were deterred less by his brazen, unpredictable nature than I was. In fact, my first effort to buy a 25 percent stake in Turner Broadcasting System for $400 million came just a year after my arrival at NBC.
Ted is an irrepressible guy who defies gravity and wins hands-down for his absolute drive and ability to get things done against all odds. I learned a lot in those early days by just watching him fall down, get back up, walk on water, and walk on air. There was no one else like him—anywhere.
Ted eventually brought himself down through his love of programming when he bought MGM. He wanted that library of film and programming to create cable channels. Ted’s ultimate problem was losing control of his company. We could never cut a deal with him because each time, for various reasons, we lacked the ability to make things happen without clearance from some higher authority. We also both ultimately wanted to be in control of the single entity we created, and that wouldn’t work.
In the end, the only thing we had was the longest-running unconsummated courtship in media history.
◆ Pier Mapes. There is no question that Ted Turner and Bob Wright were great visionaries who changed the whole paradigm over several decades despite their contrasting styles and backgrounds. Ted Turner was a formidable force in the early days of cable when suddenly everything exploded into alphabet soup—TNT, TBS, CNN, USA, ESPN. Ted deserves a lot of credit for all of this. But because he was like a bull in a china shop, it was easy for others to blow him off or write him off. That’s something I don’t think Bob Wright ever did. He understood Ted’s drive and vision, because deep down, it was the same as his. Bob was just a lot more understated and low-key, which prevented him from getting the recognition he deserved. Two cable pioneers, underestimated for different reasons, which is maybe why they were always willing to sit down and talk about what could be, even when the television business was at its most chaotic. ◆
◆ Ted Turner. When I was a teenager, someone asked me what I wanted to do with my life; what did I want to accomplish? After I thought about it, I said I’d like to set an all-time record for personal achievement by one person in one lifetime. It’s about how much good you do. I’m working on that.
Today, I reserve my time and thought processes for things that I still have some influence over. My greatest concerns are nuclear weapons, global climate change, overfishing the oceans, poverty, and terrorism, and ridding the world of childhood diseases. You use everything you have always used to make it happen: teamwork, enthusiasm, hard work, good mental powers, using your intelligence, coming up with good ideas first. Trying to save the world with the United Nations probably turned out to be a more worthwhile endeavor than creating a media empire with NBC. ◆
We were all about challenging conventions back in the 1970s when television was a black-and-white, three-network proposition. Back then, it was akin to making mischief because the status quo was so entrenched. Today it’s all about disruption, and change has become the norm. But none of us ever has all the control we need to do what we want—not even Ted Turner in his prime. When I look back on our long-running friendship, I can see now we were bonded by the ongoing hope that our companies could advance the cause of 24-hour cable news together.
That never happened in large part because of our different styles and approaches to pursuing that goal. Ted was brazen to a fault, never thinking before speaking publicly what he knew would shock and jolt others into action. I preferred to be more subtle, even flying under the radar of my GE bosses, who were simultaneously repelled by and attracted to a media business they had trouble wrapping their industrial conglomerate
arms around.
Ted might have been able to achieve all of his fondest hopes, including owning a major broadcast network, if he had been more diplomatic. But he always was true to himself first. He was destined to have more passion than control, which is never a good formula for achieving your objectives. On the other hand, without Ted’s original brand of entrepreneurism, the media world would not have caught fire the way it did. His free spirit was a catalyst for change at a time when broadcasters, advertisers, and program producers, and even cable pioneers, were easily lulled into stagnation. If you ask, both of us would no doubt say without hesitation that one of our biggest regrets was never being able to pull off a deal that made us partners.
What I learned from my dealings with Ted Turner I put to work in my building of Autism Speaks. That was an even more elusive and passionate endeavor than I had known in my media career because it involved people’s real-life destiny—autistic children and their families, and Christian and my family in particular. And I suddenly understood what it felt like to have your soul on fire.