Business Lessons From The Builder Of A Media-Entertainment Empire
He is a Forbes’ billionaire (#524 in March 2008) and the largest individual landowner in the United States, having built his wealth as he constructed a media-entertainment empire now known as Turner Broadcasting System, Inc. (TBS). He was named 1991 Person of the Year by Time magazine in recognition of his company’s innovative, on-the-ground coverage of Operation Desert Storm (though CNN's intense global coverage has been controversial at times). Whether you love him or loathe him, Ted Turner with Bill Burke in “CALL ME TED” lends some credibility to the value of wacky thinking and impulsive action.
Here are lessons gleaned from the book:
- Invent (or adopt) a new business model. Having taken over his dad’s billboard advertising business and diversified his media holdings to include radio and UHF television stations, Ted capitalized on the growth in cable television by creating what he called TBS SuperStation, a local (Atlanta) station with programming distributed to markets across the United States (similar to Chicago’s WGN). When the company couldn’t sell local or national ads to its hybrid audience typically served by independent stations and network affiliates, it sold space for direct response ads. A couple of years later, his team landed national advertising buys. According to Ted, “What we were doing was so new and so unique that everyone was slow to adapt, but once a few of the bigger players validated our concept, the rest began to follow.”
- Challenge the rules. Ted spoke at Congressional hearings to discuss FCC regulations including those pertaining to the broadcast of a local station to markets nationwide. He also led challenges of the Nielsen rating system to assure that audiences of non-network programming were counted; and fought for White House press credentials for CNN (or Cable News Network, the first 24-hour all news channel).
- Create synergy. The businesses that Ted ran (either as sole owner or with a controlling interest) owned and/or controlled billboard advertising space, television stations, MGM, Atlanta Braves, a movie studio, and more. So, he was able to advertise his TV programs on billboards, show classic movies from the MGM library on Turner Network Television, create Cartoon Network to air classic cartoons following the purchase of Hanna-Barbera, access newsgathering capabilities of CNN for Headline News, and broadcast the Braves’ games on TBS without paying royalties or licensing fees. “When you own an asset, your job is to maximize its value.”
- Negotiate terms rather than price (only). Ted bought the Atlanta Braves for the offer price of $10 million but paid with $1 million down and $1 million plus interest over 9 years. When he needed cash to fund his operations, he encouraged some larger advertisers to pay cash up front in exchange for discounted prices.
- Build asset value. Ted’s focus, throughout much of his career, was on creating valuable businesses rather than showing a profit to shareholders (which came later after his company merged with Time Warner). His operations were considered high-risk, highly collateralized by his bank and he had to borrow at relatively high interest rates. But his efforts did yield growth: when he sold independent station WRET early in his career, its value had grown from $1 million to $20 million in 8 years; and when he sold Turner Broadcast System, Inc. to Time Warner, it was valued at more than $8 billion (his net worth was approximately $2.2 billion).
- Watch your cash flow. Even though his company was highly leveraged, Ted was attuned to how much cash was needed to operate his businesses and make debt payments. He purchased his first TV station by offering stock in his company, rather than taking on loans requiring periodic cash payments.
- Redefine problems and put together unusual solutions. To differentiate TBS SuperStation from its competition, programs started on the :05 or :35 rather than on the hour (:00) or half-hour (:30). Earlier, when a TV station (WRET in Charlotte, NC) needed more cash to operate, it hosted a telethon asking viewers for cash in exchange for principal and interest payments later; the event was dubbed the “beg-a-thon.” His propensity to reinterpret problems began in high school: he led his debate team to a state championship by taking an unusual position on the statement: “Resolved: Governmental Subsidies should be granted according to need to high school students who qualify for additional training.” His team caught opponents off guard by proposing that the government could benefit from investment in student training to produce scientists and engineers rather than students benefiting from financial aid.
- Work like crazy. When he worked for his dad (who, sadly, committed suicide but left him the family business), he was the first to arrive and the last to leave. Later, he often slept in his office and had an apartment built in the CNN complex so that he could avoid a daily commute. Jane Fonda, his third ex-wife, sheds light on the disadvantages of working all the time: “The fact is that the things that allow certain people to become super achievers are the exact opposite qualities that allow them to have successful relationships.”
- Assemble a talented team of people with complementary capabilities, committed to the cause. Ted portrays himself as a visionary and domineering but energizing, fun, and charismatic leader. He transfers skills learned as captain of racing boats (he led a crew to win the America’s Cup in 1977) to running a business, with emphasis on delegating tasks. I particularly liked this comparison: “From my early misadventures I realized that when conditions were good, you couldn’t tell how strong your crew was. Heading out and singing chanteys everyone looked great, but once the going got tough, the weaker guys would fold.”
- Make friends. Ted developed contacts and cultivated relationships everywhere, from local Rotary Club meetings to industry conferences. He met with people to discuss possible collaborations and keep a watch on industry happenings. He didn't seem to hesitate to call on his contacts whenever he had an urgent need, such as the time he needed someone to run an independent satellite uplink station to transmit TBS programming, had to assemble the CNN team in 11 months, or needed friendly investors to provide over $500 million in cash within several months to avoid a company take-over.
- Look ahead to see possibilities instead of regretting mistakes. At the height of his wealth, Ted had a net worth of $7-10 billion following the merger of Turner Broadcasting System with Time Warner, and the new company's substantial growth and profitability. But when Time Warner joined with then-rising Internet star AOL to become AOL Time Warner and the company floundered, his net worth dropped to $2 billion within a few years. Ted eventually left, divested his holdings, and now spends his time on Ted Montana's Grill and the Turner Foundation, Inc.
- Prime-time network television (8 p.m. to 11 p.m. daily)
- Reruns on independent stations (UHF) and during the day on network affiliates
- Walter Cronkite as the CBS News anchor and "most trusted man in America"
- Breaking news interrupting regularly scheduled programs
- Local personalities on television
- Saturday morning cartoons
- Test patterns (rather than programming) after midnight and before dawn
- Watergate hearings on all networks rather than C-SPAN during the summer of 1973
The media-entertainment landscape changed dramatically from when Ted Turner started buying radio and television stations in the 1960s to the time he launched CNN in 1980 (ESPN was started in 1979; and MTV in 1980) to now with The History Channel, The Weather Channel, HGTV and more (plus capabilities for recording shows). Ted's story, combined with insights into media transformation, makes a fascinating read.
Note: I received a copy of CALL ME TED in exchange for a book review.