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CHAPTER XI

Taft Broadcasting Company

MY INVOLVEMENT WITH Taft Broadcasting Company could be a book in itself, lasting as it did for over twenty years. However, I’ll try simply to hit the high spots. Many of the “people stories” contained in this book would never have occurred had I not been involved with Taft.

My career with the company began in a strange and tragic way. I had been legal counsel to the company for several years and became secretary and a member of the board of directors. All of these came as a result of my friendship with Hulbert Taft, Jr., the founder of the company. Hub, as he was known, started the company in 1939 with the acquisition of WKRC radio in Cincinnati. He did this over the objection and advice of his father, who was the owner and publisher of the Cincinnati Times-Star newspaper. Hulbert Sr. like many newspaper barons of that day, was convinced that radio was a passing fad, and Hub Jr. would never see it prosper. He could hardly have been more wrong. The company grew rapidly in AM and FM radio, and over the years added television stations.

All of this changed tragically in November of 1967, when Hub was killed in the most bizarre accident I think I have ever known. He had built a bomb shelter on his estate in Indian Hill, a suburb of Cincinnati. A number of wealthy people living in the eastern United States did something similar in those days because they were greatly concerned that the Russians would fire missiles directed to the eastern part of the country from their bases in Cuba. This seems almost fantasy-like today but it was very real then. On a cold, rainy afternoon—November 10, 1967—Hub went into the bomb shelter and something (maybe a cigarette, maybe an electrical malfunction) caused a terrible explosion, most likely because there had been a propane gas leak. In any case, he was killed instantly at age fifty-nine. All of us who knew him were devastated. I felt the loss keenly because he had been so good to me and given me so many opportunities to learn and grow.

Hub’s death, of course, was something that none of the shareholders (predominantly made up of members of the Taft and Ingalls families) had expected, and they had to reach a decision on his successor very quickly. I was totally surprised and not a little scared when I was asked to come into the company as chief executive officer. I had to make up my mind literally overnight. I decided to make the move after counseling with my wife, my father, and one of my law partners. Dad was mildly irritated that I even had to ask him what I should do. His answer was, “Of course you should do it. No one ever got anywhere by turning down a challenge.” But it was not an easy decision because I was enjoying my law practice and thought the future was bright. However, I felt I might never have another chance like this and, therefore, moved forward with great excitement. My law firm was very supportive, so the transition was an easy one in that respect. However, I was overwhelmed with what I did not know about management and was determined to move slowly and with sensitivity until I gained the respect and support of the people in the company. The biggest problem I faced was that, since I was the company’s lawyer, most of the senior executives concluded that I was put into the job to preside over and implement the sale of the company. Although I repeatedly told them that was not my mandate nor intention, I think it was at least a year before people were comfortable that I was there to grow and build the company.

By the way, one of my most amusing memories of my being named Chairman of Taft Broadcasting Company came to me from a good friend who called to congratulate me. He said, “Charlie, I think it’s terrific, but have you considered the fact that the next move is out!”

The Growth and Development of the Company

LET ME TRY to give a brief overview of what happened over the next twenty-five years. When I joined Taft Broadcasting, we owned seven television stations, seven AM radio stations, and seven FM stations. We needed to expand outside of broadcasting because, in those days, the Federal Communications Commission limited the number of stations that one company could own. So, when you reached the legal limit you could not acquire any additional stations—even though the stations that you owned were generating a substantial amount of cash. Shortly before Hub died, we had made our first move outside of broadcasting with the acquisition of Hanna-Barbera Productions, the famous animation studio. In subsequent years, we bought another animation company (Ruby-Spears Productions) and built five major themed amusement parks utilizing Hanna-Barbera characters. All of the parks have been a great success except for the Australian park, which never really seemed to match the recreation needs and tastes of the Australian people. The other four parks, Kings Island, Kings Dominion, Carowinds, and Canada’s Wonderland continue strong and successful to this day.

We also acquired Worldvision Enterprises, one of the largest distributors of television and film product in the world. We acquired other Hollywood production companies (such as the famous Quinn Martin Productions, creators of The Fugitive, Barnaby Jones, and many other great shows) not only for their own value but to add their product to the Worldvision distribution system. At the same time, we bought television and radio properties whenever the rules of the FCC allowed.

Interestingly, our broadcasting operations took us into still other nonbroadcasting directions, such as owning the controlling interest in the Philadelphia Phillies and having a small interest in the Cincinnati Reds. Amazingly the Phillies won the National League pennant in our first year of ownership. A funny thing happened in the World Series. The Phillies had acquired three of the great players from the Cincinnati Big Red Machine—Pete Rose, Joe Morgan, and Tony Perez. We had watched them play hundreds of times during the years we lived in Cincinnati. In the first game of the World Series, as I saw Tony on first base, Joe on second, and Pete in right field, I turned to Marilyn and said, “I think we’ve already been to this ball game!”

Winning baseball’s National League Championship is not only a momentous occasion in itself, but a beautiful and very impressive ring is given to the players on a team that wins either the National League Championship or the American League Championship. What is less well known is that the owners and other officials of the teams usually receive such a ring as well. When the Phillies won in 1983, each of the owners (and, indeed, their spouses) received a magnificent ruby and diamond ring with all the appropriate inscriptions. It is a large ring, but it is very beautifully crafted. Over the years I have not worn the ring a great deal, partly because it is so large but more importantly because I didn’t want to risk losing or damaging it. However, on a few occasions, for no particular reason, I have worn the ring for brief periods of time. Inevitably, when I have worn it, someone will spot it and ask me about it. As recently as March of this year, a flight attendant on a flight to Cincinnati spotted it and said, “Isn’t that a baseball championship ring?” But, the funniest incident occurred when I was taking some of the family to Disney World and extended my right hand with money into the cashier’s window. The young girl behind the counter said, “Oh my goodness, sir, that’s a beautiful ring. What is it?” I explained that it was a National League Championship ring. She responded, “That is so impressive—what position did you play?” I couldn’t resist, so I said something to this effect: “I was a short stop. I was not very well known but was proud to be part of a championship team.” She said, “I am so impressed. I have never met a Major League Baseball player.” I couldn’t continue the charade any longer because I was laughing too hard, so I said, “Well, the truth is, young lady, you still haven’t!” I then explained the whole story to her, and we both had a good laugh.

Further, among other enterprises, we embarked on a joint venture with the legendary John Malone’s Tele-Communications Inc. by which we entered the cable television business. We also became a significant owner of Black Entertainment Television. When we entered into the joint venture with Tele-Communications Inc., John Malone had already helped a young man named Bob Johnson and his wife, Sheila, start Black Entertainment Television. Bob’s vision was a cable channel that served a black audience with music and other programming that would appeal to that audience. Bob felt, correctly, that this was a very under-served market, and he also recognized that, even though cable channels in those days were frequently hard to come by, a channel of this sort would have a very good chance of being approved by the typical municipality, even cities that had put a freeze on new franchises. He and Sheila turned out to be right on both counts. They ended up building a highly successful and highly profitable enterprise, and our stock interest in BET multiplied many times in value. When we first became shareholders, Bob and Sheila were just starting out and had no infrastructure or “backroom.” So, in the early days, Taft Broadcasting did all of their bookkeeping and accounting at our television station in Washington, D.C., WDCA. I have always kidded Bob by telling him that without us they might not have ever made any money, and, even if they had, they couldn’t have counted it without us!

All of these investments spawned other smaller interests, such as a licensing and merchandising company to exploit the Hanna-Barbera cartoon characters and a company that designed amusement parks and choreographed shows that were a big thing in the parks in those days. I could go on and on, but the point is that all of these enterprises brought me in contact with people who became an important part of my life.

IN THE INTEREST of honesty and humility, I need to comment briefly on Taft Broadcasting’s foray into the motion picture business. The motion picture business has been a siren song to scores of companies and individuals over the years. It is glamorous and holds out the dream of making a great deal of money on a small investment. The fact that neither of these notions is true hasn’t seemed to deter anybody, and it did not deter us. I will mention only two of our projects, which are certainly the ones that stick out in my mind. The first was one of the few pictures that was profitable—Running Man starring Arnold Schwarzenegger—and it was quite profitable. We may have made a little money on a few of our early low-budget efforts, but Running Man probably allowed us to claim a break even in our movie efforts. The other movie, however, should be a lesson for anyone who dreams of success in Hollywood. It was what we thought was as close to a “can’t-miss” investment as one could imagine. Adapted from a Pulitzer Prize–winning novel called Ironweed, it starred (can you believe this?) Jack Nicholson and Meryl Streep! We had visions of Academy Awards and riches beyond measure! So, what happened? It was a financial failure, not because anybody did anything wrong—Nicholson and Streep were magnificent, and the book was faithfully transferred to the screen.* The problem was very simple—it was a dark, depressing story, and the public just plain did not like it. This was enough for me and my associates. We exited the movie business with a few scratches and bruises but modest losses and a significant amount of learning and experience. That’s the last movie we made.

IN THE MID-1980S we made a very large acquisition of television properties from the Gulf Broadcasting Company. The price tag was $755 million, a big number even today. We acquired a number of big-market TV properties, including stations in Fort Worth, Houston, Tampa, Phoenix, and High Point, North Carolina. This was a major step in the growth of Taft Broadcasting Company. We were, of course, very excited but would probably have been less exuberant if we’d realized that this acquisition would lead to the end of the company we had worked so hard to build.

I had an interesting experience while negotiating the deal with Gulf that I’m not sure I have ever shared with anyone. We were in the Gulf corporate headquarters trying to finalize the deal. Unbelievably, although we were prepared to offer $755 million, Gulf was insisting on $765 million. We were getting nowhere in resolving the dispute, and Grant Fitts, the CEO of Gulf, said, “Charlie, let’s go into a separate room, and you and I will settle this between ourselves.”

When we were alone Grant said, “I really need the price to be $765 million.” I pointed out that $755 million was what our board had approved, and I simply couldn’t go higher. As the argument went back and forth, I had a very strange experience. One half of my mind was engaged in the dispute; the other half was saying something like this, “Charlie, do you realize what’s going on in the other half of your brain? You’re talking about spending $755 million! You are just a little boy from a little town in the southeastern Ohio hills. What on earth do you think you’re doing talking about whether a deal should be $755 million or $765 million! Are you serious?!”

Fortunately, the negotiating side of my brain took over and we concluded the deal, but I have never forgotten that “out of body” experience!

THIS SEEMS LIKE a good spot to share briefly my thoughts on the “art” of negotiating. I have always had very strong feelings about the right way and the wrong way to negotiate. Over the years I have been engaged in countless negotiations, some as a lawyer and some as a principal, but my approach has always been the same.

I approach a negotiation as a discussion that leads to making a deal. As a result, I have always felt that respect for the other party and a willingness to compromise were essential ingredients. If one does not treat the other party with respect and courtesy it is, obviously, harder to reach an agreement. Similarly, if one is unwilling to compromise, it is hard to see how an agreement can be successfully reached. It’s like the old saying goes—a successful deal will not totally please either party.

I am very opposed to the opposite approach, the approach that sees negotiating as “winning” and humiliating your adversary. Again, negotiating should not be about winning, but rather reaching a satisfactory agreement and maintaining a relationship with the other party that will permit you to remain friendly and respectful in the future. I have never been more convinced about the rightness of my approach as I have been recently as we have watched the hopelessness and craziness of the negotiations in Washington over the debt ceiling and the so-called fiscal cliff. It has all been about “winning” or “losing,” and insult and vitriol have made it impossible for the various parties to respect or trust one another in the future. To repeat one final time: The object of a negotiation should be to make a deal, not to prove your manhood!

By the way, I also think there is an “art” in conducting a meeting, whether it is a negotiating session or not. I will share some tips about what has worked best for me later in this book.

THE ACQUISITION OF the Gulf Broadcasting properties naturally drew a lot of attention, and one organization that was particularly attentive was the Robert Bass Group in Dallas. Shortly after the acquisition, the Bass Group began to acquire stock in Taft. When this became public knowledge, Carl Lindner, the well-known Cincinnati philanthropist and financial genius, approached me and expressed his concern that the Bass interests might take over our company and move it out of Cincinnati. He indicated that he would like to begin acquiring shares in our company to forestall this possibility. Once Carl and his group entered the picture, a bidding war developed between his company and the Bass Group, and, although we in management did not want to sell the company, the price being offered became so high that our legal responsibilities gave us no alternative but to support the sale of the company.

Let me explain this in more detail, because you might wonder why we in the management group didn’t mount a strong effort to repel the takeover. The answer is simple though sad. Once the Bass and Lindner groups started bidding, everyone tended to lose sight of underlying values and became absorbed in over-bidding the other guy. When the Bass group started to acquire stock the price was around $50. When it became publicly known that they were buying, the stock price rose to around $62 a share. It was at that point that the Lindner group moved into the picture. As the price of our stock moved above $100 a share, I sat down with our senior management group and told them to determine what price a management-led group could afford to pay without risking over-paying and putting our limited personal resources at risk. They came back a few days later and told me that we could probably go as high as $120 per share but to offer anything above that would be foolhardy. Unfortunately, the bidding war took the price past $120 per share quickly and never looked back! When the final price reached $157 per share, we in the management group were squarely up against a legal doctrine—“fiduciary duty.” We owed our shareholders a legal duty to accept what we believed to be the best price available, even if it meant losing control of the company. So, reluctantly we supported the sale of the company. Though we had deep regrets (and still do) that it had come to this, it is even clearer in retrospect that we did the only thing we could have possibly done.

Thus, in 1988, the Lindner group acquired the Taft Broadcasting Company.

The Company and Its People

MY YEARS AT Taft Broadcasting comprised the largest segment of my professional career. We had a phenomenal group of people in the company, at all levels, and we had a great time. As has been true whatever I have done and wherever I have been, I have been privileged to work with good people. As I point out repeatedly, no one has success without a strong “supporting cast.” This has been true for me in each of my “careers.” It was certainly true at Taft Broadcasting Company where, over a period of more than twenty years, I had a great group of executives, male and female, supporting me. It would be unfair for me to single out particular individuals because there were so many of them, and I don’t know how I would ever pick and choose those to mention. I must, however, make two exceptions and mention Dudley Taft and George Castrucci. Dudley, the son of the founder of Taft Broadcasting Company, was a young lawyer with the Washington, D.C., firm of Koteen & Burt when his father was killed in November of 1967. Dudley later joined Taft Broadcasting Company and worked his way through a variety of roles, and we named him president of the company, my number-two guy. From the beginning, Dudley and I were friends and worked well together. But what is interesting and, I think, unique is Dudley’s attitude as a member of the executive team. He could easily have felt entitled to run the company, and he could just as easily have taken advantage of the fact that his name was “on the door.” He could have resented me for sitting in “his father’s chair.” He never did this and simply let his ability and his personality speak for themselves. He was an enormous asset to me and a credit to his father and his family. Our relationship was briefly strained during the Bass/Lindner battle for control of our company. Dudley, quite understandably, made a bid of his own for the company, but it was soon over-bid in the heat of the battle. I respected and admired his position, and I think he understood mine. We remain good friends and always will.

George Castrucci was Taft’s chief financial officer for many years and succeeded me as CEO. He provided me with sound financial and business counsel and was particularly highly regarded by our financial advisors and security analysts.

The friendships and respect generated among our people have led us to have a biannual reunion of the senior management group in Cincinnati. It is always well attended and a continuing reminder to all of us of the great years we enjoyed together. I think one of the nicest things anyone ever said to me was when a Cincinnati friend said, “Do you realize that everyone in town wants to work for your company!” This may have been a bit exaggerated but I loved it.

Hanna-Barbera

Unquestionably the most “famous” part of Taft Broadcasting was Hanna-Barbera. In 1965, while I was still practicing law and representing Taft Broadcasting Company, the company had the opportunity to acquire Hanna-Barbera Productions. Taft owned the maximum number of broadcast properties then permitted by the Federal Communications Commission and determined that a primary area for expansion would be companies producing content for broadcast. Hanna-Barbera was seeking to be acquired, and it seemed a perfect fit for us. I made several trips to Los Angeles with Hub Taft and our investment bankers to negotiate and complete the acquisition.

I was in seventh heaven when we decided to buy Hanna-Barbera. I loved animation and I loved Hanna-Barbera, and here I was meeting with the great men themselves to negotiate the acquisition. Bill Hanna and Joe Barbera were represented by their agent, Jess Morgan, who became one of my very good friends and later served on the Taft Broadcasting board. Most of the meetings were held in a bungalow at the Beverly Hills Hotel. This in itself was culture shock to this small-town Ohio boy. With lush grounds, opulent accommodations, the world-famous Polo Lounge, and a constant stream of celebrities, it was very hard to keep my mind on matters legal!

The hardest time I had keeping my “legal bearing” came when I went to the Beverly Hills Hotel for one of our negotiating sessions, this time to meet with one of the senior partners in the large investment banking firm that represented Hanna-Barbera. He had asked me to meet him at his bungalow at the hotel. I appeared at the scheduled hour at the door and rang the bell. The door opened, and I was met by a stunningly beautiful woman in an equally stunning dressing gown. I quickly said that I must be in the wrong place, but she assured me that this was the right place and that the gentleman I was to meet was expecting me. I went in and heard a shout from the bedroom, “Charlie, come on in.” When I went in the bedroom he was also in his dressing gown and was sitting up in bed eating breakfast. I suggested that it might be better if I came back later but he insisted that we could go right ahead with our negotiations. I obviously couldn’t walk out, so I sat in an easy chair in the bedroom, opened my briefcase, and we began to talk. My concentration was further shaken when the young lady lay alongside him on the bed and listened intently to our conversation. This was a scene that could have been part of a Hollywood movie starring Clark Gable and Carole Lombard! (With me being played by somebody like Percy Kilbride.) Here were these two handsome people lying on the bed in the elegant bungalow with this young lawyer in his three-button Brooks Brothers suit sitting primly in the chair with his briefcase and papers on his lap. It was, without doubt, the strangest negotiating environment that I ever found myself in before or since. But, we made the deal! Hanna-Barbera became part of Taft Broadcasting, and I began a life-long friendship with Bill Hanna and Joe Barbera, two of the most talented and engaging men I have ever known. Hundreds (probably thousands) of books and articles have been written about Bill and Joe and Hanna-Barbera, and it is not necessary—or indeed possible—for me to add significantly to this material. However, because we were such close friends I think a few stories will give you a better glimpse of these remarkable men.

First of all, they were successful and famous even before Hanna-Barbera was formed. They were cartoonists at the MGM Studios where they created the classic Tom and Jerry cartoon, which won a number of Academy Awards. Though it is now hard to imagine, MGM decided in 1957 to close its animation studio, apparently not seeing a strong future in animation. So, Bill and Joe were out of work at a critical point in their lives. They managed to scrape together enough money to open their own studio. They had a bit of money themselves, and the rest came from Harry Cohn, the legendary head of Columbia Pictures, and a well-known Hollywood director George Sidney. As always, Harry Cohn was a shrewd bargainer, and, in return for his investment, Hanna-Barbera agreed to distribute its product through Screen Gems, Columbia Pictures’ distribution arm. This deal lasted for many years and was very lucrative for Screen Gems. At the same time, they did an outstanding job of handling the Hanna-Barbera product.