It’s hard to get the current image of a tired and ticked-off Ted Turner out of one’s mind. After all, he lost billions in the AOL Time Warner merger debacle, finding unlikely solace only in his bison burger biz.
But he was a very different person 20 years ago.
During the summer of 1985 the Mouth of the South engineered a daring deal, leveraging a buyout of MGM and a simultaneous sell-back of its United Artists unit to — you guessed it — Kirk Kerkorian.
Perhaps because Ted was a media upstart and a Tinseltown outsider, and because the pricetag seemed so steep, Wall Street and Hollywood both raised their eyebrows.
Variety‘s banner headline on Aug. 8., 1985 — “Ted Turner in the Lion’s Den” — heralded the fierce battle he had kicked off.
“Turner has MGM by the tail but it won’t become his pussycat until he produces the cash — $1.5 billion or $29 per share to complete the transaction.”
The general tone of Variety‘s coverage was skeptical, the approach painstakingly financial. That’s how the paper approached most such deals, not only Ted’s tactics for MGM but those of archrival Rupert Murdoch, who was at the same moment wresting 20th Century Fox from Marvin Davis and the Metromedia TV stations from John Kluge.
The coverage of this round of media dealmaking was quite different from reports of consolidation in the late ’90s, up to and including the AOL-TW merger. Twenty years ago, there was little sense that consolidation had gone too far: The question was more whether outsiders like Murdoch and Turner could get the deals done and whether they could then manage the assets, and less about the long-term effects of such empire-building.
And there was little attention paid in the pages of Variety to the personalities in play, no attempt to colorfully describe these larger-than-life characters, let alone hazard what their psychological motivations might be. It was all about the mechanics of the deal.
Running the numbers and selling the deal to the Street was junk bond specialist Drexel Burnham Lambert. The man in charge was wheeler-dealer Michael Milken.
Variety estimated the deal would trigger $140 million in interest charges: “Serving the junk bond debt is mind-boggling,” the paper calculated.
“The key question about Turner’s muscle is not how much money he has in the bank but whether he’s bankable,” Variety opined.
In the years before content was crowned king, few recognized Turner’s perspicacity in making such a play — he would later spread the largesse of the Lion across his TBS, TNT and TMC cable channels. Rather, Variety and others focused on the finagling that went on.
One thing the paper did get right: how Kirk came out. Just as he did in his selloff of the latest iteration of MGM/UA to Sony, Kerkorian ended up “smiling all the way to the bank.”
While the negotiations for the deal between Ted and Kirk took a mere “five days and nights,” the various successive phases dragged on for months.
In late August it became clear that Ted’s acquired assets would be greater than originally assumed and would include the pre-’48 Warner and the RKO libraries.
From September to the following March, Ted kept “Leo on a pre-merger leash,” per Variety, not allowing it to dispose of rights or greenlight pictures without his approval.
Through the fall, Viacom and NBC both were approached about coming in on the deal, but they demurred. The financial terms did get revised, twice, resulting in a payout by Turner of several hundred million dollars less than originally indicated.
The deal officially closed in mid-March 1986, and the paper, by that time weary of the ordeal, reported it deep inside the film section.