Channel 5 in NYC, now, alas, part of Murdoch's empire, was a Metromedia station.
An immigrant from Germany, Mr. Kluge (pronounced KLOOG-ee) came to the United States in 1922 and took his first job at the age of 10 as a payroll clerk for his stepfather in Detroit. He made his first million by the time he was 37.
Bebeto Matthews/Associated Press-Mr. Kluge in 2007, at the announcement of his $400 million gift to Columbia University.
He made his first billion — it was actually almost two billion — in 1984, when he took Metromedia private in a $1.1 billion leveraged buyout and then liquidated the company, more than tripling his take. He sold the television stations, including WNEW in New York, for more than $2 billion to Rupert Murdoch, who was expanding his communications empire. Mr. Kluge’s sale of 11 radio stations brought close to $290 million. The outdoor advertising business went for $710 million. The Harlem Globetrotters and the Ice Capades, which together cost the company $6 million, brought $30 million.
Critics complained that he had reaped the bonanza after having paid Metromedia’s stockholders too little when he took the company private. But Mr. Kluge maintained that the value of the company shot up afterward, when the Federal Communications Commission increased the number of television stations a company could own from seven to 12 and ruled that only two cellular telephone systems could operate in a given city.
“That changed the price of poker,” he said.
In 1986, Forbes magazine listed Mr. Kluge as the second-richest man in America (after Sam Walton, the founder of Wal-Mart Stores). By this year, after a bankruptcy of the Bennigan’s and Steak and Ale restaurant chains in 2008, Mr. Kluge had dropped to 109th on the Forbes list with a fortune of $6.5 billion. Mr. Kluge savored the chance to move into new areas of high technology. He had no patience for those he called “self-important corporation types cut out of the same cookie cutter” who tended to stick to what was safe. He often took Wall Street by surprise, but as the financial analyst Allen J. Gottesman said in 1986: “Whatever he does works out real well. You always assume there was a good reason, and you usually find out later that it was a good move.” Not everything he touched turned to gold. In 1965 he bought Diplomat magazine in Washington and tried to change it from a society sheet into a serious publication of world affairs. “I lost a million dollars before I ever knew I lost it,” he said. Three years later he negotiated a proposed $300 million merger of Metromedia with Transamerica only to join in calling off the deal “by mutual consent” in a two-paragraph statement months later, saying a merger would “adversely effect” the growth plans of both companies.
But he never lost his zest for developing new businesses or his taste for complex financial deals. “I love the work because it taxes your mind,” he said in an interview for this obituary, one of the few he ever gave, after he turned 72. “Years ago, I could have taken a few million dollars and joined the country club and gotten into this pattern of complaining about the world and about the tax law.” He was critical of corporation executives who put themselves in the limelight. There were no public relations officers on his payroll. He liked to do business behind an unmarked door. “I think a great deal of publicity becomes an obstacle,” he said. “I’d love to be in the woodwork all my life. I enjoy it when I know who the other people are and they don’t know who I am.”
But it was inevitable that people would come to know who he was, first in the business world as the man with the Midas touch and then as a generous contributor to schools and hospitals. In his later years his name appeared in the society columns as the host for charity parties that he and his third wife, Patricia, gave on their yacht, the Virginian, or as a guest at dinner dances. (He had taught dancing at an Arthur Murray studio when he was in college.) He grew flowers and collected paintings, African sculpture and Indian, Chinese, Greek and Egyptian objets d’art. But nothing gave him more pleasure than putting a deal together. And the creation of Metromedia, considered a triumph of financial structuring, may have been his greatest pleasure of all.
The most satisfying day in his life, he said, was the day Barney Balaban of Paramount told him, “Young man, you bring me $4 million and you’ll be able to have the Paramount stock in the Metropolitan Broadcasting Company.” With that $4 million, Mr. Kluge got into the television business as chief executive of Metropolitan, which consisted of two stations — WNEW and, in Washington, WTTG — and two radio stations. He renamed the company Metromedia in 1961 because he intended to expand it beyond broadcasting. Mr. Kluge held to a simple maxim: make money and minimize taxes. He made it his business to study the tax code. In 1981, for example, he received tax benefits when he bought buses and subway cars from New York’s Metropolitan Transportation Authority and leased them back to the authority for a tax savings of $50 million over five years. He also found a way to enhance the company’s revenue by marrying the profits of broadcasting to the depreciation that came with billboard advertising.
“I sold the banks the idea that the Ford Motor Company that advertises on radio and television would also advertise on billboards,” he recalled. “From a financial orientation, if you took the pretax profits of radio and television and the depreciation of outdoor advertising, you increase the cash flow. I impressed the bank so much that I borrowed $14 million and got our money back in 27 months.”
John Werner Kluge was born Sept. 21, 1914, in Chemnitz, Germany. His father died in World War I. After his mother remarried, John was brought to America by his German-American stepfather to live in Detroit. The stepfather, Oswald Leitert, put him to work as a boy in the family contracting business. Mr. Kluge said he left home when he was 14 to live in the house of a schoolteacher. “I was driven to have an education.”
He worked hard, and successfully, to lose his foreign accent and to get the grades he needed in high school to win a scholarship to college. He first attended Detroit City College, which was later renamed Wayne State University, and transferred to Columbia University when he was offered a full scholarship and living expenses. At college he distributed Communist literature. “I was never an official member of the Communist Party, but I was quite liberal,” he said many years later. But what got him in trouble was his card playing. At one point the dean called him in to warn that he was in danger of losing his scholarship.
“I told him, ‘Dean, you will never catch me gambling again,’ ” he later recalled, “and it was then that I realized the dean of Columbia University didn’t understand the English language. I had told him he’d never catch me gambling again.”
Mr. Kluge later channeled his fondness for gambling into high-stakes finance. “I don’t really get comfortable when I haven’t got something at risk,” he said. Even as a billionaire twice over, he borrowed money to leverage his next ventures. Mr. Kluge graduated from Columbia in 1937 and went to work for a small paper company in Detroit. Within three years he went from shipping clerk to vice president and part owner. After serving in Army intelligence in World War II, he turned to broadcasting and, with a partner, created the radio station WGAY in Silver Spring, Md., in 1946. “It cost us $90,000,” he recalled. “I went up and down the street on Georgia Avenue in Silver Spring to get investors.”
In the 1950s he acquired radio stations in St. Louis, Dallas, Fort Worth, Buffalo, Tulsa, Nashville, Pittsburgh and Orlando, Fla. Meanwhile, he invested in real estate and expanded the New England Fritos corporation, which he had founded in 1947 to distribute Fritos and Cheetos in the Northeast, adding Fleischmann’s yeast, Blue Bonnet margarine and Wrigley’s chewing gum to his distribution network. In 1951 he formed a food brokerage company, expanding it in 1956 in a partnership with David Finkelstein, and augmented his fortune selling the products of companies like General Foods and Coca-Cola to supermarket chains.
Mr. Kluge served on the boards of numerous companies, including Occidental Petroleum, Orion Pictures, Conair and the Waldorf-Astoria Corporation, as well as many charitable groups, including United Cerebral Palsy. His philanthropy was prodigious. About a half-billion dollars went to Columbia alone, mainly for scholarships for needy and minority students. One gift, of $400 million, was to be given to the university by his estate when he died. Mr. Kluge also contributed to the restoration of Ellis Island and in 2000 gave $73 million to the Library of Congress, which established the Kluge Prize for the Study of Humanities.
Mr. Kluge and his third wife, the former Patricia Rose Gay, lived in a Georgian-style house on a 6,000-acre farm near Charlottesville called Albemarle House. He had another home in New Rochelle, N.Y., on Long Island Sound, and an apartment in Manhattan, where he kept much of his modern art collection, including works by Giacometti, Kenneth Noland, Frank Stella and Fernando Botero. He traveled to his houses in his plane and helicopter. Mr. Kluge became acquainted with the woman who would become his third wife at parties when she was in her mid-20s and he was about 60. “At one party,” he said, “she cooked the dinner and then she did a belly dance on the table and I said to myself, ‘Where have I been all my life?’ ”
A small scandal erupted in 1985 when Mrs. Kluge was chairwoman of a charity ball in Palm Beach, Fla., attended by Charles and Diana, the prince and princess of Wales. The British press disclosed that a nude photograph of Mrs. Kluge had been published a decade before in a British magazine called Knave, which was owned by her first husband. To avoid embarrassment, the Kluges were traveling abroad on the night of the ball. Their marriage ended in divorce in 1991, and Mrs. Kluge received a big settlement as well as the Virginia estate. He married again, to Maria Tussi Kuttner, who survives him. Mr. Kluge is also survived by his son, John W. Kluge II; a daughter, Samantha Kluge, from his second marriage, to Yolanda Galardo Zucco; a stepson, Joseph Brad Kluge, whom he adopted; and a grandson. His first wife was Theodora Thomson Townsend. A convert to Roman Catholicism when he married his third wife, Mr. Kluge said he often went to church. He had planned to be buried in a crypt in a chapel he built on the grounds of Albemarle, but later changed his mind after the house was awarded to his third wife in the divorce.
Mr. Kluge acknowledged that he had been ruled by his ambitions and traced them to the struggles of his boyhood. He recalled a conversation he had with friends in college about their aspirations. “One fellow said he wanted to be a lawyer, another a doctor,” he said. “I said one thing — that the only reason I wanted money was that I was always afraid of being a charity case and of being a ward someplace. That’s what really drove me all my life.”
September 8, 2010
John W. Kluge, Founder of Metromedia, Dies at 95
By MARILYN BERGER
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