By Terence McArdle
Thursday, September 9, 2010; B01
John W. Kluge, 95, a self-made billionaire who became one of the leading entrepreneurs of his generation and a major benefactor of the Library of Congress and Columbia University, died Tuesday at his home near Charlottesville.
His death was confirmed by the University of Virginia, which was also a major recipient of his largess. No cause of death was reported.
Mr. Kluge said he accumulated more than 200 companies in his lifetime, including seven television stations he sold to Rupert Murdoch in the mid-1980s, forming the foundation of the Australian-born media owner's Fox network.
The stations were part of Mr. Kluge's Metromedia telecommunications conglomerate, which at various times counted among its holdings the Ice Capades, the Harlem Globetrotters, Playbill magazine and a billboard advertising company.
Publicity shy for much of his career, Mr. Kluge quietly began accumulating radio stations with his Army discharge money after World War II while making a small fortune as a Baltimore-based food broker.
In 1959, he bought the remnants of the old DuMont television and radio network. That became Metromedia, which he grew into the nation's largest independent television business.
Metromedia stations relied on a mix of local programs, old movies and syndicated reruns that often ran counter to what the big three network affiliates had in the same time slot. Mr. Kluge believed that if the networks had an 80 percent share in a major market, 20 percent of the market wanted to watch something else.
Mr. Kluge's most daring achievement was taking Metromedia private in 1984 because he was dissatisfied with its stock price. At the time, he owned 25 percent of the company and borrowed more than $1.3 billion to buy out the other public shareholders. Under the deal, he was required to break up the conglomerate to pay off the loans.
According to U.S. News & World Report magazine, Mr. Kluge was among the first chief executives to finance his deal using the leveraged-buyout technique -- in essence, buying the controlling shares on credit.
He worked closely with Drexel Burnham Lambert's Michael Milken, a specialist in the high-risk, high-yield securities known as junk bonds. If interest rates had risen substantially, Mr. Kluge might have been unable to make the payments.
Mr. Kluge sold his stations to Murdoch for $2 billion. He told Forbes magazine that television "was going to get more competitive. . . . I didn't feel I could take that risk, to go on and develop a fourth network."
While focused on the leveraged-buyout, Mr. Kluge also made a savvy investment in the cellphone business, against the advice of many advisers who said it would take at least 10 years for the demand for mobile phones and beepers to explode.
After buying several phone providers for $300 million in 1983, he orchestrated a $1.6 billion sale of those companies to Southwestern Bell in 1986. The deal reportedly surprised many analysts, who said they thought Mr. Kluge was committed to being the fledging industry's leader.
"When we buy an asset, we look at it as a return on the investment," he told Forbes in 1990. "With cellular, you are buying a future price. In that light, the price we got may not have been the peak, but it was a good value at the time. Sometimes I might not maximize an investment. But I don't deal in 100 percent. I deal in 80 percent to 85 percent."
The deals catapulted him to the ranks of the nation's billionaires. In 2009, Forbes magazine estimated his fortune at $6.5 billion and listed him as No. 35 among the 400 richest Americans.
Not all of Mr. Kluge's investments reaped profits. He lost money on his $78 million purchase of controlling interest in the Orion Pictures movie company and his purchase of the Ponderosa steakhouse chain. Metromedia International Group, a conglomerate specializing in European and Russian telecommunications, filed for bankruptcy in 2006.A poker promise
John Werner Kluge was born Sept. 21, 1914, in Chemnitz, Germany. After his father's death, he moved to Detroit with his mother and stepfather.
His stepfather wanted him to drop out of high school and work in his painting business, but instead Mr. Kluge left home at 16 and worked on a Ford assembly line. For a time, he lived with his typing teacher, whom he credited with being his mentor.
Mr. Kluge won a scholarship to Columbia University and told school officials that if they really wanted him to attend, they would have to double his scholarship money. Columbia paid.
He graduated with an economics degree in 1937. He supplemented his tuition with $7,000 in winnings from poker. After a Columbia dean chastised him for playing poker, Mr. Kluge said he promised not to gamble again.
"But I never said I wouldn't play," he said.
Returning to Michigan, he was so successful doing sales work for a paper company that he became a part owner of the firm. After completing Army intelligence service in the Aleutian Islands during World War II, he decided his ambitions were in business ownership.
In 1946, he used his Army discharge money to buy his first radio station, WGAY in Silver Spring. He continued to buy and sell stations and invested in what became the Baltimore-based food wholesaler Kluge, Finkelstein and Co.
He liked finding unorthodox ways to promote food products. While working on a contract for a pickle company, he was inspired by the new scratch-and-sniff craze to persuade the old Washington Times-Herald to run advertisements using essence of dill in the ink.
The effect was unfortunate, with one of his associates telling The Washington Post in 2003 that every office in Washington "stunk like the dickens."
But worse was when a pressman spilled dill juice at the printing plant. "The first thing the union did when it negotiated a new contract was to say, 'No more essence in the ink,' " Mr. Kluge told The Post.
His entry into television began by chance, after a friend happened to mention that DuMont was selling its stations. After lining up investors, he bought stations in Washington (WTTG, Channel 5), Baltimore, New York, Los Angeles and Houston.
His new company, renamed Metromedia, was headquartered in Secaucus, N.J. Rents were lower than in New York, and Mr. Kluge kept costs down even more with his cut-rate approach to programming.
His frugality extended to some areas of his personal life, such as a habit of leaving his coat in the car rather than wearing it into a restaurant. He wanted to avoid tipping the coat checker.
At the same time, he lived in a Manhattan apartment dubbed "the satin citadel" by Vogue magazine, where trees grew out of the marble floors.
His other properties included a castle on 80,000 acres in Scotland and a $45 million estate near Charlottesville that featured a golf course designed by Arnold Palmer.Major philanthropist
As a philanthropist, Mr. Kluge ranked among the most generous. In 2000, he gave $73 million to the Library of Congress for a scholarly center and other projects.
He also underwrote the John W. Kluge Prize for lifetime achievement in the human sciences, a $1 million award given periodically to those distinguishing themselves in areas not covered by the Nobel prizes, such as political science, sociology and philosophy. Winners have included historian John Hope Franklin and philosopher Paul Ricoeur.
Mr. Kluge gave Columbia University $400 million for minority student aid in 2007 and donated much of his estate near Charlottesville to the University of Virginia.
Unlike the other media barons of his era, including William Paley, Mr. Kluge preferred to shun publicity largely out of a desire to avoid tipping his hand about his next deal.
"If I had my choice, I'd stay in the woodwork all my life," he told United Press International. "I'm not ego driven."
His first two marriages, to Theodora Thomson and Yolanda Zucco, ended in divorce. He received unwanted attention in 1985 when the British press revealed that his third wife, the former model Patricia Rose Gay, had posed nude for a men's magazine and appeared in a pornographic movie years before they wed in 1981.
The news dropped just before Patricia Kluge was scheduled to help host a Palm Beach, Fla., charity ball in honor of Prince Charles and Princess Diana. Patricia Kluge quietly dropped out of the royal welcoming committee. She and Mr. Kluge divorced about 1990, and she received a settlement of $1 billion.
Survivors include his fourth wife, Maria Kuttner of Charlottesville; two children from his second marriage; and a son from his third marriage.
"Work isn't really work for me," Mr. Kluge told Forbes in 1990. "I didn't think I've ever really 'worked' in my life, because 'work' to me means that you're really doing something that you don't like. I hate to tell you this, but I've never liked the weekend in my life. I was enthusiastic about Monday morning from the day I left college."