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John W. Kluge, 95

John W. Kluge, 95, dies; self-made billionaire created Metromedia conglomerate

John W. Kluge, former chairman of Metromedia International Group Inc., right, speaks during a news conference on Columbia University's campus in New York in 2007
John W. Kluge, former chairman of Metromedia International Group Inc., right, speaks during a news conference on Columbia University's campus in New York in 2007 (Bloomberg News)

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By Terence McArdle
Thursday, September 9, 2010

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.

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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.


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