Twenty years ago, a then little-known investor named Warren Buffett received an unsolicited $300,000 check in the mail from a stranger who had somehow heard of Buffett's money-making prowess.
The stranger was the chairman of Loews Corp., Laurence Tisch, a very private man who has been thrust into the public eye by the recent announcement that he will buy 25 percent of CBS Inc.
In that one incident 20 years ago, Tisch revealed a willingness to take risks, a shrewd investment instinct and a tendency to move quickly and quietly when he spots a good value -- three traits that close friends say have been the consistent key to Tisch's success in building Loews into a company with 1984 revenue of $5.6 billion.
"I don't think I had met him at the time," recalled Buffett, who, along with Tisch, is considered one of the nation's most prominent investors and deal makers. "He just deemed I was okay and sent me a check," said Buffett, who has become one of Tisch's close friends. "That's like him. He thinks something through and then just does it. He doesn't go through a lot of baloney."
Buffett said he cannot recall exactly how much Tisch earned on his investment, but "he made good money."
Tisch's days of moving quietly are long over, though, thanks in large part to his most recent decision to become a major stockholder in CBS, one of the most watched and controversial companies in America. Although Loews is a holding company that combines tobacco (Lorillard), insurance (CNA), hotels and watches (Bulova), the company has attracted little attention compared with the splash Loews made when it bought into CBS.
Loews' acquisition of 11 percent of CBS stock last summer, coming at a time when flamboyant Atlanta broadcaster Ted Turner was trying to take over CBS -- threw Tisch, 62, into the middle of a heated battle over the network's future.
Even though CBS defeated Turner's bid by buying back $1 billion of its stock, Tisch has stayed on, agreeing just last month to increase his stake in CBS to 25 percent of the company stock and take a seat on the board of directors. CBS and financial analysts hailed Tisch's increased participation as a move to stabilize the network and make it less vulnerable to future hostile takeover attempts. By joining forces with Tisch, CBS figures it not only places a large chunk of stock in friendly hands, but it also gains the invaluable financial acumen of Tisch, whom Forbes magazine once called "the smartest investor around."
But Tisch has not yet acquired all of his 25 percent stake in CBS, and some stock speculators, not eager to see the company -- and thus the price of its stock -- stabilize, may be trying to undo the agreement by driving the price of the stock up so high that Tisch would drop his plans to buy more shares.
CBS stock went up more than nine points to 123 1/2 over a two-day period two weeks ago as rumors flew that the privately held New York real estate firm Fisher Brothers was buying company shares. But the stock has since settled down, closing at $119 3/8 on Friday.
But if Tisch goes ahead and buys his shares as promised, he will assume a key role in determining the future of the broadcasting company. What that role will be remains unclear.
*Does he plan to take over the troubled company himself and bring it back to financial stability on his own? After all, financial analysts point out, he has failed to sign an agreement barring him from buying any more CBS stock.
*Or is his decision to buy CBS just another good investment for which he is known -- one that he would quickly sell if the price of CBS stock climbs high enough?
*Or will Tisch be satisfied just holding a director's seat and giving advice to the company in that role?
Shunning publicity, Tisch declined to be interviewed for this article. He similarily has refused to disclose his plans to close friends, according to those friends.
"I spoke to him the other day and asked him what he was going to do with CBS," said one friend, who spoke on condition that he not be identified. "He didn't tell me," which is not surprising, the friend said. But Tisch made it clear he was uncomfortable with all the attention, the friend added.
"When I joked about all the publicity, he said, 'This is awful.' He got very upset."
According to CBS Chairman Thomas H. Wyman, Tisch's involvement stems from a takeover attempt last January by conservative Sen. Jesse Helms (R-N.C.) and his Fairness in Media group. At that time, Tisch contacted Wyman, "really worried" about the future independence of the network, particularly on the issues of civil rights, Israel and South Africa, Wyman said in a recent interview with The Wall Street Journal. Yet Tisch did not start buying CBS stock until last July as part of a tax-related investment strategy, Wyman said.
Sources close to Tisch say they strongly doubt that the deal maker purchased a stake in the network because of his political concerns. "Larry Tisch is too smart to cross his business dealings with his political views, whatever they may be," said one source close to Tisch, who also spoke on the condition that he not be identified. "Wyman came to Tisch earlier in the year in the context of the Turner takeover attempt, seeking advice on the takeover problem. They had no discussions on the issues or politics. His investment interest didn't come until later."
Whether politics was a factor or not, those who know Tisch insist that he didn't buy the stock solely out of a desire to save the network.
"He wouldn't buy into something unless he decided the value was there," Buffett said.
"He looks at everything as a business deal," another friend said. "His mind is constantly working on how to make $2 out of $1. . . . His sole key is maximizing value to shareholders -- that's his history and, therefore, his fun," the friend added.
Even so, "He's not a hit-and-run type, the fast-buck takeover artist," a family friend said. "He has to make money, but if he can save something, he'll save it. But in the end, he's unsentimental. He will not throw good money after bad."
If history is any guide, Tisch will be a formidable director to do business with. On other corporate boards on which he has served, he has proven to be a tough questioner and a fighter -- one who willingly bucks the management that named him to the board in the first place.
Consider his role in the battle for Getty Oil Co. Gordon T. Getty named Tisch to the company's board in late 1983 when Getty was battling the company management for control. But at Tisch's first board meeting a month later, Tisch attacked Gordon Getty's plans to sell the oil company to Pennzoil Co. for $110 a share, complaining the price was too low. Tisch's persistent criticism, among others, forced Getty to seek a better deal from Pennzoil and ultimately led to Texaco's acquisition of Getty for $125 a share. Despite his earlier criticism of Getty, Tisch ended up being one of his chief and closest advisers in the Texaco-Getty deal.
Tisch also flexed his muscles shortly after he acquired a minority stake in a Chicago insurance company, CNA Financial Corp. "It was one of those investments where he thought he was buying value," recalled John J. Gutfreund, chairman of Salomon Brothers Inc. "As he looked at CNA more and more, he realized the management was not optimizing results for the shareholder and decided that a team under his stewardship would do a better job. The Chicago establishment at that time was not overly anxious to have Mr. Tisch," so a bitter takeover battle ensued, Gutfreund said.
Tisch succeeded -- and in the process eventually won over those who opposed him, said Richard B. Olgivie, the former Illinois governor who was on CNA's board during the takeover battle and remains on the board today.
"We fought vigorously. We really weren't sure what he was going to do with it. But it was impossible to prevent them from getting control. Looking back now, I'm delighted. They brought in strong management, and now the company is doing very well," Olgivie said.
"He's a tough negotiator," said the family friend. "He's a very decent man, yet I wouldn't want to be on the other side of the bargaining table with him -- especially if I didn't have any leverage. When he goes into a deal, he really squeezes you if he thinks you're squeezable -- with some grace but no charm."
Tisch has had considerable help in his battles from his younger brother Preston Robert Tisch (called Bob), Loews' president and chief operating officer.
"You have to look at them together," said a friend who, like other close associates, noted that Loews' success was due to the brothers' close working relationship.
"They were raised to be close, and they have stayed close," commented journalist Elizabeth Drew who is the brothers' first cousin. "They are a close-knit clan that looks after one another."
Together, the two have amassed an empire that Forbes magazine estimates is worth $1.7 billion. They began 39 years ago, buying a small New Jersey hotel with some financial help from their parents who once had owned a New York garment-manufacturing business. In 1956, 10 years after their initial purchase, they built their first new hotel, the Americana in Bal Harbour, Fla. With profits from that operation, they bought a stake in Loews Theaters Inc. and eventually gained control in 1960.
Today, Loews is a holding company with 1984 profits of $329 million on revenue of $5.6 billion. Its four major units include: the insurance company CNA (in which Loews owns 89 percent of the stock), the tobacco company Lorillard (makers of Kent, Newport and True cigarettes), Loews Hotels (comprised of 14 hotels and motels, including L'Enfant Plaza in Washington) and Bulova Watch Co. Inc. The theater division from which the company obtained its corporate name was sold earlier last year for $165 million. "They were uncomfortable in the theater business," a friend commented. "They didn't know how to handle the theaters when they were empty."
On top of these divisions, Loews has a large investment portfolio of about $7 billion, the bulk of which is in bonds. Together, the brothers own about 33 percent of Loews stock, which is traded on the New York Stock Exchange.
In running Loews, the brothers have drawn distinct lines of authority. Laurence is the private man, the one who makes the investment decisions and oversees the financial machinations of the company. Bob is described as the public man, traveling as much as 120,000 miles a year to oversee the operations. The day-to-day operating decisions, however, are left to each division's management -- unless trouble develops. There is little corporate bureaucracy: Manhattan headquarters has only 60 employes, and reports from the divisions are made personally, not through memos.
As successful as Loews is, it has not been without its share of mistakes. Among the most notable was its investment in Equity Funding stock just before the company fell apart in a massive fraud scandal.
Yet, said Alan C. Greenberg, chief executive office of Bear Stearns & Co., "The only people who don't make mistakes are people who don't do anything."
Greenberg, who is a friend of Tisch, noted that what makes Laurence Tisch unique is not only his success but also "the unassuming way he's handled it."
One after the other, his close friends repeatedly say that, despite Tisch's success, he lacks not only pretention but also the desire to be in the limelight.
"His style is not to get into the limelight," Buffett said. "He just doesn't care; he gets his feedback from his own successes and family."
His family includes his wife of 37 years, Wilma (known as Billie), and four sons, including two who work at Loews -- James, who serves as vice president in charge of the company's financial analysis, and Andrew, who is president of Bulova. Daniel is in a related field, as a managing director of Salomon Brothers, as is Tom, who manages a $25 million portfolio for himself and three other brokers.
"They are all very fond of each other and very overt about it -- very affectionate," said journalist Drew. "For all of their wealth, they live an unpretentious life -- comfortably and tastefully, but with no flash about it. . . . He doesn't take many vacations. He just doesn't need them because he is very happy to be at home around his family. Fundamentally, he is a very happy man, very secure -- and he cares about other people's happiness as well. He's always very busy fixing single people up. And if any of his friends get divorced, he worries about it."
Despite the Tisch family's multimillion-dollar empire, their offices are simple and unimposing. The two brothers share a limousine and driver, and Bob Tisch is known to wait in line for a movie at a theater that, until recently, he used to own.
Although there are Jewish executives who have hit the jackpot and have abandoned their heritage, the Tisches take their religion very seriously, studying the Bible and Talmud and contributing large sums of money and time to Jewish charities. Billie Tisch was the first woman to be elected to the prestigious post of president of the Federation of Jewish Philanthropies of New York. Laurence Tisch also has played an active role on the boards of several Jewish charities. It disturbs him greatly to see other Jewish executives forget their heritage, he has said.
"I think that's the tragedy of Jews," he told The New York Times two years ago.
"It concerns me as far as the future of the Jewish community in America," he said, adding that he believes assimilation is "a disaster."
In addition to participating in Jewish charities, the Tisch brothers have been very active in promoting many New York groups as well as New York University, where Laurence Tisch is the chairman of the board. Three years ago, the brothers donated $7.5 million to the university for the School of the Arts. Ten years before that, they had given $2 million to the university for Tisch Hall, in memory of their father.
"They have a deep sense -- certainly a moral one and maybe a religious one as well -- that, if one has wealth, one has an obligation to give," noted John Brademas, the former congressman who is now NYU's president. Brademas recalled the time when he, Laurence Tisch and other NYU officials reviewed a list of potential donors. When they got to a name of a wealthy individual, "Tisch sat there like the Old Testament prophet Isaiah pronouncing judgment on people and said, 'He doesn't give.' "
Busy as Tisch is with his investments and charities, he always has time for tennis -- even though his game is far from perfect, his friends say.
"On a tennis court, he goes after every conceivable ball," said Leonard H. Goldenson, chairman of American Broadcasting Cos. "He won't let anything go by him. He's dedicated to win."