KLUGE, JOHN

U.S. Media Mogul

John Kluge ranks as one of the least known but most powerful moguls in the modern television industry in the United States. The major television networks and their affiliates deservedly draw the most attention, but Kluge proved a group of independent TV stations could make millions of dollars. His Metromedia, Inc. pioneered independent stations operations through the 1960s and 1970s. In the mid-1980s Rupert Murdoch offered Kluge nearly $2 billion for the Metromedia stations, which then served as the basis for Murdoch's FOX television network. This deal made Kluge one the richest persons in the United States.

It was the food business that led Kluge to television. In 1951 he invested in a Baltimore, Maryland food brokerage enterprise, increased sales dramatically, sold his majority stake in the mid-1950s, and began to look for another industry that was growing. He found television. In 1956 Kluge was too late to enter network television, but saw possibilities with independent TV stations. He assembled an investment group and purchased the former DuMont stations. He ran Metromedia on a tight budget, saving rent, for example, by headquartering the company across the Hudson River from new York City, in Secaucus, New Jersey. He seized upon the programming strategy of simply re-running old network situation comedies and low budget movies. And Metromedia made millions with relatively small audiences, because costs of operation were so low.

Under his stewardship, Metromedia grew into the largest independent television business in the United States. Thereafter Kluge purchased assorted businesses to add to his Metromedia empire. Over the years he acquired the Ice Capades, the Harlem Globetrotters, music publishing companies holding such titles as Fiddler on the Roof, Zorba the Greek, and Cabaret, television production and syndication units, Playbill magazine, and a highly profitable direct mail advertising division. But he did make mistakes. One disastrous misstep was Kluge's 1960s purchase of the niche magazine Diplomat; another came with his proposal for a fourth TV network. Neither project succeeded, and the failures cost Metromedia millions of dollars.

Kluge reached his greatest successes in television by buying the syndication rights to M*A*S*H. With this asset he finally gave rival network affiliates a contest for ratings in the early fringe time period. Not one to sit still, during the early 1980s Kluge cooked up a deal to take Metromedia private. In 1984, by structuring a $1.3 billion leveraged buyout on unusually favorable terms, Kluge ended owning three-quarters of the new company and pocketing $115 million in cash in the process. Now private and in full control, Kluge did not hesitate when Rupert Murdoch approached him with $2 billion to buy Metromedia's television stations.

Out of TV, Kluge attended to his other businesses. Under the Metromedia name, he began to manufacture paging devices and mobile telephones. In managing these telecommunication ventures, Kluge retraced the steps he took in his television career: buy a license in a major market at an affordable price, then wait as the market evolves, and finally cash in.

In 1995 the Actava Group Inc., Orion Pictures Corp., MCEG Sterling Inc. and Metromedia International Telecommunications Inc. signed an agreement to form a global communications entity to be named Metromedia International Group Inc. Kluge already owned a major stake in Hollywood's Orion Pictures. The new four part alliance merged wireless cable and Hollywood production skills to sell all forms of mass communication to citizens in Eastern Europe and the former Soviet Republics.

Investing and selling has benefited Kluge enormously. His wealth, which Forbes estimated at $5 billion as of the mid-1990s, vaulted him onto the list of the richest persons in the United States. Kluge spent his wealth so he could live like a king in a 250-room Georgian mansion, Albemarle, situated on 10,000 acres in rural Virginia, near Charlottesville. He hosted frequent shoots for his guests, handing out antique guns to aim at birds released by a large staff of British-born retainers. In 1988 neighbors began pressing charges when their household pets turned up dead; local wildlife officials successfully prosecuted Kluge's staff for slaughtering hawks, a protected species.

In sum John Kluge represents the TV entrepreneur in the true sense of the word. David Sarnoff and William Paley, more publicized figures who started networks, have long been the subject of major biographies and much research. Kluge, perhaps because his efforts have been directed toward a less glamorous side of the television industry, has not been studied. But as a pioneer in independent television station ownership and operation, he deserves the same degree of attention.

-Douglas Gomery

JOHN (WERNER) KLUGE. Born in Chemnitz, Germany, 21 September 1914. Attended Wayne State University, Detroit, Michigan; B.A. in economics, Columbia University, 1937. Married: 1) Theodora Thomson, 1946 (divorced); 2) Yolanda Zucco, 1969 (divorced); children: Samantha and Joseph; 3) Patricia Rose Gay, 1981 (divorced, 1990); child: John W. Kluge II. Served in U.S. Army intelligence, 1941-45. Immigrated to U.S., 1922; worked assembly line at Ford Motor Company; vice-president and sales manager, Otten Brothers, 1937-41; bought radio station WGAY, Silver Spring, Maryland, 1946; president and director of WGAY, 1946-59; president of New England Fritos, 1947-55; president, Mid-Florida Radio Corporation, Orlando, Florida, 1952-59; president and director, St. Louis Broadcasting Corporation, 1953-58; president, New York Institute of Dietetics, 1953-60; president and director, the Pittsburgh Broadcasting Company, 1954-59; president, treasurer and director, Capitol Broadcasting Company, Nashville, Tennessee, 1954-59; partner in Nashton Properties, Nashville, Tennessee, 1954-60; owner, Kluge Investment Company, Washington, D.C., 1956-60; president and director, Washington Planagraph Co., 1956-60; founder, with David Finkelstein, wholesale food operation Kluge, Finkelstein and Company, Baltimore, 1956; partner in Texworth Investment Company, Fort Worth, Texas, 1957-60; president, treasurer and director, Associated Broadcasters, Inc., Ft. Worth-Dallas, 1957-59; chair of the board, Seaboard Service Systems, Inc., 1957-58; treasurer and director of television operation, Mid-Florida Radio Corporation, 1957-60; partner in Western New York Broadcasting Company, Buffalo, New York, 1957-60; president, Washington Food Brokers Association, 1958; president, Metropolitan Broadcasting Co. (MPC; became Metromedia, Inc., 1961; then Metromedia Company, 1980s), 1959; bought World Wide Broadcasting (WWB), 1960, sold WWB, 1962; vice-president, later president and chair of the executive committee of the United Cerebral Palsy (UCP) Research and Educational Foundation from 1972; Metromedia, Inc. changed to Metromedia Company, 1980s; purchased Texas-based LDS, 1983; bought Florida-based Network 1, 1984; purchased all outstanding shares (72%) of Metromedia Company, becoming sole owner, 1984; sold off most Metromedia assets, 1984-92; became 69% owner Orion Pictures, 1988; merged Metromedia Long Distance with long-distance divisions of International Telephone and Telegraph (ITT), forming Metromedia-ITT, 1989; merged Metromedia-ITT with Resurgens Communications Group and LDDS Communications to form LDDS Metromedia Communications, 1993. Chair of the board, treasurer, director of Kluge, Finkelstein & Company since 1963; chair of the board and treasurer Tri-Suburban Broadcasting Corporation and Washington, Kluge and Company; chair of the board, president, and treasurer Washington, Silver City Sales Co.; director, Marriott-Hot Shoppes, Inc., Chock Full O' Nuts Corporation, National Bank of Maryland, Waldorf Astoria Corporation, Just One Break, Inc., Belding Heminway Co., Inc.; board of directors, Bear Stearns Companies, Inc., the Schubert Foundation, Occidental Petroleum Corporation, LDDS Metromedia, and national advisory board of the Chemical Banking Corporation; trustee, Strang Cancer Prevention Center; chair, James Madison National Council of the Library of Congress. Member: advisory council Manufacturers Hanover Trust Company; board of governors, New York College of Osteopathic Medicine; National Association of Radio and Television Broadcasters. Address: Metromedia Company, 1 Meadowlands Plaza, East Rutherford, New Jersey 07073, U.S.A.


John Kluge
Photo courtesy of Broadcasting and Cable

PUBLICATION

The Metromedia Story. New York: Newcomen Society in North America, 1974.

FURTHER READING

Fabrikant, Geraldine. "Top Shareholder Offers Deal to End Bankruptcy at Orion." The New York Times, 23 May 1992.

Flanagan, William G. "Share and Share Unlike." Forbes (New York), 10 June 1991.

Grover, Ronald. "Will Flipper Play in Estonia: Why John Kluge Is on a Buying Binge in Hollywood." Business Week (New York), 8 January 1996.

"It's Redstone vs. Kluge for Orion." Broadcasting (Washington, D.C.), 1 February 1988.

"Kluge to Sell Metromedia's Stake in Worldwide." The New York Times, 15 August 1995.

Marcial, Gene G. "The Action May Not Be Over at Metromedia." Business Week (New York), 27 September 1993.

Martin, Justin. "College Boosters." Fortune (Chicago), 17 May 1993.

Nicklin, Julie L. "Metromedia's Kluge Gives Columbia $60-million for Minority Scholarships." Chronicle of Higher Education (Washington, D.C.), 28 April 1993.

Peers, Martin. "Metromedia Signs Off on Goldwyn Buy." Variety (Los Angeles), 5 February 1996.

Petrozzello, Donna. "Orion the Nucleus of New Kluge Venture: Metromedia International Group will Use Film Library to Become Global Media Concern." Broadcasting & Cable (Washington, D.C.), 5 September 1994.

Weber, Joseph. "The Millstones at Metromedia: What's Holding Back the Building of a New Long Distance Empire." Business Week (New York), 1 March 1993.

 

See also Murdoch, Rupert