In the early 1980s, Robert Edward “Ted” Turner III was worried that Hollywood movie studios would hike prices beyond what he could afford and cut off content that his audience valued. Merging with a movie studio would ensure a steady supply of movies. Kirk Kerkorian owned 50% of MGM/UA, and in July 1985, he told Ted he was selling everything except United Artists (UA) for $1.5 billion in an auction the following month. He invited Turner to purchase the assets before the auction.

In August 1985, Turner and Kerkorian struck a deal. Turner Broadcasting would acquire MGM/UA for $1.4 billion and Turner would immediately sell UA back to Kerkorian for $480 million, resulting in a net purchase price of just below $1 billion. Turner would also have to assume $700 million of MGM’s existing debt, which meant a total price tag of $1.6 billion. To close the deal in March 1986, Micheal Milken of Drexel Burnham helped Turner reduce the cash portion of his bid. He issued high-yield junk bonds. He also issued new preferred stock in Turner Broadcasting to Kerkorian. Deal terms gave Turner nine months to pay off $600 million in junk bond debt, and he had to pay Kerkorian a dividend on his preferred shares.

According to his autobiography, Ted realized that asset sales wouldn’t be enough to cover his $600 million obligation—he needed to refinance his debt. He went to John Malone of TCI and other cable operators for help. By June 1987, a deal was in place for Turner to raise $565 million from thirty-plus cable operators in exchange for the group owning 37% of Turner Broadcasting. Ted kept majority ownership, but the deal had other strings attached.

Ted’s autonomy was reduced, and his biggest customers, cable operators, were now on his board of directors and had input into his company strategy.

After he refinanced his debt, Turner launched a new channel that would show original movies and high-profile events such as the Emmys and the Miss America pageant. The new channel was called Turner Network Television (TNT) and would generate revenue from advertising and a subscription fee, paid by cable operators, of $0.15 per cable subscriber per month. TNT launched in October 1988 with 17 million households, and by its first anniversary it was in 50 million households and generating almost $100 million in subscriber revenue alone. By 1989, Ted was about 51 years old and his ownership in Turner Broadcasting Systems was worth over $1 billion.

Professionally, things were going well for Turner, but personally, things weren’t as smooth. By the end of 1988, he and Janie had divorced after more than twenty years of marriage. Ted was diagnosed with bipolar depression. He aggressively pursued Jane Fonda after reading about her divorce in the newspaper, and the two married in 1991.

Operation Desert Storm in early 1991 put CNN on the map. It was the first time a war was reported on from behind the lines live on TV. Ratings skyrocketed. Turner’s strategy was now clear: own as much programming as possible and air it on networks he owned and controlled. Content was the key to great programming. In 1991 he bought Hanna-Barbera Studios, creator of Scooby Doo and the Jetsons, for $312 million. Combining it with MGM’s cartoon library, he owned two-thirds of all cartoons ever made. He then launched a twenty-four-hour-a-day cartoon channel and named it Cartoon Network.

Turner was still worried about movie content. He had a library of old movies, but he was worried about being cut off from new movies by Hollywood studios. Because of the board-control issue, he couldn’t buy Paramount, so he purchased Castle Rock Entertainment and New Line Cinema for $600 million in the summer of 1993. He also maximized the value of his older movies by launching a new channel, Turner Classic Movies, in April 1994.

Turner believed that vertical integration was the key to long-term success in his industry. Owning a broadcast network and movie studio was the best way to create, distribute, and monetize proprietary content. He continued to pursue merging with a broadcaster, but his desire to own a movie studio killed a potential deal to merge with ABC’s owner, Capital Cities, because major shareholder Warren Buffet disliked the movie business. Turner even started talking to Bill Gates about getting a $1 billion investment to make a bid for CBS and came close to becoming a 50/50 partner with Gates.

In 1995, the company was doing well. It had gone from $1 billion in revenues to $3.5 billion in just six years. But Ted was frustrated with the board of directors’ veto ability, specifically the board member representing Time Warner. It limited his ability to acquire a broadcast network. He went public with his frustration and started discussing buying Time Warner’s position back at a premium. Around this time, Ted began to rethink not wanting to own a cable system. Because so many channels were launching, and FCC rules were changing, it now made sense. The board of Time Warner, which owned a cable system, was also rethinking its position and decided that owning Turner Broadcasting would provide synergies and could lift its sagging stock price. A deal was struck, and in September 1995, it was announced that Turner Broadcasting was acquired at a value of more than $8 billion in a stock deal. Turner would no longer be CEO and would have a boss. This decision would set Turner up for an epic ascent of his wealth and a terrifying crash that he had no control over.

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