John Werner Kluge, the German immigrant who rose to be the richest man in the world (according to Forbes Magazine in 1988, 1990 and 1991) and had strong ties to the food industry, died quietly at his Charlottesville, VA home on September 8. He was 95.
John Kluge was born in Chemnitz, Germany. He and his family moved to the United States when he was eight years old, settling in Detroit. After a brief stint at Wayne State University, Kluge received a scholarship from Columbia University and finished his schooling there. Even in college, Kluge’s ambitious and risk-taking character was in full bloom. Kluge supplemented his scholarship money with income from three different jobs and skillful card playing. He graduated in 1937 and returned to Michigan, where he accepted a position with the Otten Brothers Company. He quickly acquired part-ownership of the company’s paper conversion business.
With the advent of World War II, Kluge joined the U.S. Army, where he rose to the rank of captain with the War Department Generals staff in military intelligence. After the war, Kluge sold his interest in Otten Brothers and remained in Washington.
His link to the food industry was established in the early 1940s when he became the owner of the Fritos franchise for the Boston area. By the mid-1940s, now living in Washington, Kluge began his own food brokerage business.
In 1946, Kluge purchased a radio station (WGAY) in Silver Spring, MD, for $15,000. Over the course of the next dozen years he acquired a number of additional FM radio stations, which at the time were regarded as an unappetizing alternative to AM stations. Over time, however, FM radio became the preferred medium for popular music and other programming and advertising revenue for FM stations rose in corresponding fashion.
By the mid-1950s Kluge’s business activities began to take on a level of diversification that would be a hallmark of his for decades to come. In 1956, he and former competitor David Finkelstein, who was based in Baltimore, merged their food brokerage operations. That business, Kluge, Finkelstein & Co. grew to be one of the largest food brokerage businesses in the country.
In 1959, Kluge delved again into the field of broadcasting, acquiring a minority interest in the Metropolitan Broadcasting Corporation (formerly the Dumont Broadcasting Corporation), taking control and changing the company’s name to Metromedia in 1960. Again, Kluge defied conventional wisdom, purchasing a number of independent VHF stations and ignoring stations affiliated with the three major networks. Operating under the banner of Metromedia, Kluge purchased and sold stations in progressively larger markets, trading up on a tax-deferred basis. Innovative programming, coupled with a lean operating style, enabled Metromedia to achieve operating margins that far outpaced those of stations associated with the major networks. At its height, the company boasted television stations in many of the country’s major media markets, including New York, Los Angeles, Chicago, Dallas, Boston, Houston, and Washington, D.C.
In the 1960s, Metromedia entered the realm of outdoor billboard advertising. The company acquired Foster & Kleiser, a regional outfit based in the western United States, as well as businesses in Chicago and New York. Metromedia’s initial investment of $14 million in the industry enabled it to consolidate a variety of fragmented markets into an established national company. By the early 1980s Metromedia owned approximately 45,000 outdoor advertising displays in 19 major metropolitan areas.
Under the direction of Kluge, Metromedia also established a presence in a wide array of other areas of business and entertainment. Metromedia business interests have included music publishing companies; recorded music; direct mail advertising; television production and syndication, including the syndication of the Merv Griffin Show; Playbill magazine; the Harlem Globetrotters; and the Ice Capades.
The 1980s marked a dramatic shift in emphasis for Metromedia, as it divested itself of long-held concerns in advertising and broadcasting and launched itself into the new territories of telecommunications and the restaurant industry. This change in direction was due in no small part to a major change in the company’s status. In 1984, Kluge took the company private through a leveraged buyout of the company’s stockholders, a maneuver that cost him $1.6 billion. Armed with more than 90 percent ownership of Metromedia, however, Kluge was free to take the company in whatever direction he pleased.
Kluge sold his outdoor advertising interests in 1986 for more than $700 million in cash and preferred stock, a significant return on his initial investment of $14 million. He also sold his six independent television stations and one network station in 1986 for more than $2 billion. These stations, primarily purchased by Rupert Murdoch, served as a cornerstone of his fledgling Fox Broadcasting Company. In addition, Metromedia disposed of its radio broadcast holdings, divesting itself of nine stations and the Texas State Networks system through a management buyout of approximately $285 million.
During the early 1980s, Metromedia began exploration of the cellular telephone industry. Intrigued by the business potential of the industry, Metromedia spent $300 million in the purchase of paging companies. The company quickly moved to consolidate its holdings, creating the country’s largest paging and cellular business. Metromedia sold the majority of its holdings in the cellular industry to Southwestern Bell in 1986 for $1.3 billion, but Kluge remained a significant player in the industry. In 1990 and 1992, Metromedia sold its remaining cellular holdings for an additional $2.2 billion.
John Kluge also established a presence in the film industry during the 1980s, acquiring majority ownership of Orion Pictures Corp. in 1988. Orion remained a troubled studio, however, despite significant contributions from Kluge. The company filed Chapter 11 bankruptcy proceedings in December 1991.
Metromedia made several other key acquisitions in the late 1980s, purchasing the Ponderosa, Bonanza, Steak & Ale, and Bennigans restaurant chains.
Metromedia remained a major force in the telecommunications industry throughout the 1980s and into the 1990s, despite its 1986 divestment of cellular and paging interests. Kluge created the Metromedia Communications Corp., national long-distance carriers in the United States with $400 million in annual revenues.
Metromedia also became heavily involved in several high-technology ventures. Axon Systems Inc. is a medical technology company that produces advanced brain-wave monitors for medical use. Stanadyne is a producer of state-of-the-art diesel fuel injectors. Another high-tech firm, Metromedia Technologies, utilizes computer printer technology to create billboards, truck signage and theatrical stage sets.
In celebration of the 200th Anniversary of the Library of Congress, Kluge donated an unprecedented $60 million to create the John W. Kluge Center at the Library of Congress. It was created as an academic center where accomplished senior scholars and junior post-doctoral fellows might gather to make use of the Library’s incomparable collections and to interact with members of the United States Congress. His gift would establish a $1 million dollar prize to be given in recognition of a lifetime of achievement in the human sciences, comparable to the Nobel Prizes in literature and economics. The Kluge Prize would honor lifetime intellectual achievement in the same way as the Kennedy Center recognizes lifetime achievement in the performing arts.
Acknowledging the scholarship funds that enabled him to attend, Kluge gave more than $110 million to Columbia University between 1987 and 1993, primarily to endow financial aid for undergraduates from underprivileged backgrounds. His donations also help many of these students pursue Ph.D.s after they graduate by financing their doctoral studies. On April 11, 2007, Columbia University president Lee C. Bollinger announced a $400 million pledge from Kluge, which the university will receive upon the donor’s death. The donation marks the fourth largest gift to an institution of higher learning in America, all designated for financial aid. This marks the largest pledge ever devoted exclusively to student aid to any single institution of higher education in the United States.
He has also donated more than $11 million to the University of Virginia in addition to endowing his 11,000 acre estate in Charlottesville to UVA.
Kluge was married four times, to Theodora Thomson, Yolanda Zucco, Patricia Gay and Maria Tussi, his widow. In addition to Tussi, he is survived by a daughter, Samantha, and sons Joseph and John W. Kluge II.
In describing his unbelievably successful career, Kluge told Forbes in 1990: “Work isn’t really work for me. 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.”