David Geffen's Bad News for Hank Greenberg, Jack Welch & Co. : It's Not About The Money

Two weeks ago, I wrote this post regarding Hank Greenberg's activity in pursuit of the New York Times Company. In that piece, I noted Jack Welch's pursuit, with a group of other investors, of the Boston Globe.

Now comes some bad news from a seriously creative, wealthy businessman. In last Friday's Wall Street Journal's article about him, Geffen admitted to wanting to build "a pre-eminent newspaper."

Further, he is quoted in the article as saying,

"It's difficult starting a business from scratch....The next thing I do, I want to buy rather than start from scratch....As a guy who is committed to, certainly by the time I die, giving everything I have a way, that gives me an awful lot of latitude about what I can and can't do."

According to Forbes' 2005 survey, Mr. Geffen is ranked #117 on the list of the world's richest people, with a net worth of approximately $4.4B. Hank Greenberg was #170, with an estimated net worth of $3.2B. That may now overstate Greenberg's net worth, as his resignation from AIG in mid-2005 may have resulted in his loss of significant assets. Jack Welch was #376, with an estimated net worth of $680MM, as of the Forbes 2001 survey, but is no longer on the list in 2005. Perhaps the result of his expensive, very public divorce from his second wife earlier in this decade.

Viewed from this perspective, Geffen has the deepest pockets, with Greenberg coming next. While Welch and his syndicate can doubtless borrow to buy the Boston Globe from the New York Times, Greenberg's interest in the parent may complicate, or may simplify, their pursuit of the ailing newspaper.

It's perhaps noteworthy that Geffen, somewhat an impressario of artistic talent, created the largest economic fortune of the three. Less of a classic businessman than the other two, his objective of building a "pre-eminent" newspaper should probably be chilling news to Greenberg and Welch. Geffen clearly has no compunction about pouring as much of his net worth into the effort as necessary.

I doubt Welch is that altruistic. Given Greenberg's maneuvering vis a vis his financial interests in AIG, I think he's more like Welch than he is like Geffen. For either of these former corporate types, with their smaller kitties, to engage in new-era newspaper-building combat with Geffen might well lead to their financial ruin.

Geffen's comments can't be good news for Welch. What will the lenders at (JP Morgan) Chase, to whom Welch has gone for financing, now think about bankrolling the least-well-funded entrant in a game in which the best-funded player has already announced he's willing to lose it all to reach his objective? Given Geffen's rather iconoclastic approaches to his work, he may well have some innovative ideas for reviving newspapers that the other two ex-CEOs can't even imagine.

This will be an interesting area to watch in 2007.