Family
Business Magazine E-Newsletter
June
3, 2008
Contents
1.
Cablevision's acquisition of Newsday
sparks speculation.
2.
Cindy McCain reverses course, releases tax records.
3.
Belgian brewer mulls takeover bid for Anheuser-Busch.
4.
Clear Channel settles with banks; Mays family will lose money.
5.
How to foster entrepreneurial leadership.
6.
America's oldest family companies are scattered across 31 states.
1. Cablevision's acquisition of Newsday sparks speculation.
Wall Street watchers and media industry figures have been talking about
the announcement that Cablevision Systems Corp. will acquire Newsday
Media Group. Earlier in May, Cablevision subsidiary Rainbow Media
announced it was purchasing the Sundance Channel. The Wall Street Journal's "Heard on the
Street" column said some cynical investors in Cablevision, which is
controlled by the Dolan family, believe CEO James Dolan is making risky
acquisitions to punish investors for rejecting the company's $36.26
buyout offer last fall. "This theory holds that the Dolans are hoping
the stock will fall so they can come back with another buyout offer --
possibly at an even lower price," the column said. "While there isn't
any evidence that this is the Dolans' ultimate plan, Mr. Dolan has left
little doubt that he feels he has a mandate to run the company as he
sees fit." Meanwhile, New York Times
sports media columnist Richard Sandomir, noting that Dolan also owns
two New York sports teams and Madison Square Garden, wondered, "[H]ow
will Dolan the Newsday owner
react when his sports staff flays his Knicks or Rangers?" Former Newsday editor Howard Schneider,
dean of the journalism school at Stony Brook University, told Sandomir
(a former Newsday staffer who
worked under Schneider), "If there is any attempt by the Dolans to
control coverage, it will demonstrate that this deal is a total
failure." (Sources: Wall
Street Journal, May 2, 2008; New
York Times, May 14, 2008.)
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to the top.
2. Cindy McCain reverses course,
releases tax records. On the day before the Memorial Day
weekend, two weeks after saying she would never make her tax returns
public, Cindy McCain, wife of expected Republican presidential
candidate John McCain, released two pages of her 2006 tax records,
revealing that she had total income of $6.1 million in that year. Cindy
McCain is chairwoman of Hensley & Co., her family's Phoenix-based
beer distributor. Her 2006 income included $299,000 in salary, $4.6
million from trusts and real estate, and $744,000 in capital gains, the
Phoenix Business Journal reported.
Her husband's campaign "said she had received an extension on her 2007
tax returns and aides said she likely would not make those public," an
Associated Press article said. (Sources: Phoenix Business Journal, May 23,
2008; Associated Press, May 24, 2008.)
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to the top.
3. Belgian brewer mulls takeover bid
for Anheuser-Busch. Belgian brewer InBev is considering a
$46 billion takeover bid for Anheuser-Busch, according to press
reports. The news comes 18 months into the tenure of Anheuser-Busch CEO
August Busch IV, the Wall Street
Journal noted in a lengthy profile. "An offer by InBev would put
[Busch IV] in a tough spot," the article said. "If Anheuser is sold to
InBev, he could be remembered as the member of the founding Busch
family who let the St. Louis icon slip into foreign hands. The Busch
family controls less than 4% of the stock, so even if a majority
opposed the deal, it can't block it." The Journal profile said that Busch IV
has a "tenuous relationship" with his father, former company CEO August
Busch III, now a company director. The report noted that father and son
have been "divided on a number of issues, including how to carve out a
winning strategy amid tepid sales of major brands like Budweiser and
Michelob." In 1975, Busch III persuaded company directors to oust his
own father, according to the report. Busch IV and his father both
oppose an InBev takeover, though Busch III's half-brother Adolphus
Busch IV is in favor of discussing a deal, the Journal noted. "Anheuser could try
to thwart an approach by buying the half of Mexico's Grupo Modelo SA
that it doesn't already own," the article said. A subsequent Journal article noted that "Though
Anheuser's board of directors has been loyal to the Busch family, the
board also includes independent directors with records as deal
makers.... Their presence, coupled with shareholder pressure to accept
an offer at a high premium, could help InBev overcome board opposition
if it decides to pursue a deal." (Source: Wall Street Journal, May 27, 2008
and May 28, 2008.)
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to the top.
4. Clear Channel settles with banks;
Mays family will lose money. Clear Channel Communications,
which had sued a group of banks that had tried to renege on financing a
$22 billion privatization deal, on May 13 reached an agreement with the
banks for $18 billion. Though the revised deal will result in a loss of
about $104 million "on paper" for the founding Mays family, "analysts
say the downsized deal still leaves the Mays family better off than
keeping their company public," the Wall
Street Journal reported. "If Clear Channel had walked away from
the deal and opted to continue as a public company, the likely result
would have been an immediate drop of the company's share price," the
report noted. "By taking the company private, Mark and Randall Mays
have the opportunity to nurture their radio and outdoor-advertising
company without the distraction of answering to analysts and
shareholders. They also will benefit from fresh ideas coming from the
new private-equity owners, Bain Capital LLC and Thomas H. Lee Partners
LLC." (Source: Wall Street
Journal, May 15, 2008.)
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to the top.
5. How to foster entrepreneurial
leadership. Family businesses aren't sustained over
multiple generations by chance alone. Especially once the company
enters the third generation -- when there are more family members in
the picture -- various family constituencies must unite in support of
the business goals and the company must grow sufficiently to meet the
diverse needs of family shareholders (job opportunities, dividends,
funds for share redemption). Good governance is the means by which
these goals are achieved. On the business side, the company needs an
active and involved board that provides effective oversight. On the
family side, a family council serves as a vehicle for educating
stakeholders, disseminating information about the company and fostering
a stewardship orientation toward the business.
For information
on developing these dual governance systems or modifying existing
structures to correspond to current family or business circumstances,
see The Family Business
Shareholder's Handbook, the just-published 11th volume in our Family Business Handbook series.
Learn more about the book and see the table of contents here.
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to the top.
6. America's oldest family companies
are scattered across 31 states. The oldest family company
in America -- the Avedis Zildjian Co., a manufacturer of cymbals in
Norwell, Mass. -- is in its 14th generation of family ownership.
Sixteen other U.S. family firms still in existence today were founded
before 1776. The companies on our list of America's oldest family
businesses -- newly updated to include firms we had inadvertently
overlooked and delete those that have been sold or closed -- are
scattered across 31 states. You'll find the updated list here.
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to the top.
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