Daring (32 page)

“Yes, I enjoyed the prestige. People think being chairman of the board is an important role. But I'm not known in every restaurant. I don't get invited to special screenings. I don't have a press card to use . . .”

IN
1976,
MEASURED BY PUBLIC ACCEPTANCE,
Clay Felker had achieved his dream. Measured by the balance sheets that year, when the city's economy was still in free fall, the company had overall revenues of $26 million.
New York
magazine itself earned $1.2 million. The
Village Voice
earned $649,000. Clay began to believe in himself as a businessman. This was his Achilles' heel.

He set his sights on California for the next expansion. He first looked at
Los Angeles
magazine, which at the time was a glossy version of a Chamber of Commerce magazine, beautiful but boring. He offered $500,000 for it. His board of directors went berserk, arguing that the company didn't have enough money. “Clay, being so instinctive, knew it was worth much more than half a million, and it later sold for something like twenty million,” Ken Fadner once told me. Clay's hands were tied. He backed off. But the rancor with his board developed into a bitter estrangement.

Then Clay decided to make a drastic move—to launch another start-up. He was completely comfortable with chaos, which as an artistic spirit he believed was necessary to create something new. His idea was to reproduce the excitement of an urban magazine in Los Angeles. He would call it
New West.
Nothing pleased him more than brokering movie sales for his writers from articles they developed for
New York
. California became a great romance for him, with its rawboned politics, its history and cultural heroes, its energy, its cults, and its crazy variations on the American dream.

The announcement of
New West
kicked up great excitement in L.A., where magazine journalism was a low-end product. Clay plucked one of the top business journalists in the country, Frank Lalli, from
Forbes
and made him the founding executive editor. Lalli's talented wife, Carole, lost her reluctance to leave New York when Clay hired her as the magazine's food writer.

Costs began to break the budget early on. Soon, Clay began calling to ask me to come out and write a cover story for his new magazine. I was still caught up in promoting
Passages
, but I welcomed the distraction. My Columbia mentor, Margaret Mead, was delighted to hear I had another news outlet. I must do an exposé on the dangers of nuclear power, she commanded. A little research uncovered a popular protest in the San Diego area against the Diablo Canyon Power Plant. It was discovered in 1973 that it sat on a seismic fault, a fault that had already generated a 7.1 magnitude earthquake. On the California ballot that year was a referendum on the safety of nuclear power plants. It was a made-to-order investigatory story. And it allowed me to take Maura to L.A. for spring vacation.

Maura sat at the pool of the Beverly Hills Hotel all day spying on stars, while I inhaled nuclear power publications, then swam with her and wrote half the night nourished by room-service salad. We met the designer Diane von Furstenberg in the coffee shop over perfectly made omelets; Diane was funny and real and we became good friends. Once Clay joined us in the bungalow, the magic really began. His friend the moviemaker Peter Bogdanovich invited us to visit the Twentieth Century Fox lot to watch him direct Ryan O'Neal in
Nickelodeon
. Lunch at the Fox commissary was a further occasion for star spotting. And that night, we were invited to watch the Academy Awards at the home of Irwin Winkler, producer of the Rocky films, who was making
They Shoot Horses, Don't They?
with Jane Fonda.

Why not move here? Winkler coaxed us. The next day a gaggle of New Yorkers gathered for lunch by the Beverly Hills Hotel pool, all of us splotched with two-day tans and red half-moons where our bathing suits had ridden up. Lunch over, we went back to our lounge chairs. “Time for turning!” chirped the cabana boy, pointing to a sun now at two o'clock. We all ran guiltily to our rooms, fearing that if we adopted the laid-back L.A. lifestyle, we might melt down to a dribble of Hawaiian Tropic tanning lotion.

BY AUGUST, PATRICOF WAS READY
to move on a campaign to oust Clay. He arranged separate meetings with each board member and pushed the story that the company was in trouble because it had run out of cash.

“The idea that we were in financial trouble was totally preposterous,” insists Ken Fadner. “The board had voted unanimously to wipe out earnings to start
New West
, in order to allow the government to finance half of the costs.” Nonetheless, the board denied Clay a new contract. A brawl broke out at the September 1976 board meeting.

“If I've told you once, I've told you fifteen times, Clay, you don't have to be a superstar all over town for paying writers well,” Patricof scolded.

“
New West
has exceeded all our expectations in terms of circulation growth, advertising, popular acceptance,” Clay countered. “It's making us temporarily victims of our own success—but just temporarily. It's grown so rapidly that the costs have outrun the original budget.”

Glaser looked at the men around the room. “This has been a launch of unprecedented success,” he intoned, “and you guys are crying because there's little money in the bank. The fact is, we are at the healthiest point in the company's whole existence.”

But egos had been too bruised for healing. Glaser later lamented to me, “Clay and I weren't wise enough to make that board of directors feel part of our community. They always felt on the outside. That guaranteed that they would act only in their own financial interests; they would have no family ties.”

WHO WOULD HAVE GUESSED
what unpredictable forces would come together in the same week of November 1976? Murdoch, recoiling from his humiliation at the hands of the British upper class in refusing his bid for the
Observer
, collided with Felker, wrestling with hostile directors over control of his three periodicals.

But Murdoch was first to seize his moment.

Clay had been trying since the start of summer to coax Burden into naming a price for his shares so Clay could make an offer. Burden's mode for dealing with stress was avoidance. At the first hint of the necessity to make a tough decision, he would start rolling up into a ball and the ball would wedge itself into a corner until there was no way at all of getting at it. “I couldn't fish or cut bait,” Burden himself told me later.

But Patricof knew he had a live buyer. He gave Murdoch's investment banker, Stanley Shuman, the names of all the major stockholders and told him who was particularly unfriendly to Clay. The backroom deals between raider and insiders had begun.

Sensing connivance in the making, Clay grew rigid with paranoia. At this very same moment, Clay's father was slipping away in a blanket of minor strokes. After flying home weekends to Webster Groves, Clay would return on Sunday nights, sad and shaken. I would coax him to go to a movie and we'd come home to warm milk and brownies. Chocolate always worked on him.

But one Sunday evening, Felix Rohatyn, Clay's financial guru, came over. Clay loved learning about finance from the senior partner of Lazard Frères's investment bank, who was successfully maneuvering to save New York City from bankruptcy. Rohatyn enjoyed being exposed to the world of ideas from the man whom many were now calling “Mr. New York.” We sat in the living room while Clay told Rohatyn he was worried about the sudden increase in trading of
New York
Magazine Company stock and the rise in the price. He was worried that one of his unfriendly directors might be making a market on insider information. And he was uneasy about Murdoch.

“Uneasy?” Rohatyn said. “Have no illusions. Murdoch is a ruthless man.”

“Who can we find to buy out Burden?” Clay asked.

“Kay Graham.” Rohatyn knew how close Clay was to the publisher of the
Washington Post
.

“I can't ask Kay,” Clay said.

“She would be hurt if nobody did,” Rohatyn said. “I'll call her.”

ABOVE THE JOLLITY OF FRIDAY NIGHT
at P. J. Clarke's tavern on Third Avenue was a no-nonsense law firm where the lights burned all night. Skadden, Arps specialized in the traumatic law of tender offers. It was the home of Joe Flom, the groundbreaking attorney who made Skadden, Arps the go-to firm for clients enmeshed in hostile takeovers. Steven Brill, the lawyer who had written the prophetic piece about Flom for
New York
, walked Clay into the Skadden, Arps office late one night. Lawyers there quickly developed a cynical view of human nature. People came at their worst. Either they wanted to learn the art and artifice of being a raider, or, in a panic, how to save their hides as victims.

This is where I found Clay in the dying hours of that fateful year of 1976. To me, the inside of the building felt like a hospital. Meals were served on trays from a twenty-four-hour kitchen. A limousine waited perpetually just outside, ready to rush clients to court or pick them up from a bloody board meeting. The attorneys slept on couches, the floor, or not at all. They sent out for cigarettes, aftershave, clean shirts from Brooks Brothers.

Clay smiled as I slipped a cup of strong coffee and a crème-filled pastry lobster tail in front of him. He was on the phone with his friend and advocate, Rohatyn. “Burden has been screwing around with my offer for a month,” Clay muttered. “Of course he can make up his mind. I told him we were prepared to raise our offer above Murdoch's and give him $7.50 a share.” Rohatyn himself was ready to kill. Once again, he dialed Carter Burden's lawyer:

“Get that yo-yo off the slopes!”

All day the lawyer for Burden, Peter Tufo, had been telling Rohatyn that his client couldn't be reached—he was in Sun Valley, skiing.

“Peter,” said Rohatyn, “there is no snow on the slopes out there. Stop bullshitting me.”

“You're just going to have to give me more time,” the lawyer said.

“We'll give you till four,” Rohatyn said darkly.

He was sitting in
Newsweek
's Manhattan offices with Katharine Graham and her attorneys. Over the next two hours, the humiliation level in the room rose considerably. As queen mother of one of the most highly respected publishing organizations in the world, the
Washington Post
Company, Graham had been trying for two days with increasing desperation to buy
New York
Magazine Company. Clay and Rohatyn had been trying with mounting frustration to sell it to her. Burden was treating them all like pathetic passengers on the wait list for a flight that was never going to take off.

At 4:45 Tufo called back to tell Rohatyn, “Look, I've talked to Carter, and it cannot go your way.”

“You mean it can't go our way at any price?” Rohatyn asked in astonishment.

“I can't tell you more than that,” Tufo said.

The people in the room could not believe what they were hearing. They had been working around the clock to prevent the great magazine raid. If it went through, it would be the first hostile takeover of a publication since the 1920s.

What none of us knew was that between Christmas and New Year's, Murdoch had obtained oral “understandings” from enough board members to sell to him if the price was right. Graham took the phone with its last feeble connection to Tufo. On a conference call connection we heard her implore: “What is it you really want? Should I fly out to see Carter, is there anything humanly possible?”

When no answer came back, she whispered, “What can I do for my darling Clay?”

“Kay, don't,” we heard Rohatyn say. “It's demeaning to you, the whole thing is obscene; at least keep your dignity.”

In the virgin hours of 1977, Murdoch and his forces sped by private jet to Sun Valley to start the New Year by sewing up Carter Burden.

IN THE MIDST OF ALL THE CHAOS,
I decided to move back in with Clay. He was always there for me when I was being attacked, well, almost always. He needed me now. We needed each other. I knew Clay was still under the illusion that there were people who would commit to him and save the company out of loyalty. I was doubtful.

We spent the rest of New Year's Eve cuddling up with Maura and soberly watching TV while the ball dropped in Times Square. On the first morning of the New Year, Clay seemed to awaken inside the body of a fallen man from whom he felt peculiarly detached. Propelled into a role he didn't understand, he picked himself up, splashed water on his slugged face, climbed into the saddle of his Exercycle and rode for a hard hour until his juices began running and he was ready to give his lawyer a decision.

“Clay, don't you have a right of first refusal?” I asked.

“It expired at midnight.”

“No, it didn't, you weren't allowed to exercise it.”

“Still? Are you sure?”

“I'm no lawyer, but your own lawyer at Skadden, Arps—what's his name?”

“Pirie, Bob Pirie.”

“He said you have fifteen days to match any offer by a third party.”

“Jesus, why didn't I remember that?”

“You never thought you'd have to. Pirie told me you could get a temporary restraining order.” All at once he snapped into command. He reached for the phone.

“Bob! Clay here, let's go for a TRO.” The old leonine confidence surged in his voice. Pirie called back to let us know he'd found a judge at home, playing the harpsichord, and persuaded him to interrupt his baroque pleasures to execute a temporary restraining order. It would block Burden from selling to Murdoch on the basis that he and his lawyer, by refusing to accept Felker's $7.50 offer, had denied Clay his right of first refusal.

The stakes were control of a company that in 1976 had had revenues of $26 million. Burden owned 24 percent of the stock. Clay's equity had been diluted to 10 percent when he bought the
Village Voice
. The battle was on.