In 1959, before becoming a U.S. citizen, Jack Kent Cooke purchased an AM radio station in Pasadena, California, for $900,000 in his brother’s name.  In 1960, a contest the station ran caused an FCC investigation that uncovered Jack’s majority ownership. His biography states that in 1962, the FCC ordered the station shut down, and Jack lost the license. It was a major financial blow. While he was licking his wounds, Jack stayed in a remote California hotel. He was surprised to get clear television reception. He learned the hotel was wired for CATV—cable TV—and that people were paying $5 a month for the service. Jack immediately recognized the potential of cable TV and jumped into action.

Cable was simple then, just a way to bring six or so channels to a community from broadcast networks that didn’t have strong enough signals. In the fall of 1964, Jack made his first cable TV antenna system investment for $4.6 million. The profit potential of a protected cable franchise was obvious and reminded him of the early days in northern Ontario when Roy Thomson had a license to print money in broadcast radio. The formula was simple to Jack. Current customers plus projected growth of a cable system’s coverage combined with current and future subscriber rates told you how much each system could generate in revenue. Having calculated these figures, Jack paid $300 per cable subscriber when he purchased a cable system. With customers paying $5 monthly, one deal was netting Jack $80,000 in monthly cash flow. Jack named his company American Cablevision.

Jack’s broadcasting and publishing background gave him an advantage in understanding the potential of the cable market. He moved fast and, in 1965, added tons of communities to his coverage area by buying existing franchises in rural areas. He created two subsidiaries, too—one that “engineered other CATV systems” and one that sold cable equipment. Jack built American Cablevision to 85,000 subscribers and, in 1968, merged it with H&B Communications in a stock deal valued at $30.8 million. In 1970, H&B was bought by TelePrompTer Corporation, then the largest cable system in America, in a stock deal. After the acquisition, Jack owned almost 12% of TelePrompTer’s publicly traded stock, meaning Jack’s shares were worth roughly $40 million. In about five years, Jack had created a $40 million cable fortune.

Cable wasn’t enough for Jack, and in 1965, he purchased the NBA’s Los Angeles Lakers basketball team for $5,175,000, a record price. Jack viewed a team in Los Angeles as one of the three most valuable NBA properties, teams in Boston and New York being the other two. Jack was also gunning for the rights to start an NHL expansion team and thought owning the Lakers and having partial ownership of an NFL team legitimized him as a sports mogul. He was right. Less than a year after purchasing the Lakers, he was granted rights to Los Angeles’ expansion NHL team for a $2 million fee and a promise to play in an arena that seated at least 12,500 people. Jack also paid $250,000 for the right to have a team in the United Soccer Association.

Jack kept pushing and, in 1966, added real estate to the mix. He started building the Forum, a modern, roughly $17 million sports arena in Los Angeles that his basketball and hockey teams could play in. The arena opened in 1967 and was unlike anything anyone had ever seen. It was a huge success.

While Jack was thriving as a sports entrepreneur and also running other enterprises, his health and home life were suffering. In 1965, his wife Jean was unhappy and attempted suicide for the first time. And Jack’s brutal work schedule led to him having a heart attack in 1973. This slowed Jack down, but it didn’t stop him. He was just getting started and was focused on his teams becoming champions.

Jack Kent Cooke’s Toronto radio station was doing well, so he started and acquired businesses that provided services to it. For instance, he purchased a small ad agency and started a service that syndicated radio shows in Toronto. According to his biography, owning these companies decreased expenses for his station and allowed Jack to profit when other stations needed the same services.

Jack was also doing deals with his partner Roy Thomson. They bought a drive-in movie chain, two national radio sales agencies, and other businesses. But one of their deals landed Jack in legal trouble: the 1947 purchase of an edgy and unprofitable magazine, Liberty. Roy and Jack bought it for $400,000, each owning 45%. But the magazine’s content got Jack sued for libel and led to criminal charges against him for “conspiring to publish defamatory libel.” Jack was acquitted, but the magazine was a financial drag, losing more than $300,000 over the years before finally turning a small profit. Jack’s experience with Liberty led to his 1952 purchase of a publishing empire, which included Saturday Night and other national and trade magazines owned by Consolidated Press. Jack had added publishing entrepreneur to his resume.

The Consolidated Press deal was significant but didn’t include Roy. The partnership between the two soured when Jack cut Roy out of a lucrative consulting deal to manage an Ottawa radio station. Roy felt Jack broke their agreement to share in each other’s deals and opted not to partner with him on deals anymore, although they remained business associates. Jack didn’t need Roy as a partner anymore. He was financially successful and started doing deals on his own. He had six offices in Toronto for his various businesses, which he bounced between daily.

Jack wanted to own more businesses in leisure industries, so in 1951 he bought the Toronto Maple Leafs, a minor league baseball team, for $200,000. With his knack for promotions and flair, Jack turned the games into must-attend events in Toronto. He also used the games as content for his radio station and did play-by-play calling of each game. He tried to do the same with local hockey team games, but because he didn’t own the team or the rights to broadcast the games, he was charged with radio piracy by the Canadian government.

Jack kept buying businesses. In 1956, he bought a company that owned two plastics factories and an aluminum foundry. Jack saw plastics as the future and a growth industry he wanted to be part of. His ownership got off to a rocky start when he sued the seller for misrepresenting the value of the inventory he’d bought.  

Jack’s dream was to start Toronto’s first TV station, and he’d been working it for years. He needed to be awarded the first license to turn that dream into reality. When Jack submitted his application to the Broadcasting Board of Governors (BBG) in 1960, his past tussles with regulators and his reputation for stuffing too many ads per hour into his radio broadcasts worked against him. In a crushing defeat, the license was awarded to another group.

After his television broadcasting license application was rejected, Jack made a major move. He uprooted his family and moved to California. He didn’t just move; he pulled off political wizardry to make it happen. Jack and his high-powered lawyers convinced the U.S. Congress to create a special bill for Jack. It allowed him to become a U.S. citizen immediately, bypassing the normal five-year waiting period, and backdated his citizenship by a decade. It passed the House and Senate and was swiftly signed into law by President Dwight D. Eisenhower. Jack had become powerful and connected not just in his home country but in the United States too. As a U.S. citizen, Jack couldn’t own certain Canadian companies, so he sold his radio stations, publishing business, and baseball team.

Having friends in high places paid off again for Jack. That same year, his well-connected lawyer, Bill Shea, shared an opportunity to buy into an NFL franchise. Jack jumped at the chance and paid $350,000 in 1961 to purchase 25% of the Washington Redskins (now the Washington Commanders).

This deal kickstarted Jack’s life as a U.S. citizen and launched what would become a professional sports team empire for him.

The biography about Roy Thomson described a critical partnership with a young man who helped propel Roy’s empire: Jack Kent Cooke. I did some research and learned that Cooke went on to have a prolific career in radio broadcasting, owning cable systems, and owning the NBA’s Los Angeles Lakers, the NHL’s Los Angeles Kings, and the NFL’s Washington Redskins. I wanted to learn more about Jack, so I read The Last Mogul: The Unauthorized Biography of Jack Kent Cooke by Adrian Havill.

Jack was born in 1912 and raised in Toronto, Canada. His parents had immigrated from South Africa and Australia. He grew up in a lower-middle-class family that sometimes struggled financially. Jack wasn’t into school and skipped it for weeks at a time. He finished only three of the five years needed to graduate high school before dropping out. More interested in making money, he tried various things, including forming a band that performed at local school dances. The “high school hustler” lived by his own rules.

In 1934, the Depression profoundly affected North America. Twenty-five percent of Canadians were unemployed. Twenty-one-year-old Jack had eloped with seventeen-year-old Barbara Jean Carnegie and begun traveling door to door to sell encyclopedias. Selling books failed, and Jack went broke. He and Jean moved in with his parents, and he took a traveling salesman job selling Colgate-Palmolive products to stores in remote northern Ontario. During one of these trips, Jack walked into a radio station to ask for a job. Roy Thomson owned that station.

Forty-three-year-old Roy was intrigued by twenty-five-year-old Jack’s persistence and hired him to manage station CJCS in Ontario. With Jean pregnant with their first child, Roy was anxious to prove himself. Jack started at CJCS in January 1937 and worked from when his eyes opened to when they closed. By June, the once-troubled station’s profits were so substantial that Roy sold the station for a handsome profit. Jack had quickly proven himself to Roy while learning the ins and outs of radio broadcasting.

Roy liked working with Jack so much that he offered him the opportunity to become partners by buying in to his next deal: purchasing a Quebec radio station for $21,000. Roy and Jack each put up $1,000, and they financed the remaining $19,000 with a bank loan. A year later, they sold that station for $105,000. Jack was in his late twenties, and this deal was his first big financial win.

Jack started looking for his own radio deals and negotiated to buy a Toronto station for $500,000. He didn’t have $500,000 liquid, so he agreed to put down a deposit, which he would lose if he didn’t close the deal in thirty days. Jack raised the money from wealthy people in Toronto. Interestingly, Roy declined to invest. After taking over, Jack immediately broke unwritten radio rules by broadcasting twenty-four hours a day and introducing other changes. Within a year, Jack had a 35% market share and his was the leading station in Toronto. Within a year or two, Jack repaid each investor $69,000, almost three times their $25,000 investment.

Jack was eager to continue expanding and wanted to buy an Ottawa radio station, but regulators blocked him. To get around the regulators, he signed a consulting contract with the station’s owner: he would manage the station and get 40% of the gross profits before taxes and depreciation, an extremely lucrative deal. In the 1950s, the station generated $1,600,000 in gross profits, of which Jack received $640,000. Jack got what he wanted, but his wheeling and dealing didn’t sit well with regulators. He was developing a reputation as a cowboy who wouldn’t follow the rules.

Jack was hitting his stride as a radio broadcasting entrepreneur and becoming well known in Toronto. He was having professional and financial success, but it didn’t come easy. Jack’s typical workday at a radio station was from 7 a.m. to midnight. It got so bad sometimes that his wife had to go to the station and drag him home. Jack’s employees viewed him as a hard-charging workaholic, notoriously cheap and prone to outbursts when something didn’t meet his standards. One newspaper article in 1949 described him as ruthless, tough, and working every waking moment.

Jack’s style helped him get early wins but also ruffled feathers and got him in trouble with the law.

I finished reading Mike Bloomberg’s updated autobiography, published in 2019.It details Mike’s journey from a Wall Street firm to entrepreneur, mayor, and philanthropist. It’s a mix of his journey, the principles he lived by, and thoughts on society.

How Did Mike’s Early Years Affect His Trajectory?

Mike was raised in a middle-class family in a blue-collar community. His father worked six or seven days a week until he died. His father’s and his community’s work ethic left an impression on Mike. Now, decades later, in his seventies and with a net worth reportedly exceeding $100 billion at the time of this writing, Mike’s idea of a perfect day is one that starts with exercise and being at his desk by 7 a.m., is jam-packed until into the evening, and ends with falling into bed exhausted. Mike believes in grinding daily, even though he doesn’t have to at this stage of his life.

Mike benefited from serendipity in his youth and early in his career. A coworker at his after-school job put Johns Hopkins on his radar. He went to graduate school because that’s what everyone else in his class was doing. He didn’t know that institutional sales and equity trading was a job, but a Harvard classmate told him to apply to Salomon Brothers for the role anyway. Salomon was acquired, and Mike’s interest in the partnership was bought for $10 million. At a glance, it looks like Mike got a lot of lucky breaks. But digging deeper, it’s apparent that his work ethic put him in environments that increased his chances of getting lucky. He did everything to the best of his ability, which led to more and better opportunities.

What Strategy Did Mike Employ to Achieve Success?

Mike learned how inefficient and difficult accessing data was while he was working on Wall Street. He wasn’t technical, but he solved this problem for his firm using computers, while still doing his day job. After this experience, he was able to do the same for other Wall Street firms, and this led to him founding his company and creating his Terminal product.

The genius in Mike’s strategy was his embrace of media. Bloomberg’s core goal is to gather accurate data and help people analyze it via their Terminal. Mike recognized that each medium was a unique way to distribute his data and analysis to people who could be potential Terminal customers. Leveraging media was a way for Mike to increase awareness about Bloomberg and pull people interested in financial data to Bloomberg. He created a magnet using media that pulled customers to him and made it easier to sell Terminals to them.

Mike also understood supply-and-demand dynamics and their impact on company longevity and margins. Providing something that’s not unique means that others can provide something similar. The supply of that thing is high, and the price you can charge for it goes down. Mike wrote about the example of reporting the news—everyone can do it, so the supply is high.

Providing something that isn’t beneficial doesn’t add value and often means there are alternatives. There isn’t a great need, which can result in low demand. Michael uses the example of entertainment content. It’s nice but not necessary, and many alternatives exist, so demand can be low.

High supply and low demand equal low prices and low margins. Mike understood this and aimed for the opposite: low supply and high demand. Bloomberg was the only company able to provide accurate data and a superior analysis tool that helped financial professionals do a better job. The supply of products like the Terminal was limited and demand was high, allowing Bloomberg to charge a sky-high rate of up to $2,000 per month to rent a Terminal. Customers happily paid it.

What I Learned from Mike’s Journey

Building a media company and selling attention is a proven and lucrative business model that scales well because of the low cost of marginal replication. However, it leaves you dependent on advertising revenue, which can be unpredictable. If you can create a unique product or service with high demand, creating media related to it is a great way to attract an audience, make that audience aware of your product or service, and increase sales of your product or service. Ad revenue can be gravy, not the primary revenue source.

Mike has had tremendous success with Bloomberg and materially affected how finance professionals work. I’m glad I got to learn about his strategy for building Bloomberg. It got me thinking about media differently. Anyone interested in learning about data, media, politics, or philanthropy may benefit from reading his updated autobiography.

To Mike Bloomberg, every problem is an opportunity. According to his autobiography, when Bloomberg News tried to become an accredited news organization to gain access to government data that impacts markets, such as the Consumer Price Index (CPI), it was denied. Bloomberg News’s credibility was questioned because its stories weren’t published in a traditional newspaper.

Around the same time, the New York Times wanted access to a Terminal. Recognizing an opportunity, Bloomberg bartered Terminal access for an agreement that worthy stories from Bloomberg News would be published in the New York Times (at the latter’s discretion). Within a year, every major newspaper in the United States wanted the same deal. By 1995, Bloomberg News was American newspapers’ second-most-published news service, bested only by the Associated Press. That same year, the New York Times newspaper syndicate, comprising 700 newspapers globally, included Bloomberg News. The credibility issue was solved, and accreditation was granted. Newspapers and distribution via print media weren’t part of Bloomberg’s strategy, but solving a problem helped unlock the power of distributing through print media.  

In 1991, Mike received a call from Jon Fram about buying the bankrupt television channel Financial News Network (FNN), which later became CNBC. Mike declined, but Fram convinced him that Bloomberg’s financial data and analysis were ideal for broadcasting, especially on TV. Mike liked the broadcasting strategy but started with radio when he acquired New York AM station WNEW for $13.5 million. Bloomberg built technology to streamline audio content creation, production, and publishing, which was unheard of at the time but made reporters more productive.

From there, Bloomberg moved into television, a technology Mike says is as powerful and impactful as Gutenberg’s printing press. It began with a daily, thirty-minute show aired on Maryland Public Television and syndicated through the United States The show was an instant hit and led to what is now Bloomberg Television, a subscription television channel distributed globally.

Since then, Mike says, Bloomberg has become the first true multimedia company available on every medium: Terminal, television, print, radio, telephones, web, social media, and podcasts. Bloomberg can deliver accurate data and analysis to customers wherever they need it and however they want to consume it.

Today, according to Bloomberg’s website, it has over 21,000 employees in 159 offices in 69 countries. Mike believes that “answering to essentially no one is the ultimate situation” and has opted against listing the company on a public stock exchange. Bloomberg even bought back Merrill’s 30% ownership stake (10% in 1996 for $200 million and the remaining 20% for $4.5 billion in 2008 during the Great Financial Crisis).

I’ve focused on Mike’s entrepreneurial journey, but his autobiography also details his time as mayor of New York City, his philanthropic initiatives, and his near-death experiences as a helicopter and airplane pilot.

Mike Bloomberg had built the most accurate bond data and superior technology to analyze it (and, later, stocks too). His autobiography says his Market Master product, later called the Terminal, was renting briskly. The company had about 150 employees and was growing. But Mike wanted more people to benefit from Bloomberg’s data and analysis capabilities. Matt Winkler would help Mike take the first step in this direction.

Matt was a Wall Street Journal reporter who, in September 1988, wrote a front-page story on Mike’s company. He highlighted how the Terminal was becoming a vital tool in helping institutions make bond-purchasing decisions. Matt also helped Mike realize that adding text news to existing Terminal capabilities would create something that didn’t exist on Wall Street. Mike decided to launch a newswire business and compete against the Wall Street Journal’s parent company, Dow Jones, and Europe’s financial news leader, Reuters. Mike hired Matt, and they were off to the races.

Mike’s goals for the newswire business were clear:

• Collect and relay the news
• Advertise the analytical and computational powers of Bloomberg Terminals by highlighting their capabilities in each news story, which would increase Terminal subscriptions
• Include Terminal functions (links to datasets) in news stories to give more information to Terminal subscribers and encourage them to subscribe—the more people read news that included Terminal functions, the more people would subscribe to Terminals

Mike took a different approach in launching the new business in 1990. His terminals generated significant revenue, so the newswire business didn’t have to pay for itself as a stand-alone product. He wasn’t beholden to advertising revenue and didn’t have to run after eyeballs. He approached creating news stories with a technology-first mindset and leveraged computers to produce and deliver financial news. This computer-driven approach got news out faster and cost less to produce. Mike’s timing was significant because the looming 1990 recession meant reporters were looking for jobs, which allowed him to hire great talent.

Mike’s strategy worked, and the newswire became popular. The service stood out because it combined traditional text news with calculations and graphs from the Terminal. The illustrations and data complemented the words, enhancing the experience for readers.

Dow Jones and Reuters didn’t take Bloomberg seriously until the newswire service was already a breakout success. By then, it was too late. Bloomberg could replicate what the established financial news companies offered, but they couldn’t replicate what Bloomberg offered. Going up against slow-moving incumbents had worked to Mike’s advantage. Being flexible and offering more for less allowed Bloomberg to become a credible competitor before the big boys realized what was happening. By the end of 1990, the New York Stock Exchange had three official news organizations: Dow Jones and Reuters, both over 100 years old, and Bloomberg News.

With his newswire successfully distributing information and analysis, Mike set his sights on the next distribution method: broadcasting.

Mike Bloomberg was in a fortunate but uncertain situation. He had $10 million but didn’t have a job. He figured he had three options: look for a job, remain unemployed, or start a company. No one was calling and offering him a job, and he was too young to retire. He decided to start his own company.

According to the autobiography I’m reading, Mike asked himself what he had the resources, ability, interest, and contacts to do. In the 1960s, Wall Street was drowning in paperwork. In the late ’60s, Mike read that computers were good at storing data. He convinced the Salomon leaders to let him work on a project, nights and weekends, to automate data collection and retrieval. In 1972, he and a programmer launched B Page at Salomon. It was an internal system to access historical trading records and available data on public securities. It was also a messaging system for internal communication. When fixed trading commissions ended, Wall Street firms began making money using math-heavy arbitrage and trading strategies. B Page gave Salomon an edge over other firms.

Mike had money and knew smart people at Salomon, so resources weren’t an issue. He’d figured out how to create a data system for Wall Street investors, was interested in data and financial markets, and had contacts all over Wall Street. He started a company offering software that let non-mathematicians analyze bond information. In 1981, he put $300,000 in a business checking account and recruited four coworkers from Salomon.

Mike needed credibility and revenue for his start-up, so he did a six-month consulting project with Merrill Lynch and was paid $100,000. He used that project to get introduced to Merrill’s leader of capital markets. He pitched a nonexistent product to the leader and told him he didn’t have to pay unless it was delivered on time. Merrill Lynch liked the product and agreed to the no-risk deal. Mike hired salespeople and operators, even though the product was still being built and they had only one customer. He blew through $4 million and ultimately hired almost two dozen people. He began to wonder if he was jeopardizing his wealth and reputation.

In July 1983, Mike’s firm, Innovative Market Systems, delivered its Market Master product to Merrill. A computer terminal with a keyboard allowed users to access bond market data and analyze whether a bond was cheap or expensive. The product was delivered on time and worked well enough for Merrill to commit to purchasing. Merrill paid a $600,000 one-time custom development fee and $1,000 monthly for each terminal under a two-year agreement. Merrill initially took delivery of twenty-two terminals, which resulted in $240,000 in subscription revenue over two years, bringing the total deal value to $840,000.

The Merrill deal led to credibility and other clients, such as the Bank of England, signing on—and to a critical acqui-hire. Michael met data entrepreneur John Aubert in Merrill’s cafeteria in 1984. John’s three-person firm was skilled at gathering and structuring data. The day they met, Mike agreed to absorb John’s company. John went on to start Bloomberg’s data-collection facility and devised Bloomberg’s data-collection process, which included a crucial analytical component. Data was the backbone of Mike’s company, and John’s skills laid the foundation for the company’s data edge over competitors.  

Things were starting to click for Mike. The more he thought about his data and analysis business, the more he realized he needed to find different ways to distribute his product.

Earlier this month, Michael “Mike” Bloomberg announced that he’s donating $600 million to four historically Black medical schools. This caught my attention. I researched Mike and his media and technology company. I’ve been reading biographies about media entrepreneurs recently, so I read the updated version of his autobiography Bloomberg by Bloomberg.

Mike was born in 1942 in a middle-class family. His father was an accountant at a dairy. His hometown, Medford, Massachusetts, was a blue-collar city outside Boston where few people attended college. Mike attending Johns Hopkins was serendipitous—someone at his part-time job told him about Hopkins and encouraged him to apply. He was an average student but got into Harvard Business School, likely because of his various leadership roles as an undergrad.

Mike planned to serve in the military to fight in the Vietnam War after graduating from Harvard, but the military rejected him because of his flat feet. Jobless and with student loans to pay a few weeks before graduation, Mike took the advice of a friend who suggested he apply to be an institutional salesperson or equity trader. Mike had no idea what people in those roles did, but he needed money. He was hired at Salomon Brothers in 1966. Securities trading and sales were considered second-class jobs, not something Ivy League graduates did. The job didn’t pay even enough to cover his bills. He started off doing clerical work but eventually got a break—he was asked to help build the firm’s business doing block trades, a new thing at the time, for institutional clients.

Block trading became Salomon’s most visible department, and Mike was promoted to general partner in 1972. In 1973, his boss had a fistfight with another partner on the trading floor, and Mike was given responsibility for all stock trading. In 1979, the block-trading business became unprofitable, and Mike was assigned to oversee the firm’s information systems.

Mike pushed for Salomon to implement a computer system that would enable cooperation across departments and firmwide risk management. This push caused a political battle between Mike and some members of the firm’s executive committee. Then in August 1981, the executive committee merged the 71-year-old partnership with public commodities trading firm Phibro Corporation. The merger was bittersweet for Mike. His ownership in the partnership netted him $10 million in cash and convertible bonds when the merger closed. But his rivalry with certain executive committee members had caught up with him; he wasn’t offered employment with the merged company. He was being fired.

After fifteen years, Mike was leaving the only full-time job he’d ever known. He was 39 and had a wife and young daughter. He had to figure out what he was going to do next.

I’ve finished reading a biography of Roy Thomson’s journey. It was written in 1965 when Roy was around 71. Roy lived another eleven years. In 1976, he wrote an autobiography that focused on the building of his British empire. I plan to read it.

How Did Roy’s Early Years Affect His Trajectory?

Roy’s parents were working class; his father was a barber, and his mother was a maid at a hotel. Roy’s great aunt, Sarah Hislop, was not working class. She invested in mortgages, and she held the mortgage on the home Roy’s parents owned. Given the family’s limited means, paying off that mortgage was their highest priority. This dynamic contributed to Roy needing to work as early as legally permissible and dropping out of school at age 14 to work full-time. The contrast between Aunt Sarah and Roy’s parents made an impression on Roy. His parents were working to scrape together enough money to pay Aunt Sarah. Aunt Sarah’s loan generated income for her, regardless of whether she worked. Roy’s parents worked for money, and Aunt Sarah’s money worked for her. Roy wanted the latter. Like Aunt Sarah, he wanted to be wealthy, and he developed a “passionate devotion to money.”

Aunt Sarah noticed his respect for money and loaned 15-year-old Roy capital to invest in mortgages alongside her. Roy was instantly hooked—hooked on the notion that he could borrow money to purchase investments and buy things that would generate cash in the future.

Roy told coworkers he’d be a millionaire by age 30. He didn’t achieve that goal, but becoming wealthy became the driving force in his life.

What Strategy Did Roy Employ to Achieve Success?

Roy learned that selling physical products and scaling that business model is complex. To sell more products, you need more inventory; to buy more inventory, you need capital to purchase it and, sometimes, expand your capability to store it.

Roy created a radio station as a way to sell more radios but quickly learned it was much easier to increase revenue in a radio station than in a company selling radios. The more listeners tuned in, the more people the ads reached and the more Roy could charge for advertising. He realized that radio broadcasting as a business model had leverage because his costs remained the same as listeners and ad revenue increased. The cost of marginal replication was low or zero, and revenue increases could happen rapidly. This was true for television broadcasting and newspapers too, which he expanded into. Media became the backbone of Roy’s strategy. Whether his customers were reading newspapers, listening to radio, or watching TV, Roy could sell their attention to advertisers for a profit.

Starting a radio station, television station, or newspaper from scratch is hard and takes time. Roy started off doing this but realized he preferred to improve existing properties. An underperforming property could be acquired for a low multiple (i.e., low price), especially if it was in a rural town and had been family-owned for generations. Once it was improved and benefiting from the economies of scale by being part of his empire, it could rapidly produce more cash. Buying media properties, improving operations, and generating cash became vital to Roy’s strategy.

Roy said, “My fortune is as large as my credit rating . . . and my credit rating is limitless.” This pretty much sums up the next part of Roy’s strategy. He believed in using debt, a form of capital leverage, to obtain the capital needed to acquire media properties. He understood two things about debt:

• Rate of return – Roy used borrowed money when the potential rate of return exceeded his interest rate. For example, when he could borrow money at 5% and buy an asset that in a year would generate a cash return of at least 10% of the purchase price, buying that asset with debt made sense.
• Ownership – Roy was focused on the companies he acquired generating cash years into the future. He didn’t give up ownership in his companies when he used debt, which meant he owned those future cash flow streams (after the debt was paid off). If he’d raised capital by selling equity (i.e., ownership), other investors would own part of those future cash flow streams in perpetuity.  

Another thing that stood out to me was how Roy used two forms of leverage. He combined a highly scalable media business model (low to no cost of marginal replication) with capital leverage (debt). The combination of the two, along with luck and a focus on cash flow, turbocharged his ability to build his empire and wealth.

What about Roy’s Execution Made Him Successful?

Roy eventually learned to stay out of the details and focus on strategy and acquisitions. Like many entrepreneurs, he learned this the hard way. After years of being in the weeds, he hired Jack Kent Cooke, who freed him up. He learned his company could move faster with him out of the details. From that point on, he ran a decentralized company with nonfinancial decision-making at each media property that aligned with the community being served. Henry Singleton at Teledyne and Warren Buffett at Berkshire Hathaway used similar approaches.  

Roy also put a ton of hours into his work. He was known to work sixteen- and seventeen-hour days and sometimes wouldn’t see his family until the weekend. He got more done than the average person. Working that much had a downside, though. When his wife passed away, he regretted not spending more time with her.

Roy’s story was inspiring. He failed for many years, first as a farmer, then selling automotive parts, and then as an electronics retailer, before realizing the power of media. But when he figured it out, he excelled. He built an empire that still stands today.

Access to capital was key to Roy Thomson’s acquisition strategy and success, according to the biography I'm reading. When possible, he avoided selling equity (ownership) in his company to raise capital. He wanted all the profits he knew he’d eventually generate to be his, not other shareholders’. He also despised the idea of having to deal with a board of directors, seeing the conflicting opinions of directors as a waste of his time. Roy believed that if he could borrow at 5% and get a return of 10% or more on the borrowed capital, it was sensible to raise capital through debt instead of selling equity.

In 1955, Roy publicly declared his intent to bid for the charter to launch an independent Scottish television station. No one in Scotland understood the opportunity like Roy did, and the elites declined to invest. He even asked colleagues at All-Canada Radio to partner with him, but they too declined. These people didn’t know that Roy had obsessed over this station and done extensive research, sending his lieutenant to tour American and Canadian stations and ask questions about budgets. Roy analyzed spending per capita in Scotland compared to England to determine what ad rates he could charge. His work paid off, and in May 1956, regulators gave Roy a charter to establish Scottish Television Limited (STV), which he was chairman of.

To finance the deal, Roy tried to borrow £400,000, but the Scottish bank gave him only £240,000, which surprised him. Roy assembled an investor group and valued the company at £400,000, equal to the required start-up capital. Roy was £160,000 short of his goal and decided to raise it primarily by issuing £120,000 in bonds, but also by selling 40,000 shares of equity for £40,000 to an investor group. Roy was one of the investors in that group; he bought £32,000 worth, or 80%. Instead of spending £400,000 of his own funds to own 100%, Roy spent £32,0000 to own 80%. He’d sold as little company equity as possible and managed to keep control and as much of the eventual profits as possible.

STV was a big hit. In its first month, STV made a £10,000 profit. Quickly, it was on track to do £1,000,000 in profit in the first year. Nobody except Roy had expected STV to turn a profit. Within two years, those 40,000 shares in STV that were initially worth £400,000 exploded in value to millions—so much so that Roy used them as part of a transaction to purchase an entire chain of British newspapers.

In 1958, Kemsley Press, a prestigious company that owned eighteen British newspapers, asked Roy if he was still interested in acquiring them. The deal was done in a complicated transaction that took sixteen intense days to negotiate. It had three parts:

• Kemsley Press acquired STV from Roy for £5.5 million: £1 million in cash, £500,000 in bonds, and £4 million in newly issued Kemsley shares
• Roy then bought Lord Kemsley’s controlling stake in Kemsley Press for £5 million: £1 million cash from the prior transaction, a £1 million promissory note with a ten-year term, and £3 million in cash that Roy borrowed from the bank.
• Roy made a tender offer (i.e., offered to buy at a set price) for Kemsley shares owned by other minority shareholders, too.

In roughly seven years, Roy had gone from electoral defeat in Canada to becoming a press baron in the United Kingdom. With the Kemsley deal, he’d reached his goal of owning fifty-two newspapers. At age 40, Roy was broke and heavily indebted. By age 65, he had empires in two countries on different continents. Roy continued to build his empire and expanded to have newspapers in Africa, Australia, and other places.

Roy also achieved his other goal and was given the title “baron” in 1964, becoming Lord Thomson of Fleet Street. Roy had reached the upper echelon of elite global circles, and he did it his way, on his terms. By 1964, his hard work had created an empire valued at roughly £100 million. His family is still one of the wealthiest, if not the wealthiest, families in Canada.

Roy passed away in 1976 at the age of 82, but his family continues to run his empire. In 2008, Roy’s Thomson Corporation acquired Reuters Group plc to form what is now known as Thomson Reuters, a multinational information company with a market capitalization (i.e., valuation) of roughly $74 billion as of this writing.

Roy Thomson was a dynamic entrepreneur who built a massive newspaper and media empire through savvy dealmaking and a dogged work ethic.