Tisch Brothers

Tisch brothers

The Tisch brothers were major forces in the real estate industry with diversification into other areas. Laurence Alan (born 1923) became CEO of CBS, while Preston Robert (born 1926) once served as postmaster general of the United States.

Laurence Alan Tisch was born in Brooklyn on March 5, 1923, and his brother, Preston Robert (Bob), was born in Brooklyn on April 29, 1926. Their father, Abraham Solomon (Al), was a businessman in the garment industry who also owned two children's camps which he and his wife, Sadye, managed during the summers when the garment industry traditionally closed down.

Laurence attended New York University, from which he graduated cum laude with a B.Sc. at the age of 18 in 1942. Subsequently, he became one of the school's major benefactors. Laurence was awarded an M.A. in industrial engineering from the University of Pennsylvania in 1943 and attended Harvard Law School in 1946. Bob attended Bucknell but left for Army service in 1943, and after his discharge in 1944, he enrolled at the University of Michigan, from which he received a B.A. with a major in economics in 1948.

Laurence Tisch purchased his first hotel, Laurel-in-the-Pines in Lakewood, New Jersey, shortly after leaving Harvard. He refurbished the place, altered its management, and made it one of the more popular resorts in the area. When Bob graduated from the University of Michigan he joined his brother, and that year they purchased another hotel, the Grand in the Catskills. Other hotels in Atlantic City followed, as the Tisches were becoming a force in the resorts business and were especially well-known for turning around unprofitable operations.

In the 1950s the Tisches took positions in Manhattan hotels, and there repeated their successes at the resorts. In 1955 they constructed their first hotel, the Americana in Bal Harbour, Florida, which soon became one of the state's most important convention centers.

In this period the larger motion picture studios also owned theaters which exhibited their movies. As a result of an antitrust decision, the two operations had been separated, and one result was the creation of Metro-Goldwyn-Mayer and Loews Theaters out of what had been Loews, Inc. Perceiving that while the theaters themselves were not particularly profitable, the land on which they were located had unrealized value, the Tisches started purchasing shares in Loews Theaters in 1959 and in September had enough equity to be named to the board. They continued their purchases and in January 1961 were able to displace the existing management and take charge of the company.

With this, the Tisches initiated a program of selling some theaters and razing others to construct hotels on the sites. Their initial project was the Summit, which replaced an antiquated theater on Lexington Avenue in New York City. Many others followed, as well as management contracts for hotels owned by others. By the end of the 1960s, Loews was one of the nation's largest hotel chains. In light of this transformation, in 1971 the Tisches renamed the company Loews Corporation.

Not content with this, the Tisches decided to recast Loews as a conglomerate. Their first move in this direction came in 1968 with the acquisition of Lorillard, the nation's fifth largest cigarette company, which itself had become a conglomerate. This acquisition was somewhat contentious. The modern anti-smoking campaign had begun in the early 1950s and was meeting with success. By the time of the Loews-Lorillard merger, it appeared cigarette smoking would only continue to decline. Anticipating difficulties, the companies diversified into other areas. Lorillard purchased Usen Canning, the second largest firm in the cat food business, and Golden Nuggets Sweets, a candy manufacturer.

Laurence Tisch cared little about the food operations, but recognized that Lorillard's assets were not reflected in its market price and that its cash flow would enable him to expand Loews' other operations more rapidly than might otherwise be the case. So he obtained the firm in a friendly takeover, cut its management force deeply, sold the candy and cat food business, and boosted profit margins greatly.

Another of Loews' acquisitions was Chicago-based CNA Financial, which was purchased in 1974. CNA was the holding company for Continental Casualty, a major factor in the fields of accident and health insurance, and Continental Assurance. In addition, CNA-owned General Finance and Tsai Management & Research, an important factor in the mutual fund industry.

The next acquisition was Bulova Watch, which was purchased in 1979. Once again the Tisches were to obtain a troubled company at a low price. At one time Bulova had been a style and technological leader in a strong American watch market, but the situation had changed by the late 1970s. Japanese watch companies were making significant inroads in Bulova's niche in the medium-price segment of the market, and Bulova had an operating loss in this period. After assuming control the Tisches installed new management, and within a year Bulova was reporting a profit.

As a result of these activities the Tisches had transformed Loews into one of the nation's largest conglomerates. By 1980 revenues came to $4.5 billion and earnings were $206 million. All segments of the business were doing well.

Typical of the Tisch operations was the 1982 purchase of seven oil tankers for $42 million at a time when the oil business was severely depressed. The price was quite low, and Laurence Tisch calculated that even if the industry did not recover, the ships might be sold profitably for scrap. After chartering them for a few years Loews sold one tanker for $15 million and in 1990 sold a half share in the remaining six for $154 million.

The Tisches' most contentious investment was CBS, the giant and troubled communications complex, which owned record, toy, and publishing companies as well as the large network. CBS seemed an ideal candidate for the Tisch treatment. It was mismanaged and so the shares were selling at a discount to net asset value. This led to hostile takeover offers from Ted Turner, who owned Cablenews Network; Marvin Davis, the owner of 20th Century Fox; and even a group including Senator Jesse Helms of North Carolina, who was conducting a vendetta against CBS News.

In order to prevent a takeover, CBS chairman Thomas Wyman ordered the repurchase of 21 percent of the firm's shares, which saddled the company with more than $1 billion in long-term debt. Wyman also sought a "white knight" and found him in the form of Laurence Tisch. With Wyman's blessings Loews started purchasing shares, reaching 24.9 percent of the outstanding common stock by the summer of 1986.

On September 10, Wyman was forced to resign and Tisch became acting chief executive officer (CEO) of CBS while retaining the chairmanship of Loews. Bob Tisch occupied no position at CBS. In 1986 he left Loews to become postmaster general, serving until 1989 when he returned to the firm. As was his practice, Laurence Tisch started firing executives and considering the sale of assets. In return for CBS's publishing, record, and magazine divisions CBS was paid $3 billion in cash. Yet it was generally conceded that Tisch had not obtained top prices for any of these companies, all of which were sold at times when their fortunes were improving. In addition, Tisch's attempts to squeeze savings out of the network resulted in lower ratings and a continued slide in operating profits, which were compensated for by interest on the firm's cash hoard. Meanwhile, in 1991 Preston (Bob) realized a lifetime ambition by buying a half interest in the New York Giants football team.

Throughout the 1990s the Tisch fiscal kingdom continued to grow. Laurence, known for his high stakes investments, was often mentioned in the same financial tabloid articles with his friend and occasional competitor, Warren Buffett. The Loews Corporation was ranked number sixty-four on the Fortune 500 with revenues of $13.5 billion in 1994. That same year, Loews earned a reported $155 million in tax-free income, just from a CBS stock buy-back deal. In 1996 the brothers were reported to each own 16 percent of the company. To keep business matters in the family and their sons involved in running the Loews empire, a total of five Tisches sat on various company boards by 1997. The Tish brothers' "Midas Touch" coupled with shrewd investment strategy and deep fiscal pockets made them a major force on the American business scene.

Further Reading

W. R. Shelton, "Tisches Eye their Next $65 Million, " Fortune (January 1960); V. Lawrence, "Running a Conglomerate like a Candy Store, " Nation's Business (August 1981); "CBS Finds a Friend, " Fortune (November 11, 1985); L. Baum and L. Lieberman, "Has Larry Tisch Sold Too Much of CBS?" Business Week (July 25, 1988); Subrata N. Chakravarty, "Behind All That Shuffling and Reshuffling at CBS, " Forbes (August 8, 1988); "Head of Loews Likely Choice for Postmaster General's Job, " New York Times (August 6, 1986); "The Quiet Billionaire, " U.S. News and World Report (February 8, 1988); "Loews Sees the Future, and It's Oil, " Business Week (March 19, 1990), and "Tisch the Younger Takes His Turn, " detailing a busy day in the life of Preston (Bob), Business Week (July 8, 1991) are but a sampling of available sources. Updates on the Loews Corporation can be found in business references such as the Hoover's Handbook of American Business. □