Tisch, Laurence Alan (“Larry”)
Tisch, Laurence Alan (“Larry”)
Tisch’s father, Abraham Solomon Tischinsky, arrived in the United States with his parents as part of a wave of Russian immigrants who entered the United States early in the twentieth century to escape poverty and religious prejudice. While in college he formally changed his surname to Tisch. He married Sayde Brenner, the daughter of Lithuanian immigrants, and formed a clothing company. Sayde Tisch had a successful career working for the movie entrepreneur Herbert Lubin until giving birth to Tisch. The couple had one other son.
Tisch and his brother worked in the family business as teenagers and were lifelong business partners. Tisch used his negotiating skills when he began selling his father’s products to vendors on the Lower East Side of New York City. Tisch’s father purchased a summer camp when Tisch was thirteen years old. He continued to run the clothing business and depended on his sons to manage the camp concessions.
Tisch was first a student at Abraham Lincoln High School in New York City before attending and graduating from DeWitt Clinton High School in the Bronx in 1939; he was fifteen years old at the time. In 1942, at age eighteen, he graduated from New York University with a BSc. He received an MA from the Wharton School of the University of Pennsylvania in 1943. Tisch enlisted in the U.S. Army and was selected to work in the Office of Strategic Services until his discharge in 1945. Turning his attention to the family business, Tisch was intrigued by the prospect of acquiring a business property in central New Jersey. With the consent of his parents, he took the entire proceeds realized from selling the summer camp and purchased Laurel-in-the-Pines, a 300-room resort hotel in Lakewood, New Jersey. The resort generated funds for the purchase of a resort in the Catskill Mountains of New York State.
On 31 October 1948 Tisch married Wilma (“Billie”) Stein and the following year welcomed the first of their four sons. In 1950 Tisch acquired the Hotel Traymore in Atlantic City, New Jersey, for a reported $4.3 million. In characteristic style Tisch improved the property to realize the potential he had envisioned. This profitable formula of minimizing risk through the purchase of undervalued properties, using the advantages of cash and depreciation, and disciplined cost cutting led to the acquisition of several properties. The Tisch-run chain of luxury hotels, exemplified by the Americana Hotel that opened in 1956 in Bal Harbour, Florida, was second only to the Hilton chain. Ten years after the purchase of the hotel in Lakewood, Tisch Hotels was reportedly worth $30 million.
Late in the 1950s a Wall Street event presented Tisch with the opportunity to purchase real estate in a manner he had not previously used. The court-ordered separation of Loews Theatres from its film production subsidiary Metro-Goldwyn-Mayer created common stock in two corporate entities. The Loews chain consisted of more than 100 theaters across the United States and was ripe for the Tisch formula for improving financial performance. By the end of the 1950s the Tisch family owned 25 percent of Loews shares and had become members of the board of directors.
Tisch was a spectacular success at following a disciplined business strategy of purchasing undervalued businesses whose potential for producing a strong cash flow could be realized by improvement in management. His successes, however, were concentrated in real estate ventures, namely hotels and movie theaters. In the 1960s a concept developed that the business press labeled the corporate conglomerate, whereby large corporations owned diversified businesses under the theory that diversification would provide protection from the vagaries of the business cycle. In 1968 Tisch began to apply his business formula to enterprises other than real estate. He saw an opportunity to acquire the common stock of Commercial Credit, an undervalued finance company with an asset base of $3 billion. Although his attempt to take over the company was thwarted by an offer from the Control Data Corporation, Tisch achieved notoriety with the ingenious financing scheme that he conceived to acquire shares of Commercial Credit. Because the purchase of Commercial Credit was made in the name of Loews Corporation, dividends from the Commercial Credit stock were taxed at the lower corporate rate and used to pay the interest on the money borrowed to purchase the stock.
Not long after the failure to acquire Commercial Credit, Tisch was presented with the opportunity to merge with a company that dwarfed Loews Corporation. A merger with Lorillard Tobacco was accomplished in a manner devised by the value-minded Tisch. No cash was spent; instead Lorillard shares were exchanged for stock and debt. At the time of this merger Tisch was purchasing shares in the B. F. Goodrich Corporation, although he never acquired a controlling interest.
The early 1970s proved unfortunate for Tisch. After taking control of the Franklin National Bank, he found himself forced to choose between shedding his nonbank holdings and divesting himself of the shares of the bank. In choosing the latter course Tisch sold his interest to Michele Sindona, who was later convicted of fraud. In 1973 Tisch encountered another pitfall when he accumulated shares of the Equity Funding Corporation, whose shares were falling in price because, unbeknownst to Tisch, the company was under investigation for fraudulent practice. Undeterred by these setbacks, the Loews Corporation continued to acquire underperforming businesses. Tisch purchased a controlling interest in the stock of CNA Financial Corporation in 1974. After gaining control he quickly revamped the company and restored profitability but not without controversy.
In a highly contentious development, Tisch acquired Columbia Broadcasting System (CBS) in 1985. He was attracted to the situation because he perceived the company as financially out of control and as having a needlessly high cost structure. Although Tisch was extremely effective in eliminating what he saw as waste, his methods were unpopular, and Tisch’s CBS venture became grist for business school case studies. When Tisch sold CBS to the Westinghouse Corporation in 1995, CBS stock had benefited, but it would take time for the effects of cost cutting to be overcome.
A short time before his death at the age of eighty, Tisch was identified by Forbes as one of the 400 wealthiest Americans. His net worth was estimated at $2 billion. Tisch achieved this considerable wealth with the time-tested formula of purchasing low-priced assets whose true value could be realized by improved management. Tisch’s life, a lesson in discipline and perseverance, proves that wealth can result from following a strict set of rules aimed at finding value in businesses characterized by temporary dysfunction.
Tisch never forgot his early life in Brooklyn and was well known in New York City for this philanthropic work. He was an active fundraiser for the United Jewish Appeal and contributed generously to cultural institutions such as the Metropolitan Museum of Art and New York University. Tisch died of cancer on 15 November 2003 at Tisch Hospital of New York University Medical Center, New York City.
Christopher Winans, The King of Cash (1995), is a detailed source about Tisch’s life. The saga surrounding the acquisition and subsequent management of CBS is covered in Ken Auletta, Three Blind Mice: How the TV Networks Lost Their Way (1991). Obituaries are in the New York Times (16 Nov. 2003) and Forward (21 Nov. 2003).