Date: 9.18.2000
I DON'T LIKE BIG SHOTS," SAYS JAMES KENNEDY, 52, chief executive of $6.1 billion (1999 sales) Cox Enterprises, about halfway through our lunch. We could have guessed. Sporting a golf shirt, the heir to the Cox media fortune is still pumped up after his workout in an Atlanta athletic club. His manner is that of a slightly awkward teenager being made to talk to the teacher. He may be the most unmogul-like mogul we've ever met.
It pains him to take credit for anything. Like, for instance, quadrupling Cox revenues from $1.7 billion to near $8 billion since he took over in 1988 and leading the company firmly into the Internet age. "The top guys get too much credit," he insists, shaking his head and smiling that embarrassed smile. At least he's consistent. A friend reports that Kennedy hates cocktail parties and small talk and is happiest when behind the wheel of his off-road vehicle.
He even makes a case for being not so great by bringing up two small failures: a minor investment in Blockbuster Entertainment and a stumble into the movie business through Rysher Entertainment. "I also deserve credit for things I didn't do well," he says, pronouncing "credit" emphatically.
Fair enough, but Kennedy cannot entirely shun the spotlight while amassing the capital he needs to compete in media like newspapers, broadcasting, cable television and the Internet. Cox Enterprises is privately held, but it owns roughly 65% of two public companies--Cox Communications, in cable, and Cox Radio, one of the country's largest radio operators with 81 stations. Together the two have a market capitalization of $25 billion. A third Cox entity, AutoTrader.com, the leading online used-car marketplace, is planning to go public this year.
Cox Enterprises is not for sale, Kennedy emphasizes. Still, he suggests, without much enthusiasm, that more pieces of the enterprise may need to find public markets in order to raise capital. And there's nothing like a tradable security to attract option-hungry talent.
Kennedy oversees both private and public companies. He is in the unique position of reporting to his mother and aunt, two of the richest women in the world, whose trusts own 98% of Cox Enterprises. Kennedy's mother, 77, is the intensely private Barbara Cox Anthony, of Honolulu. His aunt is Anne Cox Chambers, 80, the Democratic fundraiser and former ambassador to Belgium (see "The Cox Sisters Speak" below). The sisters' shares in the company are worth more than $10 billion apiece.
In 1898 Kennedy's grandfather, James Cox, bought his first newspaper, Dayton Daily News, which became a foundation of the family's media wealth. He was a three-term governor of Ohio and the 1920 Democratic nominee for president, with Franklin D. Roosevelt as his running mate. In its 102-year history, the company had only four chairmen: grandfather, uncle, stepfather and Kennedy.
Kennedy's parents were divorced when he was a child, and he grew up in Hawaii with very little awareness that he was from a family of means. "I was a howlie, the native word for foreigner, and I only wished my skin would tan darker to fit in," he says. He had one glimpse of his family's stature in l957, when, as a bewildered 9-year-old, he was flown to Dayton to dedicate the Dayton Daily News building with his grandfather. But the trip had little impact. "As soon as I came home, it was back to taking out the garbage," he says. Observes his mother, Barbara Anthony, "Jim worked from the time he was young." He had virtually no contact with his father, whose family founded Hawaiian Airlines.
Anthony pushed him into sports. It took. Kennedy works out every day. Today, before lunch, he spent 90 minutes bicycling and lifting free weights. In l992 he led a four-man bicycle team in a race across the U.S., winning in five days, ten hours. An advantage of athletic competition: "No one could accuse me of getting help from my family," he says.
Kennedy didn't even think of joining the family company until he was at the University of Denver. At age 25, with no other plans, Kennedy started as a production assistant for Cox's Atlanta newspapers. He was whisked through jobs as reporter, copy editor and space salesman, and eventually was named executive vice president and general manager of the family's two Atlanta papers. In 1987, when his stepfather, Garner Anthony, was ready to step down as chief executive, Kennedy got the job.
His first instinct was to do nothing. "I built walls to defend ourselves," says Kennedy. "I knew it wasn't the right way, but I didn't yet have the confidence to do anything else." Then came a defining moment. In 1990 Capital and Ford Motor Credit stomped into the automotive auction market with a company called GECARS. This was Cox turf, ruled by car wholesaler Manheim Auctions, which Cox had acquired in 1968.
The next interloper was the New York Times Co., which started the presses whirring for a paper aimed at Atlanta's wealthy suburbs. "Oh, gulp, here we go," says Kennedy, recalling that time. Kennedy found some confidence.
In the auction market Kennedy kept the pressure on, and when GE and Ford realized they would probably never get to first place, they sold out to Cox in 1991. As for the New York Times Co., Kennedy zeroed in on the suburbs with a new daily, spending heavily on added reporters and sales staff. "We kicked their butt and ran them out of town," he smiles. That set the tone for Kennedy's reign, and it would not be a passive one.
Working through our salads, I decide to spoil the buoyant mood by pointing out that with the Internet looming, the newspaper business may be headed for the obits itself. Cox Enterprises owns 16 daily and 15 weekly newspapers and just bought 2 dailies and several more weeklies in Ohio. Obviously Kennedy doesn't share that gloom, yet he admits to some worry. "The people who preceded me were every bit as nervous about how radio was going to impact newspapers as I am about how the Internet is going to affect everything."
So Kennedy hasn't stood still. In 1989 Cox's Atlanta Journal-Constitution was one of the first papers to be available online. Cox also has Web-based city guides in 30 locations, with its showcase site, AccessAtlanta.com. Cox Enterprises invested in entities like ExciteAtHome (1996), Ivillage (1998), MP3.com. (1999), Realtor.com. and TiVo (1999). Companies like these are not doing particularly well these days on Wall Street. Cox's stake is worth a combined $1.8 billion, down from last year's $3 billion.
In a move that might protect the company from the loss of classified advertising, Kennedy bought up loads of weekly shopper publications. Cox and Landmark Communications, in a joint entity, later bought United Advertising Publications, which puts out similar publications for the real estate market. Trader Publishing, the joint entity, will then have revenues of $1 billion a year, with a 30% operating margin. Cox's newspapers run at about 20% operating margins.
Learning about the lucrative used-car market also led to one of Cox's newer ventures. The largest online listing of used cars, AutoTrader attracted 5 million unique visitors in July.
But all these new-media enterprises don't alter the fact that Kennedy has a lot of the family wealth tied up in some older ones. Cox Enterprises owns 15 TV stations. That isn't a terrific business any more, is it? The networks are demanding cash from affiliates they used to pay to run programming. Kennedy disagrees. "I've been hearing TV's a bad business for ten years, but our broadcast properties have gone up in value double digits for the last three years."
Besides, he says, he'd have a huge tax bill if he sold the properties. He'd rather stay in the business. Cox just bought a station in San Jose and is in the process of buying two outside of Pittsburgh.
Cable faces competition from all directions, like satellites and wireless links. But Cox Communications, run by James Robbins, is in a strong position to fend it off. With its shares at a recent $37, enterprise value (debt plus market cap) is at $30 billion, which comes to an enviable $5,000 per subscriber and to 24 times operating income (in the sense of net before depreciation, interest and taxes).
Cox is investing heavily in technology. Their cable systems have 167,000 telephone subscribers in places like Phoenix, San Diego and Omaha and offer high-speed Internet connections and digital video in 23 cities. As for wireless competition, Kennedy insists that cable will remain the more "robust" connection into the home. As a hedge, Kennedy invested $800 million in 1994 in Sprint PCS, a stake now worth $5 billion.
Eventually, ownership of the company will pass to Kennedy, his sister and three cousins. Some years ago Kennedy's grandfather set up a generation-skipping trust to put their share of the wealth with the next generation, all now over 40. Kennedy now has to figure out how to protect the next generation from the currently high estate taxes.
For the present, however, Kennedy's position is secure. Says Chambers, "As a leader, he's perfect." Adds Anthony: "He's got the job as long as he wants it."
SIDEBAR
The Cox Sisters Speak
09.18.00
Barbara Cox Anthony, who has at least $10 billion, making her one of the richest women in the world, lives almost anonymously in Honolulu, Hawaii. If townsfolk know her at all it's for her driving skills. Even at 77, she has a metal foot and can be seen careening around corners. She moved to Hawaii decades ago, she says in a rare interview, because "it was just so beautiful" and unspoiled.
While Anthony has led a quiet adult life, her childhood was far from regular. She recalls visits by Franklin Roosevelt (her father's running mate in 1920) and a doting father who nonetheless ruled with an iron will. She recalls being stuck in Oklahoma City years ago trying to fly out with "Jimmy," who was five months old. Because of inclement weather, her father forbade her to make the flight. "Not with my grandson," he decreed. "So I washed Jimmy's diapers in the hotel bathtub."
Anne Cox Chambers, 80, has led a more public life. An active Democratic fundraiser, she was the mbassador to Belgium in l977 and one of the earliest female members of the Coca-Cola board. In addition to politics, her passion is gardening. And when she is not tending a trowel in her showcase garden at her home in Provence, she's in the dirt behind her brick house next door to the Georgia governor's mansion in Atlanta.
Chambers sees a likeness between Kennedy and her dad. "Like my father, he has the great gift of treating everyone he meets equally."
Ask Dyan | Curriculum Vitae | Forbes Articles | Graphic Novel | Jokes | Machan Auction | Nice Things Said About Dyan
Pictures of Dyan | Quotes | Screen Treatment | The First Article I Published | What is a Machan? | Home