Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:

• Want to get your business in front of my audience?
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• Ted Turner's $1.5 billion bet on old movies
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🔑 Market your business to Sieva's Business Business Academy audience

We began testing with our first advertisers last year, and it turns out this community is incredibly engaged. With 70,000 operators, investors, and "acquisition curious" reading this letter each week, we drove customers for advertisers ranging from Vesto (treasury management platform) to Mainshares (sourcing investors for SMB acquisitions).

We are looking for a couple new advertisers to partner with this year as we launch a few new products.

Interested in marketing your business to this audience? Just respond to this newsletter and say hi.

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🔑 Ted Turner’s MGM Gamble

In the 1980s, billionaire Ted Turner changed the television world with the launch of his 24 hour news network CNN.

But his flagship TV station TBS was fighting for survival.

Hollywood studios were jacking up movie licensing fees and threatening to starve his channels of the classic films his viewers loved.

Ted’s solution:

Go all-in on one of the most iconic studios in history.

In August 1985, he bought MGM and United Artists.

On March 25, 1986, Turner Broadcasting System closed its $1.5 billion acquisition of MGM/UA from Kirk Kerkorian (businessman who bought MGM in 1969 and developed Las Vegas hotels).

The MGM/UA Entertainment Company yesterday accepted a $1.5 billion takeover bid from Ted Turner, the Atlanta broadcasting entrepreneur.
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The acquisition will put Mr. Turner at the head of one of the most highly diversified empires in the entertainment industry, adding movies to a business that already encompasses sports teams, the satellite station WTBS-TV and cable news services.​
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- New York Times, August 8, 1985

The deal made Turner a movie mogul, but he didn't care about becoming a Hollywood celebrity.

And he didn't want to run a movie productions tudio.

He wanted something far more valuable: an endless, low-cost library of content to fuel his cable networks forever.

To finance the deal, Turner assumed roughly $700 million in existing MGM debt and raised the rest through high-yield junk bonds arranged by Michael Milken at Drexel Burnham Lambert, plus preferred stock issued to Kerkorian.

Total acquisition cost came in at $1.6 billion.

But he put little equity into the deal (a typical 1980s LBO).

Wall Street and Hollywood skeptics called it "reckless". Turner’s own board and bankers worried the debt load could sink Turner Broadcasting.

Then came the divestiture from the part of the business he didn't actually want.

Within months, Turner sold:

• The United Artists operations back to Kerkorian for approximately $480 million
• The historic 44-acre Culver City studio lot and film lab to Lorimar-Telepictures for $190 million
• The MGM name, Leo the Lion logo, production, distribution, and home-video businesses for another $300 million.

What he kept: The crown jewel of the business, MGM’s massive pre-1986 film library of more than 2,200 titles (some reports put the broader library at 3,500+ including acquired rights).

Classics like Gone with the Wind, The Wizard of Oz, Casablanca, Citizen Kane, plus the entire pre-1950 Warner Bros library (including all color Looney Tunes), RKO Pictures distribution rights, Popeye cartoons, and much of Gilligan’s Island.

He immediately formed Turner Entertainment Company to manage it.

The library effectively cost him around $1.2 billion net. Still an enormous sum, but a bargain for perpetual programming rights. Turner colorized black-and-white films, aired them nonstop on TBS, and used the inventory as the foundation for an entirely new network.

On October 3, 1988, Turner Network Television (TNT) launched with 17 million households. By its first anniversary it reached 50 million homes and was already generating nearly $100 million in subscriber fees alone, at just 15 cents per subscriber per month, plus hefty ad revenue.

The deal paid off spectacularly. The same library later launched Turner Classic Movies (TCM) and became a cornerstone of Turner’s empire.

Of course, the debt was brutal.

Turner had only nine months to repay $600 million in junk bonds.

Asset sales helped, but he ultimately had to bring in cable operators led by John Malone of TCI. In 1987 they injected $565 million in exchange for 37% of Turner Broadcasting, diluting Ted’s control but saving the company.

Turner kept majority ownership and lived to fight (and win) another day.

By 1996, when Turner Broadcasting merged with Time Warner, that MGM library was one of the most valuable assets in the deal. Today it sits under Warner Bros. Discovery, and produces cash flow decades later.

Lessons for Aspiring Business Buyers

1. Buy the moat, not the machinery. Turner didn’t want soundstages or a production pipeline. Many critiqued him for not keeping the studios in his portfolio. But he wanted perpetual content rights that would feed his core cable business for decades. When hunting deals, isolate the single asset or library that creates an unassailable competitive advantage (IP, customer lists, recurring revenue streams) and value everything else as disposable.
2. Finance aggressively but build in exit ramps. Junk-bond leverage nearly killed the deal, but Turner had pre-planned divestitures. Always model multiple post-close scenarios: What non-core assets can you sell within 6–12 months to de-lever? Line up buyers in advance if possible.
3. Debt is a tool, but refinancing is the real skill. Turner couldn’t pay down the bonds with asset sales alone, so he brought in strategic partners (cable operators) who actually wanted his product. Smart buyers treat heavy leverage as temporary scaffolding and line up patient capital partners who align with the long-term hold vision.

Have a great day,

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.