Keeping in silent tune with his image as the J.D. Salinger of the business world, billionaire investor Kirk Kerkorian has quietly completed building a plush new home in Beverly Hills, where he will reside as the wealthiest Angeleno.
The 83-year-old owner of Tracinda Corp. of Beverly Hills has a net worth estimated to be $7.5 billion, far above last year’s list topper, homebuilder and financial services guru Eli Broad, whose $6.5 billion fortune is now the second largest in the L.A. area.
Through his holding company Tracinda (a name derived from his daughters Tracy and Linda), Kerkorian owns a majority stake in Metro-Goldwyn-Mayer Inc. of Santa Monica, the MGM Mirage Inc. hotel-casino chain. He also is a major shareholder in DaimlerChrysler Inc., which he is suing for $8 billion.
The suit, filed last November, is the first such action ever undertaken by Kerkorian, who prefers to spend his time and boundless energy with 40-hour workweeks, daily three-mile jogs, weekend tennis, watching movies and hanging out with longtime friends, according to associates of the reclusive magnate.
Kerkorian, as is his career-long custom, declined to be interviewed last week. But several of those who know him well say he has a “pleasant demeanor,” which they said has played as much a role in his success as his keen business acumen. Kerkorian, they said, never allows his emotions to cloud his judgment.
“He’s extremely polite and extremely respectful of everyone, from the maid to the Queen of England,” said Alex Yemenidjian, CEO of MGM and a friend and tennis buddy of Kerkorian’s for a dozen years. “And he’s the most brilliant person I know. I always kid with him that the only difference between me and him is his foresight is 20-20 and my hindsight is 20-20. He knows when to double down, he knows when to hold, and he knows when to fold.”
For example, investors who had stock in MGM when Kerkorian bought the company in 1969 saw their shares increase in value by 2,100 percent by the time he sold the company to media mogul Ted Turner in 1986.
Hands-off management
Yemenidjian, whose 12-year rise through the Tracinda ranks included a decade as president of what was then called MGM Grand before becoming the studio’s CEO two years ago, said Kerkorian has never been a micro-manager, preferring instead to leave most of the decision making to his trusted company heads. The two speak on the phone two or three times a day and meet face-to-face weekly.
Although Kerkorian knows some of the stars, directors and producers in the industry, sources said he is never so hands-on that he might, for example, personally attempt to coax A-list talent to sign on with an MGM movie project.
“He’s an inspiration and a great sounding board for major decisions,” said Yemenidjian. “It’s a real luxury to be able to have an advisor like him. The interesting thing about Mr. K is that he has always conducted himself in business with such integrity that everyone trusts him implicitly. His word means more than any contract.”
Kerkorian, who has traveled to more foreign countries than his friends and business partners can count, also makes two or three business trips a month to Las Vegas, where he owns a second home. His method of travel is his private Boeing 747, which is equipped with a personal gymnasium. Last year, his third marriage ended in divorce after only a few months.
Kerkorian is notoriously press shy, particularly for someone who owns a movie studio and started his professional life hawking newspapers on the streets of Los Angeles. At 9, after his family’s savings were wiped out in the Depression, they relocated from Fresno to L.A., where the young Kerkorian hit the streets selling papers.
He was 22 years old and earning only 45 cents an hour installing wall furnaces in 1939 when he developed a fascination with flying. He signed on with the Royal Canadian Air Force, where he flew “suicide missions” delivering Mosquito bombers from Montreal to Scotland during World War II through brutal North Atlantic weather. Although only one in four planes made it, Kerkorian reportedly flew 33 successful missions.
After the war, he made his first trip to Las Vegas, where he bought a single-engine Cessna to train pilots and fly charter routes.
With $50,000 he earned flying with the Royal Air Force, Kerkorian purchased the Los Angeles Air Service and its three planes, on which he chartered trips to Las Vegas and Reno and to the Del Mar horse track. Trips to Hawaii were later part of the offering.
In what would become a pattern of business, Kerkorian pumped his profits back into the company he had renamed Trans International Airlines, took it public in 1965, sold the stock, bought it back again and sold it for good in 1969 for $104 million.
Box-office booster
With his fortune, he almost immediately began buying shares of the beleaguered MGM studio, expanding his entertainment industry holdings with the purchase of a 25 percent stake in Columbia Pictures in 1978. Amidst a disagreement over how many shares Kerkorian could continue to buy, the company bought him out, turning his $3 million investment into a $134 million bonanza.
But it was his investments and sales of MGM, and later United Artists assets, that would ultimately place him among the upper echelon of money makers in the city.
Kerkorian built the company up, sold it to Ted Turner in 1986, only to quickly buy back MGM’s logo and name, as well as United Artists’ assets when Turner was cash strapped. Turner retained rights to the pre-1986 MGM library. An avid fan of movies, Kerkorian pays to watch them the way non-studio moguls do.
“He has never asked me to screen a movie for him,” said Yemenidjian. “Even the MGM movies. He sees them in the theaters. There are no pretenses to his personality. He’s a gentleman’s gentleman.”
With his purchase of MGM in 1996 the third time he’s had control of the studio Kerkorian now owns all of United Artists’ assets as well as the post-1996 MGM film and television library, including the 20 films that the studio is expected to release this year. The overall MGM library includes more than 4,000 films, including the “Rocky” and “James Bond” series, as well as 10,000 television shows.
The handful of close friends that Kerkorian has had in the entertainment industry including Gregory Peck, the late Cary Grant and Priscilla Presley (who he reportedly dated in the late 1970s) are among a large group of people he has been close to for decades. Schmoozing with today’s younger screen idols in not part of his lifestyle, people close to him said.
“The ones who are friends are actors from a different era,” said Terry Christensen, his lead attorney in the DaimlerChrysler suit. “I don’t think he feels the need for the publicity or the glamour that most of these other people seek (today) the stars and the people that like to hang out with stars.”
Although the suit against DaimlerChrysler sent a shock wave through Wall Street, Christensen said the litigation was unavoidable.
Juergen Schrempp the conglomerate’s chairman, proclaimed that the marriage of Daimler-Benz and Chrysler Corp. would be a merger of equals enticing shareholders, including Kerkorian, who then had a 13 percent stake in Chrysler to approve the deal in the fall of 1998.
By then, Kerkorian’s original $1.5 billion investment was worth approximately $5 billion. He has since sold about 16 million shares of DaimlerChrysler, which lowers his holdings to 17 million shares, or about 1.7 percent of the automotive conglomerate.
When Schrempp made Chrysler a subsidiary unit of the former Daimler-Benz in everything but name and forced most of the Chrysler executives out of the company, the value of the unit dropped by $30 billion, said Christensen.
“This is the first time he (Kerkorian) has ever sued anybody,” said a longtime friend who requested anonymity. “Isn’t that fascinating? He’s not a litigious person. He likes doing business with people. Nothing has changed. He’s doing the same things he’s always been doing.”
With a trial in U.S. District Court in Delaware, where Chrysler was incorporated in 1925, expected to begin in a year, DaimlerChrysler said it is preparing for an aggressive court battle.
“We believe that his claims are without merit, and we intend to defend (against) them vigorously,” said Jodi Tinson, a company spokeswoman.
An avid fan of movies, Kerkorian pays to watch them the way non-studio moguls do.
