All in the Family Fortune

By Barbara Rudolph.

Laurence Alan Tisch has never been one to run with any pack. At the age of 15, while his cronies were playing stickball in Manhattan playgrounds, Tisch was a student at New York University. At Harvard Law School in 1946, he seemed to have a bright future, but then he dropped out. Some 40 years later, having become a tycoon while keeping a low profile, Tisch, 63, has suddenly thrust himself into an unfamiliar spotlight at the helm of CBS, one of America's best-known corporations.

The head of the $17.5 billion Loews corporate empire is often surprising but rarely anything less than impressive. On Wall Street, where wizards come and go with the shifting sands of the stock market, Larry Tisch has for decades inspired awe as an uncannily successful investor. He is cautious where others are carefree, daring while others are timid. In corporate boardrooms across the U.S., Tisch is known and feared as a tough negotiator who will disarm his strongest adversary and tenaciously protect his investments. To his 22,000 employees, the name Tisch is synonymous with an unerring ability to control any cost, expose any extravagance. From such talents a fortune has been forged: along with his brother, Loews President Preston Robert (Bob) Tisch, Larry has amassed a tidy family nest egg estimated at $2 billion.

At Loews, where his family controls 24% of the stock, Tisch operates hotels from Manhattan to Monte Carlo and owns subsidiaries that sell cigarettes, insurance and watches. This motley collection of businesses last year earned $589 million on sales of $6.7 billion. In addition to its stake in Loews, the Tisch family owns real estate scattered across the country and a vast stock and bond portfolio. Though the domain sometimes seems too enormous to comprehend, much less oversee, Tisch is rarely fazed by his responsibilities. He told TIME last week, "I find business very relaxing. I look forward every day to going to the office."

Management at Loews has always been a family affair. Larry is the master strategist and financier, usually tucked away in his plainly furnished corner office at 666 Fifth Avenue in Manhattan, his head permanently cocked toward his Quotron terminal. Bob, 60, an equal partner, a gregarious man with an exceptional command of details, has been the hands-on operator. The unusual alliance has not been broken in 40 years. "We have never had an argument," Larry Tisch claims. "There's no reason to show temper. I don't get mad." When Bob became Postmaster General last month, the partnership was temporarily scuttled. Many of the Loews president's responsibilities will probably be assumed by the next generation of Tisches: one of Bob's sons and three of Larry's four sons all work for the family company.

The Tisch empire was built by buying good businesses at even better prices. Many Wall Street investors call themselves "value-oriented" and "contrarian," but those buzz words often translate into an investment philosophy no more profound than "Buy low, sell high." Larry Tisch is the real thing, earning his stripes over and over again.

To triumph as often as he has, Tisch has thumbed his nose at conventional wisdom. He buys companies or stocks when they are wildly unpopular and shuns anything that is remotely in vogue. "I'm always looking for companies that have real value," he says, "companies that we would be proud to own." Says E. John Rosenwald, an executive at Bear Stearns, a New York brokerage firm, and a Tisch family friend: "He's not a herd follower." Last year, for example, Tisch bought seven oil supertankers for a fraction of what it would have cost to build them. He is betting that the distressed oil industry will eventually rebound. Tisch is self-deprecating about his financial ability. "I've been lucky," he shrugs.

As an investor, Tisch has a talent for controlling his emotions, which enables him to resist most popular waves of fear or greed. He can be utterly unsentimental when money is involved. Last year, for example, he sold off the company's chain of movie theaters, the original heart of Loews.

Tisch runs Loews with a firm hand. After acquiring a company, the chairman never hesitates to make his presence known. He may force out management and put in place his own deputies after the takeover. But once his chosen managers are at the helm, Tisch is not afraid to let them do their jobs. "Everybody has a certain pride in their work," he says. "I'm not one to try to rank qualities of people. If it comes across to me that a person is doing the best work he can, with good moral standards and good business standards . . . that's what I look for."

The Tisch operation is remarkably fat-free. Loews' Manhattan headquarters houses only 60 employees, less than .3% of the conglomerate's total work force. That spare staffing may enable Loews to move quickly when a good business opportunity is spotted. The chain of command is short, and word reaches the top quickly.

For all his wealth, Tisch lives relatively modestly and quietly. With Wilma ("Billie"), his wife of 38 years, he shares a Manhattan apartment and a suburban house in Rye, N.Y., overlooking Long Island Sound. The Loews chairman never smokes, only occasionally drinks and usually plays tennis twice each weekend. "He always wants to win," observes Investment Banker Bernard Stein, one of his regular partners. Tisch also enjoys showing guests first-run % movies on a full-size screen. Friends are devoted to him. Says Stein: "If I were in trouble and had to make a phone call, he's the guy I'd call."

A strong supporter of Walter Mondale's presidential campaign, Larry Tisch has a keen interest in politics and an eclectic taste in politicians. He has recently been host at breakfasts for Representative Charles Rangel, a liberal Democrat from Harlem, and the Rev. Pat Robertson, the conservative preacher and presidential candidate. Says Richard Ravitch, chairman of New York City's Bowery Savings Bank and former head of New York's metropolitan transportation authority: "Most people who seek the White House seek his advice and ultimately his support." Tisch was instrumental in helping preserve the deductibility of state and local income taxes in the new tax-reform bill.

The two Tisch brothers are generous donors to several charities. They have given more than $10 million to New York University, where Larry Tisch is chairman of the board of trustees. He is a trustee of the New York Public Library and the Metropolitan Museum of Art. "I feel I must give back," says Tisch. He and his brother are active patrons of and participants in various Jewish organizations, including the Federation of Jewish Philanthropies and the United Jewish Appeal. The family is religious: once a week a Talmudic scholar comes to Tisch's office, where he and two of his sons join in a discussion of the Bible and Jewish tradition.

The clan members are unusually close. Three of Larry Tisch's four sons own homes within a twelve-minute drive of his country house. Says Steve Tisch, 37, an independent Hollywood producer (Risky Business) who is Bob's eldest child and has no connection with the family business: "It's remarkable for two guys who have built an empire, yet they have never been too busy for their children."

A devotion to family was instilled in the Tisch brothers early on. Says Washington Journalist Elizabeth Drew, a first cousin: "They have been unshakably close since their boyhood." The boys grew up in Brooklyn and Manhattan. Their father owned a small boys' clothing company as well as two summer camps in New Jersey. After graduating from N.Y.U. at 18, Larry earned a master's degree in industrial engineering from the University of Pennsylvania. In 1946, after his brief stay at Harvard Law School, Larry and Bob persuaded their father to help them buy a Lakewood, N.J., resort hotel called Laurel-in- the-Pines, which proved to be a potent moneymaker.

Using their fast-accumulating profits and borrowing against their growing assets, the Tisch brothers built up a chain of nine properties in 13 years. One prize: the opulent Americana hotel in Miami Beach. The hotel industry was booming, but not many operators were skillful managers. The Tisch brothers had a knack for keeping costs down and sales up. By 1960 their net worth was estimated at $65 million.

Not satisfied to stand still, Tisch hankered after the bigger, bolder deal. In 1960 he found a worthy object for his ambition in Loew's Theatres, a chain of 118 movie houses. Like many a later Tisch target, the company was undervalued. Reason: many of the theaters rested on prime city real estate, whose worth was not reflected in the stated, or book, value of the firm. After taking over the company, the brothers sold off the most valuable sites and renovated many of the remaining theaters.

In the 1960s, the close-knit New York City real estate community took notice of the new kids in town when the Tisches built the Summit Hotel, two apartment buildings and several motels. They acquired other hotels across the U.S., including the Mark Hopkins in San Francisco and the Ambassador hotels in Chicago.

Tisch had no real master plan in building his empire, no carefully crafted long-term strategy to consult. He just looked for good deals, an elusive goal for many corporate chiefs. In the late 1960s, Tisch started playing the takeover game. His first catch was Lorillard, maker of Kent and True cigarettes. In 1968 Loews acquired the company in a friendly deal, but soon after the merger was completed, Tisch, taking an active hand, forced out the company's chief executive. No sense in sitting back and watching an acquisition turn sour, he believed. Lorillard profits subsequently showed stronger growth under Loews management.

Perhaps Tisch's finest acquisition was also his toughest. In 1974 he fought for nine months to take over CNA Financial, an insurance company that battled to remain independent. Tisch won; Loews owns 80% of the company. After the purchase, Tisch put in place a new chief executive. Today CNA is Loews' most profitable division. Still, Tisch felt bruised by the struggle and vowed never again to launch a hostile takeover.

Along the acquisition trail, Tisch made several false moves. In 1973 Loews bought a substantial share of Equity Funding just before the insurance company fell apart in the wake of a scandal that involved selling fraudulent insurance policies. Loews suffered a pretax loss of $3 million on its investment. Another ill-timed move was the acquisition of Bulova Watch in 1979, which proved a money-losing division for Loews until 1984.

The family also unwittingly became embroiled in a New York scandal during the mid-1970s. Loews had bought a $40 million stake in the Franklin National Bank, which was sold to Michele Sindona, an Italian financier. When the bank later failed, Sindona was convicted of looting its assets, and Loews was sued by the Federal Deposit Insurance Corporation and a bankruptcy trustee for breach of fiduciary duty and misuse of inside information. Without admitting any wrongdoing, Loews agreed to pay $1.2 million to settle the suits.

Tisch has tried to avoid any situations that could compromise his reputation. Says he: "American companies must be represented by people who have the highest standards of business ethics." Insider trading scandals on Wall Street, Tisch suggests, are "sad. There are certain pressures on these people that make them succumb."

None of the past chapters in Tisch's business career could have prepared him for his latest incarnation as the acting chief of a broadcasting company. Until last summer, Tisch had confined most of his investments to firms in more prosaic lines of business. CBS is his first really glamorous investment. Last week Tisch was delighted to find himself in a CBS control room watching the morning news show in action. Said he: "I've always wanted to do that."

Tisch may have had several motives for buying into CBS. First he was looking, as always, for a lucrative investment, and the price of CBS stock seemed right. Says Tisch: "Originally we invested in CBS as part of the opportunity of the moment. The stock went down to a point where we thought it was interesting." Tisch figured that sooner or later he could realize a profit on his investment.

The Loews chairman may have had other reasons for pursuing CBS. For perhaps the first time, Larry Tisch may have been attracted to the limelight, wanting some fame to go with his fortune. Says one CBS board source: "He is trying to give himself a new dimension." Cousin Elizabeth Drew disputes that view. Says she: "He is utterly secure. He is not doing this for an ego trip. He doesn't need the publicity or seek it, but he knows that it comes with the territory."

For decades the public arena has been his brother's territory. It was usually Bob who chatted with reporters, Bob who worked the crowds at cocktail parties. It was also Bob Tisch who created a growing New York social institution, the power breakfast. One favored spot for early morning conferences is the Loews-owned Regency Hotel on Manhattan's Park Avenue, where the rich and famous, along with people who merely aspire to be, can be found eating two eggs and bacon (price: $8.25).

The Loews chairman may have also been drawn to CBS by a desire to safeguard the independence of a network news operation. Says CBS Board Member Harold Brown: "Larry Tisch is a public-spirited citizen who is also a very shrewd businessman. He does have the public interest at heart. He regards the network as something to be protected from selfish or disruptive or repressive influences."

Perhaps Larry Tisch has an equally strong impulse to seize control when he believes himself to be in the right. Whether he will interfere with the TV network's independence remains to be seen. Said one CBS board source: "He does not want to be seen as somebody who dominates with his opinions what should be a public service. But he's not perfect, and it's up to the board to watch this."

How long will the board have to keep watching? That is anyone's guess. Though Tisch says, "I hope I'm connected with CBS for the rest of my life," he insists he will stay in the chief executive post only during a "brief transition period." Unless, of course, he discovers that he enjoys being a public figure in the limelight more than he ever thought he would.

With reporting by BONNIE ANGELO/NEW YORK