Media tycoon who created 204x returns in 29 years: Mets boss Tom. Murphy

Metropolitan Broadcasting Company has extraordinary high-quality assets, while having extraordinary excellent management, the manager's superb management ability is reflected in both business operations and capital allocation, I have been observing the Metropolitan operation for many years, I think this is the best listed company in the United States, CEO Tom. Murphy and President Dan. Burke's duo is the best partner I've ever met in business, and they're not just brilliant managers, I even want to marry my daughter to him. A lot of what I've learned in management comes from Murphy, and I've begun to blame myself for not using these management essences earlier. ---- Buffett said

Born in New York in 1925, Murphy joined the Navy during World War II, entered Harvard Business School after the war according to veterans' benefits, and after graduation began his corporate career in the consumer goods giant Lever, in 1954, Murphy, under the introduction of his judge's father's friend, went to independently manage a struggling television station. Murphy's way of dealing with losses is to radically control costs and improve the program, he said: You can't control the revenue of controlling the TV station, but you can control its cost. After the first profit, Murphy bought a second and a third tv station in a row, forming them the Metropolitan Broadcasting Corporation.

In 1961 Murphy entrusted the day-to-day work of the Metropolitan Broadcasting Corporation to Dan. Burke, for the business requirements, there are only eight words: streamline the organization, decentralize. Dan was asked to strictly follow these eight words. While he himself focuses on acquisition integration and capital allocation, Murphy's capital allocation is strongly admired by Buffett because he has the following three maverick practices:

First, focusing on mergers and acquisitions in the media industry, refusing to diversify, refusing to be bigger, refusing to synergistic effects, the goal of the Metropolis is not to have an aircraft carrier fleet, but to consume the least amount of ammunition to win each battle. He used his cash flow and leverage to focus on buying broadcasters, then controlling costs, improving operations, paying off debts, and repeating themselves until the small fish ate the big shark and bought the industry giant ABC ABC. Observing the capital giants that have fallen into crisis in the past decade in China, whether it is Evergrande, Wanda, Oceanwide, or Retail Suning, HNA transportation, player system, LeTV, Tomorrow, Pioneer, Founder, basically have a common point, the use of banking and stock leverage for diversified acquisitions, less than 5-8 industries, more than 20 industries, the acquisition speed of domestic bosses is amazing, but underestimated the difficulty of integrating business and improving operations, and eventually dragged down the main business and fell into a debt crisis.

Second, extreme decentralized management, the met's business philosophy is to hire well, manage less, find the best manager, and then let go, because Murphy himself admits that the company headquarters does not know the answers to all the problems, and the boss does not know where all the problems are, so let the young managers who hear the cannon go to complete the work, to control the cost, to sell the program. The role of the boss is to create the corresponding culture. For example, when Dan first became president, he used to write weekly reports to Murphy every week, and a few months later, Murphy told him that I used them as toilet paper for the weekly reports you wrote. Dan then understood that he should focus all his time on operations, rather than reporting to the leadership. After the acquisition of the giant ABC in 1986, Murphy first went to ABC to check, the company sent Rolls-Royce to pick up the boss, Murphy arrived at the company's first order, is to sell all the company's reception vehicles, executives can only take taxis, close the executive elevator, executive restaurant, executive entertainment and leisure hall, and finally sold the luxury office building to the global local Japanese at a high price. Murphy said: Never forget that we are still in debt, and strict cost control is always a sword in our heads.

Third, rational mergers and acquisitions, focus on mergers and acquisitions that are lower than the intrinsic value, if there is no bargain, then buy a large number of company stocks and then write off. The takeover was Murphy's own dictatorial turf, and within that range, he was the king of the arrogant dictatorship because he knew that the best investment could not be made by a show of hands. He bought more than 30 radio and television stations in 30 years, and his evaluation criteria was that the acquired company would have an ROE of more than double digits after removing leverage, and if it did not meet the standard, it would wait indefinitely. The source of acquisition funding is internal cash flow and mortgage leverage for acquired assets, and avoiding issuing shares to dilute his own equity, his mantra is that issuing new shares is like digging my ancestral grave. The only exception was to complete the biggest deal of the century, with a $3.5 billion acquisition of ABC's American broadcasting giant, Murphy painfully issued 3 million new shares to Buffett, borrowing $517 million, and 3 years after the acquisition, Murphy paid off the acquisition debt and began to buy back a large number of shares, and finally he wrote off 53% of the outstanding shares.

In 1995, when Murphy was 70 years old, he accepted Buffett's suggestion and sold ABC to Disney's boss Eisner for a sky-high price, for $19 billion. Valuation is 13.5 times the cash flow, the price-to-sales ratio is as high as 28 times, this price is higher than the valuation of today's stock king Moutai, Moutai price-to-sales ratio in recent times only 20 times, relying on mergers and acquisitions and integration of management talent, Murphy to create amazing returns to shareholders, in 1966 invested 1 DOLLAR, to Murphy retirement and sell the company, can get back $204, 29 years of annualized yield of almost 20%, is 18 times the S&P index, close to Buffett's return rate in the same period.