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Anschutz Has a Low Profile and a Large Footprint

By Annys Shin
Washington Post Staff Writer
Sunday, November 21, 2004; Page A01

For a publicity-shy billionaire, Philip F. Anschutz knows how to make his mark.

In 1998, when the Denver businessman couldn’t resolve a dispute with a hog farm next door to his ranch, he funded an initiative to change state law, setting the toughest hog-farming restrictions in the country, and pushed his neighbor out of business.

In 2000, after waiting for Hollywood to make more family-friendly and inspirational movies, he started producing films such as “Holes,” last year’s sleeper hit about a boy sent to a detention camp to dig holes, and “Ray,” the Ray Charles biopic.

With a penchant for acting on a grand scale, Anschutz, 64, has a way of instantly becoming a major player in any scene and any city he enters.

Now, the Denver investor is on the cusp of becoming a major presence in Washington with ambitious plans for soccer team D.C. United and his new ownership of the area’s Journal Newspapers Inc.

Since taking control of D.C. United three years ago, Anschutz has made it a priority to turn around the team’s fortunes and make it more attractive financially. He is on track to do both. D.C. United recently won the 2004 Major League Soccer championship, its fourth title and first since 1999. And Anschutz representatives are in talks with city officials about building a 24,000-seat, soccer-only stadium on the Anacostia River, an effort to increase the value of the team.

Anschutz is also behind the newspapers that are turning up on front lawns across Bethesda and Alexandria. In October, Anschutz bought the financially troubled Journal chain of suburban tabloids based in Alexandria. A few months earlier, Anschutz paid $20 million for the San Francisco Examiner, the former flagship of the Hearst publishing empire, the Independent and their printing company. The Examiner purchase sparked concerns among critics in San Francisco that he wanted to use the newspaper to promote his conservative beliefs, a charge his executives deny. With both operations, Anschutz appears to be creating a new model of newspapers, a hybrid between free community papers and big-city tabloids.

Though the amount paid for Journal Newspapers wasn’t disclosed, both acquisitions could safely be called small for Anschutz, who is used to brokering deals worth hundreds of millions of dollars. But those who know him know not to underestimate him. Whether in railroads, telecommunications or sports and entertainment, Anschutz has a track record of finding undervalued assets and turning them into major players.

Diversified Holdings

Anschutz first struck it rich in the oil fields of Wyoming and Utah and then proceeded to sink his wealth into a variety of investments. He owns railroads and is the investor-operator of five of the 10 Major League Soccer franchises. He is the largest stakeholder in Regal Entertainment Group, the nation’s largest movie exhibition chain with 18 Washington area theaters and 550 nationwide, and Staples Center in Los Angeles.

Despite his glamorous investments, he is not one for glitz. Once called “the billionaire next door” by Fortune magazine, Anschutz eschews many of the trappings of wealth. He prefers cowboy boots to wingtips and sitting behind the wheel to sitting behind a chauffeur. He avoids bodyguards and is regularly spotted jogging around his Denver neighborhood, where he and his wife, Nancy, have lived for more than 30 years.

Anschutz also shuns the limelight. Most of his companies are privately held. As a rule, he doesn’t speak to reporters; he’s granted only a few on-the-record interviews over the past 30 years. Through a spokesperson in Denver, he declined to be interviewed for this story.

A low profile hasn’t protected him from controversy. He has taken the heat for funding organizations that oppose legalized abortion and legal protections for gays and lesbians. And he was non-executive chairman of Qwest Communications International Inc., the Denver telecommunications company involved in an accounting scandal.

However, none of these scandals has yet to tarnish Anschutz’s reputation as an investor. He’s still admired for having the foresight to lay thousands of miles of fiber-optic cable alongside railroad rights of way he controlled. He wasn’t the first to use railroad tracks to lay communications lines. But he did it on an unprecedented scale and later reaped at least $1 billion from the sale of Qwest stock. Said Jim McClellan, a former executive of Norfolk Southern Railway Co., “[Anschutz] doesn’t think like you and me.”

The Dealmaker

Anschutz acquired his financial savvy by watching his father, a Kansas wildcatter, ride the booms and busts of the oil business. Shortly after graduating from the University of Kansas in 1961, Anschutz became a wildcatter himself, founding the Anschutz Co. He moved to Denver, where his father once had an office.

After he was in business a couple of years, he later told the Colorado Historical Society in a 1974 interview, he experienced a crisis, which he referred to as “the most important single event” in his business career. A well he owned a stake in struck oil and soon caught fire.

Over the next several days, working on little sleep, Anschutz persuaded the other stakeholder to increase Anschutz’s share in the well if Anschutz could contain the blaze. He then sought out Red Adair, a famous firefighter who later put out the oil well fires during the Gulf War. In part to pay Adair, Anschutz persuaded a movie studio to pay him $100,000 to film Adair putting out his well fire for a 1967 John Wayne film called “Hellfighters.” The fire was put out and Anschutz saved his business.

Anschutz went on to uncover one of the country’s largest natural gas reserves in Wyoming. In 1982, he sold half his interest in the Anschutz Ranch East Field for $500 million, catapulting him to No. 13 on Forbes’s list of the richest Americans. He next invested in railroads, and through his control of railroad rights of way, he was able to build Qwest’s fiber-optic network.

Qwest went public in 1997, and at its peak, its stock boosted Anschutz’s personal fortune to $18 billion, according to Forbes. However, it turned out that Qwest and its competitors overbuilt fiber-optic capacity. The demand they anticipated never materialized. In 2002, Qwest announced it would restate $1 billion in earnings.

Qwest last month agreed to pay $250 million to settle Securities and Exchange Commission charges of fraudulently booking $3.8 billion in revenue over three years. Two former Qwest executives pleaded guilty to fraud; two were acquitted. Authorities have not implicated Anschutz in any wrongdoing.

In 2002, New York Attorney General Eliot L. Spitzer sued Anschutz and four telecom executives, accusing Anschutz of making $1.5 billion in “unjust enrichment revenue,” including the sale of initial-public-offering stock Anschutz received in the hopes he would steer investment banking business to Citigroup Inc. Anschutz and Spitzer reached an agreement in which Anschutz admitted no wrongdoing and later paid $4.4 million to law schools and charities, and Spitzer agreed to drop the suit.

That same year, Anschutz stepped down as Qwest’s non-executive chairman. Anschutz remains on Qwest’s board and still has 80 percent of his original Qwest holdings, which have lost significant value.

A Matter of Values

He has since focused his attention on building a global entertainment and sports business. He is a part owner of the $407 million Staples Center, home to the Los Angeles Lakers and Los Angeles Kings.

Anschutz is also the largest shareholder in Regal Entertainment, which he created in 2000 by combining three movie theater chains that had filed for bankruptcy protection: United Artists Theatre Co., Regal Cinemas, and Edwards Theatres. In the past 12 months, Regal, now a public company, paid out two large dividends. Anschutz netted $710 million. He had invested $500 million to create Regal.

Anschutz took on movie making, too. In 2000, he formed a film production company, Crusader Entertainment — recently renamed Bristol Bay Productions. “He believes there is a huge untapped market for things families can do together. That doesn’t mean it’s a family values agenda,” said James Monaghan, an Anschutz spokesman. “He found in raising his [three] kids there is not a lot of things he could go to with them.”

As a producer, Anschutz has a clear idea of what he wants his films to say, said Angelo Pizzo, a screenwriter Crusader hired to write what Pizzo called “a family-friendly inspirational soccer movie.” Pizzo, who penned hits such as “Hoosiers,” and “Rudy,” said Anschutz called him several times, including late at night, with suggestions. “His concern is not the craft. It’s the points made, in terms of the message,” Pizzo said. “He cares about sending a positive inspirational message to young people.”

In a rare public speech in February, reported by the Wall Street Journal, Anschutz told the audience: “My friends think I’m a candidate for a lobotomy, and my competitors think I’m naive or stupid or both. But you know what? I don’t care. If we can make some movies that have a positive effect on people’s lives and on our culture, that’s enough for me.”

His purchases this year of the San Francisco Examiner and the Journal Newspapers, weak publications in competitive markets, led some in San Francisco to wonder if he wants to send a particular message through his newspapers. “People have the yips about a conservative owner owning a paper in a liberal town,” said Christopher Caen, a columnist for the Examiner.

“When he bought the Examiner, we thought, ‘What the hell is this guy doing?’ Its business prospects were not phenomenal,” said Tim Redmond, executive editor of the liberal San Francisco Bay Guardian. “When we found out who he was, we were nervous he was going to bring his Christian-evangelical politics to San Francisco.”

Anschutz has supported socially conservative causes. In 1987, Anschutz’s family foundation gave Focus on the Family founder James Dobson an award for his “contributions to the American Family.” According to its Web site, the Denver-based group works to “counter the media-saturating message that homosexuality is inborn and unchangeable” and one of its policy experts called legalized abortion an example of when “Satan temporarily succeeds in destroying God’s creation.”

In 1992, Anschutz contributed $10,000 to a group called Colorado Family Values, to support an amendment to the state constitution that invalidated state and local laws against discrimination based on sexual orientation. Anschutz’s money helped pay for an ad campaign that said such anti-bias laws gave gays and lesbians “special rights.” The U.S. Supreme Court later overturned the amendment as discriminatory.

Anschutz is an active Republican donor. Since 1996, he, his companies and members of his family have given more than $500,000 in campaign contributions to GOP candidates and committees.

Robert Starzel, president of SF Newspaper Co., Anschutz’s Bay Area newspaper group, said Anschutz does not meddle in editorial policy. “[Anschutz] has kept in close touch. But he’s taken no hand in the operations, nor in demanding any particular editorial policy,” Starzel said.

At Journal Newspapers, Anschutz’s vision is to meet the growing demand for “individualized content by giving people localized news,” said publisher Jim McDonald. McDonald is a former executive with Metro International, a Luxembourg-based publisher of free commuter tabloids across Europe and in Philadelphia and Boston.

The revamped Journal Newspapers are fatter on copy and ads than under the previous owners, the Phillips family of Arkansas, who closed bureaus and laid off reporters. Some actions point to a forthcoming District edition. Journal Newspapers recently took out ads on journalism job sites looking for a full-time design director, page designer and copy editor to work in Washington. Asked if he plans to launch a D.C. edition, McDonald in an e-mail replied: “No comment.”

The Journal Newspapers compete with Washington Post Co. publications and the Washington Times.

A Man in Control

Anschutz associates are more forthcoming about plans for D.C. United and the stadium here.

Anschutz Entertainment Group has invested a total of about $300 million in soccer in the United States. Of its soccer franchises, only the L.A. Galaxy team is turning a profit, according to company spokesman Michael Roth. Last year, Anschutz sold the Colorado Rapids. He is in talks to sell the San Jose Earthquakes and has put D.C. United on the market.

D.C. United President Kevin Payne said he recently returned to United’s front office after a stint managing all of AEG’s soccer franchises for the purpose of getting the team in shape for a sale and closing the stadium deal. Stadium deals are a way to make teams more attractive to buyers, Payne said.

While the details are yet to be worked out, Payne said he expects it will be similar to AEG’s other stadium deals. AEG — or the new owners — will put up some money to build the stadium. The city will likely lease the land to the team. The team owners will retain operating rights, entitling them to revenue from ticket sales, concessions and naming rights.

Payne is handling negotiations but expects Anschutz to keep abreast of developments. Anschutz, he said, is always coming up with creative ways to wring out synergies. Just last month, Payne received an e-mail from the boss telling him to take some guest to the grand opening of Regal Cinemas at Gallery Place to see a preview of “Ray.”

Payne said he often receives such notes. When you work for Phil Anschutz, Payne said, “you get used to it.”

(c) 2004 The Washington Post Company

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