The following article about Henry Kravis and KKR's pre-1992 hidden history first appeared in the July 22, 1992 issue of the now-defunct Lower East Side alternative newspaper weekly, Downtown, during the period when Kravis's KKR firm still owned New York magazine--prior to its sale to Bruce Wasserstein in 2003 for $55 million).
"Last week a partnership controlled by Kohlberg, Kravis, Roberts, the New York financial firm famous for engineering takeovers like RJR, Nabisco's, announced it would buy most of the U.S. magazine holdings of Rupert Murdoch...The $650 million deal (which came just days after KKR announced it would back Fleet/Norstar's $625 million acquisition of the failing Bank of New England) calls for the KKR group to buy nine publications. The list includes the Daily Racing Form--the most profitable--and New York, Seventeen and Premiere." (Newsweek magazine on May 6, 1991)
"Henry R. Kravis...has...been characterized as impatient, aggressive, and hard-edged. His longtime friend Michael Douglas is said to have copied some of his mannerisms for his role as Gordon Gekko in Oliver Stone's film Wall Street...An early supporter of George Bush [I], he donated $100,000 to Bush's presidential campaign and, as the candidate's New York co-chairman, raised many times that amount." (1989 Current Biography Yearbook)
In its Sept. 5, 1989 issue, New York magazine published an article on the Kohlberg-Kravis-Roberts [KKR] investment banking partnership which concluded: "KKR has been one of the most self-consciously private and publicity-shy firms on Wall Street." Coincidentally, less than two years later, KKR's K-III Holdings Corp. subsidiary purchased control of New York magazine from the then-debt-burdened Fox Television Network/TV Guide Owner Rupert Murdoch. Shortly after KKR's April 1991 purchase of New York magazine, a New York media analyst named Richard MacDonald predicted: "I bet there won't be any Henry Kravis covers on New York."
In addition to purchasing New York magazine, Seventeen, Premiere and the Daily Racing Form, in the early 1990s, the KKR firm of New York's 1988 Bush-for-President campaign co-chairman, Henry Kravis, also purchased Soap Opera Digest, Soap Opera Weekly, European Travel & Life, Automobile and New Woman from Murdoch in 1991. The Weekly Reader and Funk & Wagnalls encylopedia were also owned by KKR prior to 1992.
Besides owning magazines, Kravis's KKR also owned commercial television stations in the early 1990s. In 1983 it had purchased Golden West Broadcasters and in 1985 it had raised $2.4 billion to gain control of Storer Communications. Consequently, KKR owned 15 percent of Storer/SCI Television--which operated commercial television stations in such places as San Diego, Atlanta, Boston, Detroit, Cleveland and Milwaukee--in 1992. That same year, New York magazine's then-parent company also "made an agreement with an upstate New York cable" commercial television company "to acquire up to $1 billion in cable systems," according to the May 26, 1992 issue of the Village Voice.
In addition to having a special interest in the world of commercial television in the early 1990s, Bush I's 1988 campaign co-chairman in New York was the chairman of the board of trustees in the late 1980s of the New York City area's publicly-funded local PBS television station--WNET/Channel 13. In The Money Machine: How KKR Manufactured Power And Profits, Sarah Bartlett noted how Kravis reacted after gaining more control over Manhattan's "non-commercial'television station:
"Today, Henry sits in his magnificent 42nd floor office exuding the satisfaction of a man who has conquered...`Chairmanship of Channel 13,' he says, clearly savoring the sound of it. `That's going to be a kick. I can bring my business background to that, my interest in television, my interest in education, and I'm having a lot of fun.'
But prior to 1992, Kravis apparently attempted to use his special influence to censor journalists who showed too much curiosity about how his KKR firm operated. As freelance journalist Sarah Bartlett recalled in The Money Machine:
"The journalists who tried to raise questions about KKR's behavior toward its investors were met with a combination of intimidation, personal attack, and disinformation.
"In my own case, after I wrote two stories in the New York Times in August of 1989 about KKR's troubled deals and [former KKR Partner Jerry] Kohlberg's lawsuits, Henry [Kravis] called the newspaper's [then-] publisher, Arthur Sulzberger, to complain. Henry knows Sulzberger...through the Metropolitan Museum, where Sulzberger is [was] chairman. The Met, of course, is where Henry donated $10 million for the Kravis wing.
"On Friday, Sept. 15, Henry [Former WNET-Channel 13 lawyer] Dick Beattie, and another KKR partner, Paul Raether, had lunch with Sulzberger, Max Frankel, the [then-] editor of the paper, the managing editor, and an assistant managing editor who oversees the business section. I never heard afterward from any of the editors who attended the meeting."
(end of part 1)
(Downtown, 7/22/92)
