Company Of Adventures - Merchant Prince Part 30

Ken has force-fed his father's business empire from annual revenues of $725 million in 1976, when he took over, to $11.5 billion a decade and a half later. The total equity value of the companies he controls has sky-rocketed from less than $1 billion to more than $11 billion, exponentially surpa.s.sing Roy Thomson's impressive rate of annual growth.

In 1989, following sale of the Thomson Group's North Sea oil holdings for $670 million, its publishing and travel a.s.sets were combined into an umbrella YOUNG KEN 499.

organization (the Thomson Corporation). Ken uncharacteristically boasted that it would allow him to set his sights on any target. "I can't imagine any publishing company anywhere in the world that would be beyond our ability to acquire," he gloated.

KEN THOMSON LEADS A DOUBLE LIFE, and enjoys neither. In England--and most of non-North America where t.i.tles still mean something-he is Baron Thomson of Fleet of Northbridge in the City of Edinburgh, the peerage bestowed on his father on January 1, 1964, two days before he lost his Canadian citizenship for accepting a British t.i.tle. "I regret giving up C anadian citizenship," Roy Thomson said at the time, "but I had no choice. I didn't give it up. They took it away from me. They gave me the same reward you give a traitor. If I had betrayed iny countrv, that's the reward I would get-taking away my citizenship. Canada should allow t.i.tles. If you get a t.i.tle from the Pope, there's no trouble accepting that."

During their visits to England, Lord and Ladv Thomson live in a four-bedroom flat (purchased for E90,000 in 1967) in Kensington Palace Gardens, off

*Roy Thomson turned down Prime Ministerjohn Diefenbaker's 1959 offer to appoint him Governor General of Canada. "It wouldn't have suited me verv well because I'm too much of an extrovert for that," ROY declared at the time. "I can't conceal mN, feelings very easily. I talk too much, everybody says, but I talked myself into more deals than I ever tAked myself out of, so I'm still ahead of the game. At any rate, it worked out for the best. Since then, I've got a hereditary peerage. And I'm a Knight Grand Cross of the Order of the British Empire, that's a GBE, which is the highest degree of the Order of the British Empire. That ent.i.tles you to be 'Sir.' If I hadn't got a peerage I'd be Sir Roy, so I'm right at the top of the heap."

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Bayswater Road.* A secluded street with extra police protection, this is where many of the amba.s.sadors to the Court of St. James's have their residences. While abroad, the introverted Ken and Marilyn Thomson of Toronto are transformed into the introverted Lord and Lady Thomson of Fleet, using their t.i.tles, with two sets of clothing and accessories as well as stationery and visiting cards. "I lead a dual life and I'm getting away with it," Thomson declares. "It actually works."

One place it doesn't work is in the House of Lords. Ken has never taken up his father's seat in Westminster's august Upper Chamber, nor does he intend to. The older Thomson glowed with pride the day he received his t.i.tle.

After celebrating by queuing up at Burberrys for a cashmere coat reduced from Y,75 to Y,40, he had his official coat of armst carved on his office door, and when one elderly London dowager persisted in calling him "Mr Thomson," he barked, "Madam, I've paid enough for this G.o.dd.a.m.n t.i.tle, you might have the good grace to use it."t Having been elevated to the House of Lords, Thomson seldom attended its sessions and didn't particularly enjoy it when he did. "I've made a lot of money, but I'm not the brightest guy in the world, by a h.e.l.l of a long ways," he once commented. "I've found that out since I've been in the House of Lords. About

*During the Second World War the flat was used for interrogating high-ranking n.a.z.i officers.

t It features the bizarre image of a beaver blowing an Alpine horn under the inotto, "Never a Backward Step."

tThe reason for the granting of a tide is never promulgated, but in Thomson's case it was thought to have been mainly for his initiative in donatingY5 million to establish a foundation to train Third World journalists. It is still active and recently helped revive the New Cbina Daily.

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90% of the things they discuss there, I'm a complete ignoramus about. I've got a one-track mind, but I b.l.o.o.d.y well know my own business."

"For Dad, the t.i.tle symbolized what he had achieved from nothing, and he made me promise I wouldn't give it up," Ken recalls. "He told me he'd like to see me carry it on because he rightly suspected I was the type of person who might not want to. I remember telling him, 'Well, Dad, I think you're a little naughty to ask me to do that. Because everybody should have the right to make his own decisions in this world. But after what you've done for me, if you really want me to, I'll make you that promise.' Now, I didn't promise him I'd use the t.i.tle in Canada or that I'd take up my seat in the House of Lords. So now I'm happy to have it both ways."

Another of the inheritances from his father was the att.i.tude that while making money was holy, spending it was evil. The Thoinson style of penny-pinching-father and son-goes well beyond sensible parsimony.

"n.o.body has any sympathy for a rich man except somebody thats richer again," Roy once ruminated. "I mean, h.e.l.l, I eat three meals a day and I shouldn't. I should probably eat two. And I only have so many suits of clothes, and I'm not very particular about my dress anyway, and I can't spend, oh, not a small fraction of what I make, so what the h.e.l.l am I doing? I'm not doing it for money. It's a game. But I enjoy myself I love work. I like to be successful. I I ike to look at another paper and think, Jesus, if only that was mine. Let's have a look at the balance sheet."

Roy Thomson's approach to spending was best summed up in the marathon bargaining sessions he staged when he was renting s.p.a.ce for his Canadian head office at 425 University Avenue in downtown Toronto. The landlord, a promoter who had a Scrooge-like reputation of his own to uphold, despaired of reaching any 502 FAREWELL TO GLORY.

Ist Lord Tbomson of Fleet

reasonable rental agreement because Thomson's offer was so far below rates charged for comparable s.p.a.ce elsewhere. When the press lord finally wore him down, the building's owner gasped in reluctant admiration, "Mr Thomson, you really are cheap!" To which an indignant Roy Thomson responded, "I'm not cheap! You're cheap! I'm cheap cheap!"

The photographs of the original Lord Thomson weighing his baggage so he wouldn't have to pay extra on his economy flights across the Atlantic, going to work on London's underground, or lining up for cafeteria lunches created a comic mask that somehow took the hard edge off his business deals. His outrigger spectacles, with lenses as thick as c.o.ke-bottle bottoms, magnified his glinting blue eyes as he peered at the world with Mister Magoo-like good humour, hiding his touch of icy cunning. Thomson carefully cultivated the image of himself YOUNG KEN 503.

as the living embodiment of the profit motive on the hoof Seated next to Princess Margaret at a fashion show, he spotted a lam6 gown on one of the models. "My favorite color," he told the Princess. "Gold!" During Thomson's much-publicized 1963 encounter with Nikita Khrushchev, the Russian dictator teasingly asked what use his money was to him. "You can't take it with you," said Khrushchev. "Then I'm not going," shot back a determined Thomson.

Ken Thomson's scrimping habits are equally mingy, if less well known.

Although he is a member of six of Toronto's most exclusive clubs-the York, Toronto, National, York Downs, Granite and Toronto Hunt-he prefers to have lunch by himself at a downtown yogurt bar, if he's not home walking Gonzo, that is.* He does most of his shopping on department-store bargain days. Murray Turner, a former HBC executive who knows Thomson slightly, was shopping in the Loblaws store at Moore and Bayview when he heard a shout, "Murray! Murray!" and saw Thomson beckoning to him. As he reached the side of the world's eighth-richest man, it was obvious that Thomson could hardly contain himself "Lookit," he exclaimed, "lookit this. They have hamburger buns on special today. Only $1.89! You must get some." Turner looked in disbelief at Thomson's shopping cart, and sure enough, there were six packages of buns, presumably for freezing against a rainy day. "I'd walk a block to save a dime at a discount store,"

Thomson readily admits. On the same day he spent $641 million on a corporate takeover, Thomson met George Cohon, the Canadian head of McDonald's, and asked him for a toy Ronald McDonald wrist.w.a.tch.

*He occasionally frequents fancier restaurants but takes the uneaten portions home in a Gonzo-bag.

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Cohon sent him one of the free timepieces (used mainly for internal promotions), but the verv next day Thomson's secretary was on the phone claiming the watch had gained four minutes over the past twenty-four hours and asking where His Lordship could get it fixed. Cohon ordered another watch sent to him, but the messenger had strict orders to bring back the original gift.

The press lord appears to dress well (his shoes are from Wildsmiths on London's sw.a.n.k Duke Street), but his suits are made for him by a cut-rate tailor in Toronto's Chinatown at $200 apiece from the discounted ends of bolts he picks up during his Journeys to Britain. He lives in a twenty-three-roorn mansion behind a set of handsome gates at the top of Rosedale's Castle Frank Road, built in 1926 by Salada Tea Company president Gerald Larkin. A prime example of Ontario Georgian-style architecture, the dwelling is run down, its curtains left over from its first owner. The Thomsons (Marilyn's parents live with them in a coach-house) usually eat in the kitchen to save electricity, and the family is unable to retain housekeepers because of the low pay. Even the help's food is rationed. Most cookies are kept in a box with the Thomson name lettered on it. A strict allocation of two of Mr Christie's best is placed on a separate plate to feed the rotating parade of disillusioned cleaning women.*

Thomson owns a Mercedes 300-E but usually drives his ancient Oldsmobile ("it clunks around but it's the car that Gonzo prefers") and once purchased a red Porsche

*Besides the London flat, the only other Thomson residence is in Barbados, where he ou ns the Southern Palms Hotel. To maximize profits, Ken and Marilyn stay in a third-floor walk-up apartment whenever thev visit instead of occupying one of the more luxurious main-floor suites. Toronto travel impresario Sam Blyth has occasionally booked them aboard West Indies cruises on a travel agents discount.

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turbo. ("Honestly, not one of my more practical expenditures. I was thrilled at first but I hardly use it-I've probably driven not more than twenty-five miles in it this summer." The car is for sale.) The Thomsons never entertain and seldom go out. When they do, preparations include discreet calls to find out precisely what other guests have been invited, whether anyone will be smoking or drinking, how soon they might comfortably leave, and so on.

The world's eighth-richest man is one of the country's most reluctant philanthropists. When TorontoDominion Bank chairman d.i.c.k Thomson (no relation) and Fred Eaton, head of his family's department store chain, called on Thomson to solicit funds for the Toronto General Hospital, a favourite Establishment charity, they were warned by a mutual friend that the only way they would get any money was to pledge construction of a veterinary wing to treat Gonzo. They thought it was a joke, and came back almost empty-handed.

There has been much argument among his headquarters staff over how much cash Ken Thomson actually spends per week. Some insiders claim it's twenty dollars; others insist it's at least forty. No one bids any higher. He has credit cards but seldom if ever uses them. "It's an idiosyncrasy," saysjohn'rory, his chief confidant. "It's just very difficult for Ken to put his hand in his pocket and spend money. Yet he's extremely kind and generous. When we're rushing to a meeting and we're late, if he sees a blind man, he'll stop, miss a couple of lights, and help him cross the street." Tory didn't need to add that the blind man gets no money. Thomson himself won't discuss his spending habits. "I agree with my father that you should use only a small portion of your money on yourself and that you have some kind of obligation to do something useful with the balance.

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He thought the most beneficial thing you could do with money was to invest and reinvest it, to keep it growingand so do L"

Ken's only excursion into philanthropy was his successful 1982 effort to have Toronto's premier concert hall, the magnificent structure designed by Arthur Erickson, named after his father. He gave $4.5 million to the project, the largest donation ever granted the performing arts in Canadian history. "Dad would have been thrilled," he says. "I'm so proud to hear it on the radio sometimes-Roy Thomson Hall, my dad's name being mentioned-or see it in the Globe and Star. He was born on Monteith Street and loved Toronto. lie even tried to use Lord Thomson of Toronto as his t.i.tle, but the government wouldn't let him." Still, a cultural- especially musical-edifice hardly seemed an appropriate monument. "I could do without culture," Roy Thomson once confided. "I haven't got any, particularly. And I could do without art. I can do without the theatre. I can do without all these things.... Some people love culture. They live on it. They appreciate it and I rather envy them in a way. But, not for me. My favorite music is about the level of Gigi. I like tunes like the 'Blue Danube' waltz, 'Sailing Down the River,' and South Pacific."

The naming of Roy Thomson Hall caused a furore. Of the $39 million required to finance the building's construction, $26.5 million had been allocated by the federal, provincial and munic.i.p.al governments; a further $12.5 million had been raised from corporate donors and individuals. The Thomson contribution was a welcome but hardly essential windfall to be used for future improvements, which to many minds did not warrant naming of the hall after Roy. Accountants quickly calculated that the magnificent gift would not cost Ken very much. The $4.5-million donation was divided into five annual instalments of $900,000, paid through a YOUNG KEN 507.

Thomson subsidiary. As well as saving Thomson $450,000 a year in deductible taxes, the delayed instalments earned annual interest of more than half a million dollars at the high rates prevailing at that time, leaving the benefactor to sc.r.a.pe up only $2 million.*

THE SAGA OF ROY HERBERT THOMSON, the Toronto barber's son who quit school at fourteen to become a five-dollar-a-week clerk and in 1931 ]eased a fifty-watt radio station in North Bay, Ontario, and another later at Timmins-so he could sell the radios he was lugging along country roads-is one of the sustaining legends of Canadian capitalism. Less well known is the way the hardships of the Great Depression permanently imprinted themselves on generations of the Thomson clan. "I'm still horrified by people who don't make soup stock out of meat sc.r.a.ps," says Ken's niece Sherry, who spent her youth in the communal Thomson home at Port Credit, just west of Toronto. "And if you were making a custard with three egg yolks, you could have knocked me over with a feather the first time I saw a woman throw the egg whites down the drain. That just wouldn't occur to me; the whites are tomorrow's dessert. You used everything and got into the rhythm of making your own jam and freezing your vegetables."

The Port Credit household, which for a time included not only Ken but also his sisters, Irma (Sherry's mother) and Phyllis Audrey, and most of their children, was run according to stern, puritanical precepts.

"Granddad loved us very much," Sherry recalls, "but the affection was always very gruff. It was a staunch,

*That's not all. Wien they attend Roy Thomson Hall concerts, Ken and Marilyn regularly phone down for free house seats- and get them.

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didn't-come-from-much kind of family, so that signs of affection came out almost by accident, as asides." It was a stern upbringing. She remembers her mother being locked out by Roy, the family patriarch, if she ventured home after midnight. This was not when Irma was a teenager but well into her thirties, divorced, with a nineyear-old daughter, and dating again. Luckily the family had German shepherds and a dog porthole had been cut into the sunroom door. Irma's dating partners still recall having to push her, 1940s dirndl and all, through the dog door after their goodnights. "They could only do that in the summer," according to Sherry, "because in other seasons, the ground got too wet. When I became a teenager I was locked out by my mother in turn, and had to climb up the trellis."

Young Ken had attended elementary school in North Bay, where he worked summers as a disc jockey in his father's radio station, CFCH. His main job was to play background noises meant to evoke the crowd sounds and clinking gla.s.ses of a ballroom, while big-band dance numbers were on the air, but he also fell in love with the music of Hank Snow and dreamed someday of actually meeting him. When the family moved to Toronto, young Ken was enrolled in Upper Canada College. After an unsuccessful year at the University of Toronto, he joined the Royal Canadian Air Force but was never promoted beyond Leading Aircraftman, the equivalent of an army lance-corporal, spending most of his time as an editorial a.s.sistant on Wings Abroad, a propaganda weekly. He took his discharge in London and spent two years at Cambridge, though the university had no discernible effect on him. After spending a year on the editorial staff of his fathers Timmins Dai~y Press, he moved back to Southern Ontario where Roy Thomson had acquired the Galt Evening Reporter as one of four dailies he picked up in 1944. His five-year apprenticeship there YOUNG KEN 509.

was an important formative influence, as were the weekends he spent at the Port Credit house.

Roy Thomson had moved to Scotland in 1954 but returned to the family homestead in summer and at Christmas. The elder Thomson held court while watching the TV set in front of him, listening to the radio beside him, petting the Scottie dog at his feet, eating fruit with a little paring knife, all the while reading a murder mystery. Ken loved frightening his nieces and nephews, especially when they slept in garden tents during the summer. "He'd put a sheet over his head and ghost us," Sherry recalled.

"Or he'd hide behind a bush and make fake owl noises. But we always knew it was him and we'd yell, 'Oh Kenny, stop it!' He was very much the tease."

By the late 1950s, Roy Thomson had not only acquired the prestigious Scotsman but had also won control, in what was the world's first reverse takeover bid, of the huge Kemsley chain that included London's influen- tial Sunda Times.* Roy's lucky streak broke in 1967, when he acquired The Times, Britain's great journal of record.t The Times may not have lost its l.u.s.tre under Thomson, but it lost him bags of money.

Thomson had by this time become a fixture among British press lords. He could always be depended upon to say something mildly outrageous and to pose for yet one more photograph showing off his skinflint habits. "They say business is the law of the jungle," was a

*At about that time his daughter Irma had to canva.s.s funds from neighbours to get the roof of the Thomson house fixed because Roy refused to spend the money.

tThe extent of The Times' authority was best summed up in a Punch cartoon, depicting a secretary waWng into a British company president's office to announce: "Sir, the gentleman from The Tmes and the press are here."

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typical sally. I think it's the law of life. If you want to prosper, you've gotto be ambitious.... You've got to be ready to sacrifice leisure and pleasure, and you've got to plan ahead. I was forty years old before I had any money at all. But these things don't happen overnight. Now how many people are there that will wait that long to be successful, and work all the time? Not very many. Maybe they're right. Maybe I'm a b.l.o.o.d.y fool. But I don't think I am."

American tyc.o.o.ns J. Paul Getty and Armand Hammer approached Thomson in 1973, offering a 2 0-percent share in the] r Occidental consortium prepar- ing to drill in the North Sea where Phillips Petroleum had already found valuable indications. Roy bet his family's (as opposed to his company's) fortune on the play, though oil was then worth only $3.60 a barrel. When Occidental struck the giant Piper field and later the Claymore-and prices climbed to $14 a barrelThomson almost overnight earned $500 million.

By 1976, Roy Thomson was in his eighty-second year and not at all well.

Ken, who by then had married a graceful model named Nora Marilyn Lavis, had been brought across the Atlantic to a.s.sist the old man.* "Most people would say, 'I wouldn't want to do what you've done, even for your success,"' Roy reminisced in one of his last interviews. "They'd say, 'You've missed a lot out of life and success hasn't made it all worthwhile.' But it

*Theirs is a wonderful marriage. But Ken seems to be deferential at home as well as the office. In an impromptu 1988 telephone exchange with a reporter from the Financial Post, Thomson admitted that he saved barbers' bills by having his wife cut his hair, but made the transaction sound curiously self-demeaning. "My wife made me have it cut commercially lately," he admit- ted, "but if I behave myself, she'll do it for me. I'd just as soon have her cut my hair. n.o.bodv does it as nicely as Marilyn. The cost is for me to be nice to her for a few days."

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has to me. It's just a matter of ambition and determination, you keep plugging away. I learn more front my failtires than I learn from my successes, because I learn b.l.o.o.d.y well not to do them again. Nothing has ever happened to me in my I ife that hasn't been for the best, now I accept death. I lost my wife. I lost a daughter, but those things, I mean, you can't measure them in terms of happiness or success or failure. I'm a very imperfect individtial, and I've done a lot of things I shouldn't have done, but I honestly am not a person who caused anybody any suffering if I could help it."

Henry Grunfeld, former chairman of S.G. Warburg, the London merchant bankers who had helped finance Thomson, remembered his last conversation with Roy in the bank's Terrace Room at its Gresham Street headquarters.

"It was about three weeks before his death and we both knew it was the last time we would meet. He told me he was worth about $750 million, or whatever it was, and complained bitterly how much he wished he could have made a billion. 'Why, haven't you got enough, Roy?'I remember asking, especially since he was so obviously very ill. He looked surprised, as if he had never considered the question, and shrugged, 'Henry, it's just for the flin of it . . .' It was pathetic."

Thomson died on August 7, 1976, and Ken was suddenly in charge. Ills father had pa.s.sed away both too soon, because the younger Thomson was not ready to take over, and too late-because Ken was by this time fifty-three years old and had spent most of his adult life following his father, a tactful step behind like a commercial version of Prince Philip.

Inheriting a father's business is difficult; succeeding an individual as powerful and articulate as Roy Thomson-recognized as a folk hero of capitalism--was impossible. Ken tried valiantly to turn himself into an extrovert but soon conceded that it was a mission impossible. "The nice thing about my 512 FAREWELL TO GLORY.

dad was that he was so unusual. No one in his right mind could expect me to be the same. I'd be happy to go unnoticed. I've tried to be a good, sound businessman in my quiet way, but I can't say I've been a slave to business.

I've tried to strike more of a balance between my personal and business lives." His father's friend and adviser, Sidney E Chapman, summed up the situation more succinctly: "When you live in the shadow of a legend, you don't go flashing mirrors."

Ken's first major decision was to cut family ties with The Sunday Times and The Times, where union problems had forced suspension of publication for eleven months. During their stewardship the Thomsons, father and son, had poured.V, 100 million into the properties without any significant return.

Their loyalty to those great inst.i.tutions without any apparent fiscal controls was totally out of character. Thomson sold the two papers for the value of the land and buildings to Rupert Murdoch, and gradually moved his businesses back to Canada.

The company owned forty-three daily and eleven weekly Canadian newspapers at the time. They ranged geographically from the Nanaimo Daily Free Press on Vancouver Island to the Evening Telegram in St John's, Newfoundland.

What they had in common, apart from ownership, was a blandness so pervasive that no selfrespecting fish could bear being wrapped in one of their pages.