Britain Death of A Tycoon

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When Robert Maxwell went over the side of his yacht off the Canary Islands, it was a death scene made to order for pulp publishing. He could have made millions with the tabloid rehash in his popular weeklies, the trash book and the movie and television rights. But without him to patch together such a deal, the ripples from his final fall threatened to sink some of the media empire he had built.

The imperious tycoon, decorated war hero and Holocaust survivor was last seen alive in the predawn light, pacing on the deck of his yacht, the Lady Ghislaine, as it cruised in the calm waters of the Atlantic. Only late in the morning, after a phone call to his stateroom went unanswered, was he reported missing. About six hours afterward, Maxwell's 6-ft. 2-in., 280-lb. body was found floating naked in the sea.

Did Maxwell, 68, commit suicide because he was distraught about the tangled affairs of his debt-laden companies? Was his death somehow related to his alleged links with Israeli intelligence? Only two weeks earlier, Seymour Hersh had alleged in his book The Samson Option that the billionaire maintained ties to Mossad. (Maxwell promptly sued for libel.) If he did indeed have a Mossad connection, did that give someone a reason to have Maxwell killed? Other seemingly farfetched speculation suggests a CIA connection. Or, alternatively, did a member of his crew, rumored to be occasional victims of his wrath, exact revenge?

Provisionally, the Spanish magistrate charged with investigating the death settled on the most innocent explanation: Maxwell died of natural causes, probably suffering a heart attack before he fell overboard. Since he was found floating (a drowned body normally takes about three days to surface), that theory is not without merit. Most likely, no one will ever know the full story behind Maxwell's death.

Without him, however, there can be no doubt that his far-flung corporate kingdom will never be the same. Maxwell's properties, which include Macmillan Publishers and the London-based Daily Mirror as well as printing plants, the Israeli newspaper Ma'ariv and several professional soccer teams, are joined by a complex web of interlocking connections, all masterminded by Maxwell and Maxwell alone. "You've lost the force majeure, the single persona that held it all together," says John Reidy, a New York City media analyst at Smith Barney.

Two of Maxwell's sons, Kevin, 32, and Ian, 35, were quickly named their father's successors. Kevin will take over the American arm of the Maxwell domain, Maxwell Communication Corp., and his brother will run the Mirror Group Newspapers in Britain. The young Maxwells face the same challenge that confronts most media barons these days: massive debt. No one outside the company, and not many inside it, knows precisely what Maxwell's debts are. That is because a number of his interests were privately held. The details of their loan arrangements thus remain safe from the scrutiny of public shareholders.

Moreover, many of the debts of the private firms were assumed by pledging, as collateral, shares in Maxwell's two publicly traded companies, Mirror Group Newspapers and Maxwell Communication. Mirror Group shares had been declining even before Maxwell died, and were off more than 30% between May and the suspension in trading that followed Maxwell's death. But because the Mirror Group remains solidly profitable, they bounced back 45% after trading resumed last week. All told, the Maxwell companies probably carry debts of $3.9 billion, according to London's Financial Times. That figure was about 50% higher than many investors had assumed.

The exhilarations -- and perils -- of bold action were part of Maxwell's appetite from the start. Born Jan Ludvik Hoch in the Czech village of Solotvino, he lost his parents and four siblings at Auschwitz. Having left for Budapest in 1939, he arrived in France early the following year and sailed to Liverpool a few months later. He won Britain's Military Cross in January 1945 for leading a platoon against a German defensive position. In London after the war, he launched Pergamon Press, a scientific publisher. In 1969 Maxwell lost the company in a scandal: he was charged with misrepresenting Pergamon's financial condition during a takeover battle. He recaptured the firm in 1974 and last March sold it to the Dutch publisher Elsevier for $765 million.

Maxwell was a lifelong subscriber to Machiavelli's dictum that it is better to be feared than loved. David Adler, who was a Maxwell executive for three years, remembers being called on the carpet because he was unable to meet his master's plane at the airport. (He sent three limousines instead.) "Remember," Maxwell bellowed, "I am the most important person in your life!"

This year Maxwell's reputation spread from Wall Street to 42nd Street and the likes of New York City cabdrivers when he stepped in as the 11th-hour savior of the city's Daily News, whose workers were waging a draining strike against the paper's owners, the Tribune Co. Maxwell luxuriated in his role as an American media king, appearing in ads for the paper and putting on lavish spreads at Washington social functions. The new proprietor pocketed $60 million in exchange for taking on the News and its debt, but the paper still loses money -- between $30 million and $40 million a year, estimates John Morton, a newspaper analyst at Lynch, Jones & Ryan in Washington.

More than a few Maxwell assets are probably headed for the auction block. Within days of his death, Maxwell Communication agreed to sell a 56% stake in Berlitz International to Japan's Fukutake Publishing for $265 million. But there is concern that the easy asset sales may all have been done, says Jeff Matthews of the New York City firm Rocker Partners, which has in the past sold short Maxwell stock. "Future sales might be distress sales," Matthews suggests.

Meanwhile, Maxwell watchers are keenly following the early performance of the younger generation. The sons are acting a lot like their father, some already observe. "In moments of greatest adversity, that's where they're the coolest; it's bred into the family," notes Donald Fruehling, who was a Macmillan executive and board member. "Maxwell's whole life was 'Never panic,' " Adler agrees. "The kids are living that legacy." That is not to say, however, that either Kevin or Ian will become another Robert Maxwell. There was only one of those.

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