forbes.com
Russian problems plus distrust of billionaire John Kluge have turned Metromedia International into a rare object: an undervalued telecom. Zamboni Time?
By Justin Doebele
THE BULK OF JOHN KLUGE'S $11 billion fortune traces to his sale of U.S. telecom assets from Metromedia after he and longtime aide Stuart Subotnick took it private for a song in 1984. An accounting irregularity had knocked the stuffing out of the stock. What happened was legal, but many shareholders felt cheated, and Kluge had to cough up a minor settlement.
Flash forward to 2000. Kluge has a new Metromedia, this one called Metromedia International Group, which, like the old entity, has TV, radio, wireless and paging assets. Instead of being based in the U.S., however, this international version has its assets in Russia and nearby states.
Like the old Metromedia, the new version is a fallen angel: Trading at $23 a share in 1990, Metromedia International now hovers around $6 on the American Stock Exchange. The Russian crisis of 1998 and subsequent troubles daunt investors.
Will Kluge Inc. get there first again? Subotnick, in day-to-day operating control of Metromedia International, insists not. "We have always tried to build this company for the benefit of the shareholders," he says. "We have no plans to take this company private."
After taking over PLD, a leading Russia-based telecom company, late last year, Metromedia brought in PLD's chief, the dapper Englishman James Hatt, to revitalize the company and its stock.
The 6-foot-7 Hatt, 40, is a formidable presence, both physically and in his reputation. He came to what was still the Soviet Union as a Cable & Wireless executive. He left that giant in 1994 and the next year was atop PLD, which had established itself as the first Western-owned telecom outfit in Russia.
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