posted on July 18, 2012 13:54
One hundred and eighty thousand people, from Maine to California, contributed to Jesse’s campaign when he defeated Jim Hunt in 1984 and about a month after the election, having dinner with Jesse, Tom Ellis said, “Let’s ask each of ‘em to buy CBS stock – then start a proxy fight to take over CBS.” Jesse mulled that over and said:
“There might be a lot of other people who’d like to take over CBS too” – which, the more Mr. Ellis thought about it, seemed like a sound idea.
Normally, before mailing two million people – the number Mr. Ellis settled on – we’d test, say, one hundred thousand of them to see what kind of response we’d get. The theory worked like this: We’d risk $50,000 on printing and postage to test-mail a hundred thousand people and if they sent back $50,000 in contributions then we would mail the other 1,900,000 people.
I started working on the mailing then Mr. Ellis said, “We need a securities lawyer to file notice of our proxy fight with the Securities and Exchange Commission.”
We went to New York and hired an attorney then ran into two problems: When I showed the attorney the letter I was about to test-mail to a hundred thousand people he said: “It’s fine. But as soon as you send it out CBS is going to sue you and I doubt a court is going to let you mail the other 1,900,000 people before holding a hearing.”
“Fraud and violating the Securities laws.”
“That letter’s not fraud.”
“Correct. And after you prove that in court you can mail the rest of your letters.”
He smiled, “Welcome to my world.”
“How long will a court hearing take?”
“CBS’s annual meeting will be over by then.”
“Which is why they’ll sue you.”
Tom Ellis rocked back in his chair, looked out the conference room window down at the traffic on Park Avenue then said: “Let’s mail them all.”
“Mail two million letters and risk a million dollars – without testing?”
Mr. Ellis grinned, “Why not?”
Then the lawyer explained the second problem: “You also need an independent CBS stockholder – who’s not part of your group – to sign the SEC filings. And CBS is going to sue him too.”
Which meant we needed to find someone who not only owned CBS stock but who didn’t mind being sued by CBS. Mr. Ellis said:
Hoover Adams, the editor of the Dunn Daily Record, owned – I think – one thousand shares of CBS stock and the idea of being sued by CBS didn’t intimidate him a bit. We mailed the two million letters and just like the lawyer said, CBS sued us – so we went back to New York to be deposed by CBS lawyers.
The morning of the deposition as Hoover Adams, Mr. Ellis, our lawyer and I strolled down Park Avenue toward the lawyer’s office, a line of eight limousines rolled by, pulled over at the curb in front of the lawyer’s office, doors started opening and Hoover stopped dead in his tracks.
I said, “Hoover, we’re late.”
“Hold on a minute,” he grinned and pointed toward the limousines. “Let’s see who that is – it might be an Arab sheik.”
“That,” our lawyer said, “is CBS’s lawyers.”
The prospects of being deposed by eight limousines full of CBS lawyers didn’t phase Hoover a bit. He looked at the lawyer. “You’re kidding?”
After we started our proxy fight the value of CBS’ stock doubled then, with CBS ‘in play,’ the Wall Street sharks and green mailers descended on us. Worst, when we sent out our letter people bought CBS stock (at $75 a share) by the thousands, but hardly anyone also sent in a contribution to help pay for the mailing. We lost half a million dollars and a group of wealthy New York investors ended up controlling CBS.
Last Sunday Hoover Adams died. He grew up in Harnett County, raised three children, loved one woman all his life and worked until he was in his nineties and, if you were going to start a proxy fight with CBS, he was a good man to ride the trail with.