McCaw Communications

"against the big, the pretentious, the powerful. He wrote complex agree- ments containing understated language which gave his clients latent powers or maneuvering room—what he called "back doors"—the kind of language that gave McCaw Communications an escape or jujitsu leverage over other parties if problems developed."

"When John Stanton walked into McCaw Communications, he was a young associate determined to make partner at his accounting firm by finding and seizing an area of expertise. Almost as soon as he heard about cellular, Stanton realized he had found his niche. (He later founded his own national cellular company, Western Wireless.) Stanton now came to McCaw with an idea for funding cellular by adapting a form of lending analysis used in the cable industry. This was key because potential investors or lenders needed a reference point to understand a new business where profits were distant. As Stanton later recalled, he met first with Keith McCaw, who didn't say much in response. "Wait a minute," Keith finally said, leaving the room. Keith came back escorting Ed Hopper, who looked at Stanton's papers, listened to his pitch, and instantly liked the idea. "You're hired," said Hopper. "Can you have a team here tomorrow?""

"Now McCaw told Milken that McCaw Communications wanted help to buy more cellular licenses. But Milken saw a new threat to Craig McCaw. "You're exposed," Milken said. McCaw was trying to grow two capital-intensive businesses at once while facing deeper-pocketed competitors on both fronts. He couldn't grow in both cable and cellular for long. Milken warned McCaw that his company was too deeply in debt. There was an irony—the foremost apostle of debt telling Craig McCaw that his financial strategy was too risky. According to Perry, McCaw didn't show much reaction. He just took it in thoughtfully and said merely, "Hmm. Okay." But Milken was right. The Southwestern buyout of Metromedia's cellular business showed how the bigger boys were prepared to snatch licenses that McCaw needed. Previously, McCaw had been annoyed by industry talk that his company was spread thin. To his face, the chair- man of PacTel had called his company a "house of cards." "I was tired of hearing about how much leverage we should take," McCaw says. Hearing the same message from Milken gave it a new urgency; it "hit McCaw right between the eyes," Stanton said later. McCaw had to focus his company on one business or the other."