The Association of U S West Retirees



Anschutz withdraws
Billionaire will leave boards of Qwest, Regal, Union Pacific
By Jeff Smith, David Milstead And Joyzelle Davis
Rocky Mountain News
Wednesday, March 1, 2006

Denver billionaire Philip Anschutz is dropping from the boards of Qwest Communications, Regal Entertainment and Union Pacific Railroad this spring to focus on his private investments.  Anschutz associate Cannon Harvey also is resigning as a Qwest director, marking the third Anschutz official to leave the Denver telco's board in the past year.  That means Anschutz, Qwest's founder and largest stockholder with 300 million shares, will have no representation on the company's board.

Anschutz officials have been targets of disgruntled shareholders almost since Qwest's accounting problems surfaced in 2002.

Jim Monaghan, a spokesman for Anschutz, declined to comment on whether Anschutz simply got tired of the criticism and said the timing was appropriate given the strong management and boards of the three companies.

Monaghan denied the decision had anything to do with the possibility that former Qwest Chief Executive Joe Nacchio, who was recently indicted on insider-trading charges, will point fingers at Anschutz at a potential trial.

"It had nothing to do with any legal issues or anything of that," Monaghan said.  "The timing is because we're entering the proxy season and they have to get their proxy statements together."

Anschutz, 66, had served on the various boards for a combined total of more than 30 years.  Anschutz particularly acknowledged Qwest CEO Dick Notebaert's leadership in working with board members to bring Qwest through a difficult period, Monaghan said.

Anschutz technically is declining to stand for re-election to the Qwest and Union Pacific boards and is resigning from the Regal board.

Anschutz owns nearly 5 percent of Union Pacific's stock, dating back to when the Omaha-based railroad company bought Anschutz's Southern Pacific.  He has 56 percent of Regal Entertainment, which he assembled through the purchase of three troubled theater chains and a subsequent public holding.  Each holding is worth more than $1 billion at current market prices.

"These moves will allow Mr. Anschutz to devote more time and attention to his privately held investments -- something he has desired to do for the past several years," said a statement issued by Monaghan.

Anschutz's empire in the past decade has expanded to include daily newspapers, Hollywood production studios, live entertainment and sports franchises.

AEG, one of dozens of Anschutz's privately held companies, says it owns more sports teams and events than any other company.  Among those are the Los Angeles Kings hockey team, five Major League Soccer teams and a stake in the Los Angeles Lakers basketball team.  AEG also is spearheading a $1.7 billion redevelopment project that intends to turn a skid row-adjacent Los Angeles property into a Times Square-like entertainment district.  Another Anschutz subsidiary, AEG Live, is the second-largest concert promoter after Clear Channel.

Anschutz's Film Group in December released the first installment of the C.S. Lewis series The Chronicles of Narnia, which has grossed more than $657 million in worldwide box office receipts, as well as last year's biopic Ray.  The film group has 16 films in active development or distribution.

It was Qwest, at its peak, that drove Anschutz's wealth to all-time highs, roughly $18 billion in 2000.

Anschutz split the small telco from Southern Pacific in 1991 and acquired the Qwest name in 1995.  In 1997, it went public under new CEO Joe Nacchio and grew so big so fast it was able to acquire Denver-based phone company U S West in 2000.

But the collapse of the telecom industry, coupled with the revelation of improper accounting, led to the stock's collapse.  The Securities and Exchange Commission, in alleging misdeeds at Qwest, called it "a $44 billion fraud."  Qwest has since settled the case for $250 million.

Notebaert thanked Anschutz and Harvey for "their years of dedication, hard work and insight."

"As Qwest's founder, Phil Anschutz brought great vision and leadership to the company," Notebaert said in a two-sentence statement.

Tom Friedberg, a former telecommunications analyst who closely followed the development of Qwest through the years, noted that Qwest hasn't been Anschutz's company for a while now.

"Dick Notebaert has been successful turning the company back into U S West in everything but name," said Friedberg, now a management consultant.  "He's loaded the board with blue-ribbon CEOs instead of a group of directors who really wanted to change the paradigm of American telecommunications. . . . There's been a disconnect between the Anschutz folks and the Qwest folks, and this is just confirming that."

Donna Jaegers, a telecommunications analyst with Janco Partners in Greenwood Village, said it's unusual for someone with such a history with a company and large stock holdings to leave a board.  Anschutz still owns 16 percent of Qwest.

"It brings up the question:  Are they going to try to sell their holdings?" Jaegers said.   "And maybe they're afraid of what's going to come out in the Nacchio trial."

Said Monaghan: "I know of no plans to sell stock in any of the three companies."

Nelson Phelps, executive director of the Association of U S West Retirees, reacted to the news with elation.

"Oh, you're kidding me," Phelps said.  "All I can say is 'Hooray' with a capital H.  This is the best news I've heard all year.  I just hope he doesn't dump his shares."

The retirees, as well as major Wall Street proxy-advisory firms, alleged that Anschutz and his associates on the Qwest board lacked independence.

Proxy-advisory firm Glass Lewis said they should step down for being present at the scandal.  Lynn Turner, Glass Lewis' managing director for research, said it's "a positive development for investors when directors who oversaw a company while it was cooking the books and misleading investors, step down.  Hopefully, any remaining directors who served managment, and not investors, during this same time period would follow in the footsteps of those who stepped aside today."

Mogul's holdings

Philip Anschutz's empire spans many industries, from theaters to railroads, and sports teams to oil.  Among the holdings of Denver-based The Anschutz Co.:

  A majority stake in Regal Entertainment Group, which controls former independent theater chains United Artists, Regal Cinemas and Edwards Theatres

  Nearly 5 percent of the Omaha-based Union Pacific railroad

  The San Francisco Examiner and Washington Examiner newspapers

  Staples Center sports arena in Los Angeles

  Five pro soccer teams, the NHL's Los Angeles Kings and a stake in the Los Angeles Lakers

  A stake in Denver-based Forest Oil,2777,DRMN_23916_4504326,00.html