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Joshua Kosman, Predicting The Next Credit Crisis
TERRY GROSS, host:
This is FRESH AIR. I'm Terry Gross. My guest, Josh Kosman, predicts that we're
on the verge of the next great credit crisis, not because of credit cards or
student loans. The credit crisis he's predicting is from the actions of private
equity firms. These are firms that buy companies, with the help of huge loans,
and typically try to resell the companies or take them public before the loans
come due. The companies that have been bought and sold are then often left with
the debt. Kosman explores how private equity firms manage to make big profits
while nearly destroying some of the companies they buy and sell in his new
book, "The Buyout of America."
He says many private-equity-owned companies are defaulting on their debts, and
that will mean more people losing their jobs and will have global consequences
for the credit market. Private equity firms have purchased companies in a
variety of industries, including hospital and nursing home chains, mattress
companies, newspapers, radio stations, hotel chains and record companies. Some
of the biggest private equity firms are the Carlyle Group, Blackstone Group and
Kohlberg Kravis Roberts. Josh Kosman is a financial reporter for the New York
Post and a former editor at mergermarket.com and a former writer for The Deal
and Buyouts newsletter.
Josh Kosman, welcome to FRESH AIR. Let's start with the basics. What is a
private equity company?
Mr. JOSH KOSMAN (Author, "The Buyout of America: How Private Equity Will Cause
the Next Great Credit Crisis"): A private equity company or a private equity
firm - there's only about 100 major firms, maybe there's 300 overall. Many of
them are in New York, and they are these small groups of people who raise money
from â mostly from public pensions to buy companies, and they buy companies by
having â just the way that you or I would arrange a mortgage. We'd put maybe 20
percent down and borrow 80 percent. But the critical difference is when they
buy companies, they put 20 percent, and then the companies they acquire borrow
the 80 percent to finance the deal. So then the companies are responsible for
that debt. So basically, private equity firms, which is a fancy way or a nice
way or saying a leveraged buyout firm, go around the country, and they buy
companies using basically mortgage tactics but where the company takes the risk
and not them.
GROSS: You know, when I read that in your book, I actually couldn't believe it.
(Soundbite of laughter)
GROSS: Honestly, like, I really don't understand how that works, that, like, I
buy your company, and then you have to pay the debt for me to buy you? Like,
Mr. KOSMAN: It's pretty insane. My first job covering the industry â I've
covered the industry for about 13 years â was at a trade publication called the
Buyouts newsletter, and I didn't know what a private equity firm was or a
buyout was. I just thought it was an interesting job in Manhattan, and it
looked like it was worth taking. And it took me, I think, maybe two or three
months into the job before I really figured that out, and it shocked me, too.
GROSS: So why is it that way?
Mr. KOSMAN: It's really because of this giant tax loophole, and the giant tax
loophole is called interest tax deductibility, and this is how â why LBOs are
generally profitable for the private equity firm. Any company can deduct the
interest they pay on loans from their taxes. So if you buy a company, and you
buy it with all this debt financing, well, now suddenly, you're basically not
paying taxes anymore, and because of that, that company then can, in theory,
use that money to pay off its debt quickly. Reality is this is not the way it
typically plays out, but in theory, that's the way it works.
GROSS: So theoretically, with a private equity company, they buy a company.
They use debt to buy the company. The company that they've bought has to pay
off the debt, but they can deduct the interest from their taxes.
Mr. KOSMAN: Right.
GROSS: And theoretically, the company that's being purchased should make a
profit over time, should be more profitable in the next five years, and then
the company that bought this company can sell it at a profit. Everybody wins
because the company that's purchased becomes more profitable, the company that
bought that company sells the company at a profit. So theoretically,
everybody's happy. Is that the way, like, the perfect model looks?
Mr. KOSMAN: That's the way that the perfect model looks, but it rarely ever
works out that way. Typically what happens is the company is more profitable in
one sense, its earnings increase, usually because the private equity firm is
starving the company a bit of capital because that's â a private equity firm,
and I should have said this at the start, they're in the business of buying and
selling companies within four or five years. So there's no long-term interest.
So typically â and a Davos study shows this. Private equity firms eliminate
more workers than their direct competitors, and at the same time, they usually
decrease investment in research and development and capital expenditures. That
helps the companies they buy pay off their debt more quickly. And you know,
typically, you know, while the companies become more profitable short term,
until that pressure causes them to be less competitive, what it also â but you
know, at the same time, the company still has interest to pay on the debt. It
may have to take â may be able to take it off your taxes, but you still have to
pay the interest. So typically, these companies actually are much less
profitable than when they buy them.
GROSS: Give us an example of an industry in which there's been a lot of private
equity buys, and the industry, the whole industry in a way, has been squeezed
with a lot of layoffs and cuts within what the business does.
Mr. KOSMAN: Sure. An easy example is the mattress industry. Private equity
firms bought Sealy and Simmons about a decade ago - actually, it's 2009, so
let's say 15, 18 years ago - and then they bought and sold them between each
other, but buyout firms acquired, or private equity firms - and private equity
firms, by the way, I should also note, these are the same guys who were the
leveraged buyout kings of the 1980s, the exact same people often, but when
leveraged buyouts got a bad name, when Michael Milken went to jail, when movies
like "Wall Street" were made, they underwent a marketing change and very
cleverly started calling themselves private equity firms, but they're one and
In the mattress industry, private equity firms bought Sealy and Simmons, the
number one and number two brands by a mile. They stopped really competing
against each other. They cut costs, and they raised the prices of the
mattresses. They started focusing only on the top end and stopped even making
mattresses really for middle-income people that cost less than $1,000. So
basically simplifying this over time, as they bought Simmons and sold it to
another PE firm three or four years later, and same with Sealy, the buyers â
the sellers would make a lot of money, and the buyers felt, well, we can keep
raising prices because there's no competition. We own Sealy, and we own
Simmons. It's different firms, but they both have the same aim: to make a
short-term profit, not to beat each other up on price. What happened over time
was they couldn't raise the prices anymore, and the prices were raised double
the price of inflation, double the rate of inflation. They cut the beds in
half, so you came up with no-flip mattresses. That cut their manufacturing
costs, but it alsoâ¦
GROSS: Wait, wait, let's explainâ¦
Mr. KOSMAN: Sure.
GROSS: I thought great, no-flip mattresses, you don't have to go through the
work of flipping it, and the bed's kind of extra-good, so you don't have to
flip it, but there's another reason why you don't have to flip it.
(Soundbite of laughter)
Mr. KOSMAN: That's right. Initially, they made the mattresses thick. They kept
putting â creating thicker and thicker mattresses so they had an excuse to keep
raising and raising the prices. So they thought, both Sealy and Simmons both
had the same thought. The private equity firms that owned them both thought,
well, why don't we cut costs significantly and cut the beds in half and
introduce these no-flip mattresses.
Simmons did it first, early this decade. Sealy stood back. Sealy even made a
statement when Simmons did it, saying we would never offer a no-flip mattress.
That's why you should buy our mattresses. Simmons's sales didn't rise, but
their earnings went through the roof. The private equity firm that owned Sealy
at the time, which was Bain Capital - the same firm that Mitt Romney owned
during that period, the Republican presidential candidate - decided okay,
well, we'll change tack. You know, even though our market share is growing,
their earnings are going through the roof, and that's what we care about. So
then they introduced no-flip mattresses, and now and for the last six or seven
years, Sealy and Simmons only offer no-flip. There are no two-sided beds
GROSS: But are their no-flips any better or worse than the two-sided ones?
Mr. KOSMAN: Well, they certainly have less of a life. You can't flip them, so
just like a tire, you know, when you rotate your tire, you know, beds that used
to last 15, 20 years on average â and those were Sealy and Simmons beds â now
these beds last six, seven years. So it's a much cheaper bed. And what ended up
happening in the middle of this decade is Tempur-Pedic came out of nowhere. And
Tempur-Pedic offered a very nice sleep on a â I guess they call it, you know,
it's those foam beds, and those mattresses, on the high end, which is all that
Sealy and Simmons at this point were now competing in, they started to really
outsell Sealy and Simmons. And that puts â and then Sealy â and for Sealy and
Simmons, not only were they losing market share, now their earnings were
starting to fall.
GROSS: What's the state of Sealy and Simmons now?
Mr. KOSMAN: Now they're both in a really tough state. Simmons just got bought
by â went bankrupt, and it got bought by Serta. So that means Simmons, a
company that's been around for more than 100 years, doesn't exist anymore. A
quarter of their employees were laid off in the last year, and now â I
shouldn't say â the private equity firm that owned Serta bought them and says
they'll keep them independent, but that's a little hard to buy.
As far as Sealy, they were veering towards bankruptcy, and their private equity
owner, Kohlberg Kravis Roberts, put in some more money in the company to keep
it going, but Sealy is also having some problems, though they're probably a
step above where Simmons is.
If you look at it historically, though, Sealy's market share around 1990, when
the first buyout of Sealy happened, was about 28 percent. Today, they're at
about 20 percent. So I certainly believe that private equity firms, you know,
from the time of 1990 through today, have not done Sealy any favors, although
those private equity firms, by buying and selling Sealy to each other, have
generally made huge profits but in the process have hurt the business.
GROSS: So let's look at the hospital industry. You say that the hospital
industry has been especially hard hit by private equity takeovers. Why the
Mr. KOSMAN: They like the hospital industry, and in some ways, although it's a
very different product, it's like the mattress industry. They want to â you
know, the private equity firms like to put out this myth that they help
restructure businesses. They buy companies by putting companies in debt. Banks
would never lend money to those companies unless they felt those companies
would likely be able to pay that money off. So they are looking for companies
that are healthy, usually that are not fast growers and that they think will
have dependable cash flow no matter what happens.
So if they cut employees, cut research-and-development spending, if they starve
these companies, that these companies, at least in the short term, won't be
hurt competitively. That was the theory with mattresses, and that's also the
theory very much in the hospital industry, that if you buy a hospital, and it's
the only game in town â you buy a hospital chain, but if a lot of their
hospitals are the only game in town, well, then, patients, if they're getting
worse service probably won't leave for a while, and thatâs really the theory.
And patients usually leave when doctors leave, and doctors typically do not
leave a hospital very quickly. They're pretty conservative in the way they â
their relationships with hospitals.
GROSS: Here's what I'm wondering: These are not hostile takeovers. So if you're
a nursing home or a hospital chain or a large music company, why would you let
a private equity firm buy you, knowing that it's going to put you into debt,
knowing that your company is likely to be squeezed in order to show profits on
the books in the short term? Why would you want that? Why would you allow that?
Mr. KOSMAN: It's a very good question, and I think the sellers in most cases
don't realize much of what we're talking about. Very little has been written
about the destructive nature of private equity. Certainly, the investment
bankers that help sell companies, it's not in their interest to put that out
there. That's even if they really have put it together.
I believe that â I've talked to some sellers who somewhat regret what they did,
and I spoke to them for the book. Some of them didn't make the book, they
didn't want to be on record. But the sense I get is when you're selling a
business, you're looking for the most money you can make, and if a private
equity firm offers the most money, and sometimes they certainly do, that's what
you're focused on.
In a pretty revealing interview to me, the CEO, the former owner of a company
called Alpha Shirt in Philadelphia, in your town, spoke to me, and he explained
himself as â he had run this family business that basically imprints shirts.
They buy shirts from Hanes, imprint them and then â and they're a huge company.
And he said when he was ready to sell, his sons weren't ready to run the
business. They were just teenagers. He was ready to get out. It was his
father's business and his father's business before that, and they offered the
best price, and you know, he didn't do a lot of due diligence. He didn't really
call around, although he was given the names of other owners who have sold
their companies to private equity firms.
GROSS: If you're just joining us, my guest is Josh Kosman, and he's a financial
reporter for the New York Post. He's the former editor at mergermarket.com, a
former writer for The Deal and Buyouts newsletter, and his new book is called
"The Buyout of America: How Private Equity Will Cause the Next Great Credit
Crisis." Let's take a short break here, and then we'll talk some more. This is
(Soundbite of music)
GROSS: My guest is Josh Kosman. He's a financial reporter for the New York
Post. He's been covering markets and deal-making for years. His new book is
called "The Buyout of America: How Private Equity Will Cause the Next Great
You predict that the buyout of many companies by private equity firms is going
to cause a big credit crisis similar to the mortgage crisis. Let's look at some
of the reasons why you predict that. Yeah, go ahead.
Mr. KOSMAN: Sure. Private investors this decade, for these private equity
firms, used the same cheap credit that caused the housing bubble to buy 3,100
U.S. companies. Those companies employ one out of every 10 Americans, about
seven and a half â it was 10 million people. They've resold some of those
companies, so say today it's about seven and a half million people.
So private equity firms are the largest employers in the country when you
combine the companies they own by a mile, bigger than Wal-Mart, bigger than
The Boston â the cheap credit that was used to buy these companies, a lot of
the debt on that is starting to come due just now, and it will do so over the
next few years. The Boston Consulting Group, a pretty conservative
organization, predicts that half of those companies will default on their debt
by the end of 2011. If that comes to passâ¦
GROSS: That's half of the companies that were purchased by private equity
Mr. KOSMAN: That's right. That's right, so half of that â exactly. So if half
of those companies, so roughly 1,500 U.S. companies, end up filing for
bankruptcy, and those companies fire about 50 percent of their workers, not the
most aggressive estimates, you've got about 1.9 million people unemployed.
That's a huge hit.
Now, beyond that, you know, and that obviously reduces consumer spending, means
more home foreclosures, all sorts of problems, the companies that are â will be
falling into â will be defaulting owe about $1 trillion in debt. And if a
significant amount of those loans become worthless, that'll cause a freeze in
lending. To compare, about $1 trillion in debt in companies is similar to, in
2007, when subprime mortgages in this country were about $1.3 trillion. So it's
â the numbers are pretty close. And even if the economy recovers more than it
has today, many of these companies will collapse anyway because they're under
such tremendous pressure. But I certainly do believe that the way we are right
now, the economy is today, it created such a bubble to allow private equity
firms to buy companies using cheap credit, paying very high prices, putting
little money down, that just like the housing market, unfortunately, a lot of
these companies the private equity firms bought in this bubble are due to
GROSS: Another comparison to the housing market, the now-famous CDO is
collateralized debt obligations, which is basically mortgage debt that was
sliced and diced and packaged and sold and resold in the form of, you know,
exotic instruments, as they say.
(Soundbite of laughter)
GROSS: There's an equivalent for the private equity companies. They have CLOs,
corporate loan obligations. So explain how CLOs compare to CDOs and why that
might cause a problem.
Mr. KOSMAN: Sure. It's very similar. The same hedge funds that were creating
CDOs, which caused the mortgage market to boom, also created what were called
collateralized loan obligation funds, which made it much easier for companies
to borrow money to finance these LBOs. Same situation where hedge funds would
come in - mostly it was hedge funds. It was also banks. They would buy a pool
of loans to support LBOs, just like they would buy a pool of mortgages. Maybe
they'd buy a pool of 150 to 200 LBO loans, slice them up and resell them to
places like sub-Saharan African countries, Montana's state government, selling
this off as this is very safe because it's 150 to 200 loans, and even if a few
default, you're going to get paid, guaranteed. And Standard & Poor's and
Moody's, the rating agencies, gave these CLOs, just like they gave CDOs, AAA
ratings. So they gave them very much their stamp of approval, saying these are
very safe investments, and in the mortgage markets, as we know now, these are
far from safe, and unfortunately in the LBO market - and which has a huge
impact on this country because these are 3,000 companies that employ one out of
every 10 of us, unfortunately a lot of these companies are going to collapse,
and a lot of these CLOs also will prove to be nearly worthless.
GROSS: So has there been any problem yet? Have people lost money on their CLOs,
or is this something that you think might happen sometime in the future, maybe?
Mr. KOSMAN: I think mostly this is something that very likely will happen and
is starting to happen but has not happened yet. I mean, this year kind of
quietly, for the last 12 months, we've had an 11 percent default rate in this
country. That's near-historic highs. And half of the companies that have
defaulted, it's about 175 companies so far, have had private equity
involvement. Those are companies like Chrysler, like Reader's Digest, like
Simmons mattress that we talked about before. So unfortunately, the tsunami of
defaults is already starting.
GROSS: Josh Kosman will be back in the second half of the show. His new book
about private equity firms is called "The Buyout of America." I'm Terry Gross,
and this is FRESH AIR.
(Soundbite of music)
GROSS: This is FRESH AIR. Iâm Terry Gross, back with financial reporter Josh
Kosman, author of the new book âThe Buyout of America: How Private Equity Will
Cause the Next Great Credit Crisis.â The book is about private equity firms,
firms that buy companies with the help of huge loans, then sell the companies
at a profit, leaving those companies with the debt. The debt drives many of
those companies into bankruptcy. Kosman is a reporter for the New York Post and
a former editor at mergermarket.com.
You write about how private equity firms are really connected to powerful
people who are, or have been, in government. You mentioned several former
treasury secretaries have gone from the Cabinet to private equity. Name some of
the treasury secretaries who are in private equity now.
Mr. KOSMAN: Itâs really amazing. Four of the last eight treasury secretaries
are in the private equity industry. They include James Baker, include Nicholas
Brady, Paul OâNeill and John Snow. And John Snow, in some ways, may be the most
interesting case and show how those private equity connections can really help,
where those Washington connections can really help a private equity firm.
Cerberus, a PE firm, hired John Snow as chairman months after he left Bushâs
administration - meaning the second Bush, George W.
And GMAC - a Cerberus-owned company - and Chrysler, both got into trouble, both
looked for bailout funds. And in the case of GMAC, the government, in the last
days of the President Bushâs administration, allowed GMAC to convert from an
auto leasing company, basically, to a bank. As a bank, GMAC then could receive
TARP funds. And this was even though GMAC did not have enough capital in
reserve to meet typical bank holding requirements. And at the same time, much
of their business was in auto financing, which is not well diversified, which
doesnât make for a good bank.
And now, since they got that special status, itâs amazing. The government has
bailed out GMAC - I think, two or three times - to the tune of more than $12
billion to a company that, you know, arguably should have been never allowed to
receive TARP money and, I would probably say, is not that important to our
country. Why canât someone else set up an auto leasing business?
GROSS: There are tax loopholes that private equity firms benefit from that you
would like to see closed. What changes would you like to see made?
Mr. KOSMAN: The biggest one is interest tax deductibility. In the late â80s, it
is something that Congress considered, and that is the ability of a company to
not pay taxes on the interest it pays on its loans. I would like to see that -
you know, that loophole was there. Itâs more than a loophole. It was intended
so that companies could borrow money to build a plant, to buy new equipment. It
wasnât intended so you could borrow money to finance a takeover. If you
eliminated interest tax deductibility just for corporate takeovers, which would
really only impact the private equity firms, you would do a lot to make LBOs
And buyouts have - I think there is a track record that the core practice
doesnât work, and if you ended this tax loophole, if you ended the interest tax
deductibility on corporate takeovers, you would basically make LBOs
unprofitable and you would basically end the industry.
GROSS: The Obama administration is basically looking into that.
Mr. KOSMAN: Yes. Iâm very pleased to see that the president has appointed Paul
Volcker to consider the whole tax code, and interest tax deductibility is on
the table. I would think they would take a serious look at it. I believe Iâm
the only one so far that Iâve seen whoâs come up with at least an estimate of
how much the government has lost because of this loophole. And this decade, it
looks like theyâll lose about $70 billion from companies that pay much less in
taxes because they take on all this debt.
A study that came out after I wrote the book shows that private equity owned
companies pay about half in taxes, about half - their tax is rate is about half
of their competitorsâ. It was great study. It was done by a Notre Dame
professor. So, I think the government can certainly raise - by closing the
loophole, itâll generate a lot more money, certainly tens or billions, maybe
even a hundred billion. And the only purpose of this deductibility is to allow
LBOs to happen. And I think in the 30 years that the LBO industryâs been
around, they certainly have improved in that theyâve helped companies.
GROSS: How do you know that the companies that have gone under or are
struggling now, companies that were bought by private equity firms, how do you
know that they werenât going to struggle or go under, anyway? So maybe they
wouldâve gone under sooner. Or maybe the ones that are struggling would have
gone under, and, you know, the scenarioâs actually better than what it would
have been, even though itâs a bleak scenario.
Mr. KOSMAN: In most of these cases - well, in almost all of these cases,
private equity firms like to say that they help restructure companies. Reality
is the companies they buy need to be healthy to begin with or they canât do the
LBO. Those companies are taking on so much debt to finance their own sales that
these are healthy businesses. So I think in most cases - I mean, I will
certainly take a step back. Iâm one journalist who did two years of homework.
But I think in the evidence that I saw, I think there is a lot of evidence that
private equity firms hurt companies.
Their returns to their investors, to the pensions, is under the Standard &
Poorâs 500. So theyâre buying companies on leverage, like if we bought houses
on leverage. And yet their returns are worse than the S&P 500. And if you just
bought stocks in the S&P 500 and levered them up, youâd make three, four times
the money that private equity firms do. So they donât even make good returns
for their investors. So, I think - you know, to me, on many different levels,
itâs pretty clear that they donât improve companies. And I believe the
companies that they acquire need to be - almost all the time, need to be
healthy to begin with or they canât acquire them. So these are not companies
that were necessarily veering towards bankruptcy.
GROSS: Well, Josh Kosman, thank you so much for talking with us.
Mr. KOSMAN: Sure. Thank you very much for having me. I appreciate the interest.
GROSS: Josh Kosman is a financial reporter for the New York Post. His new book
about private equity firms is called âThe Buyout of America.â Coming up, part
two of our interview with Woody Harrelson. Heâs starring in the new film âThe
Messenger.â This is FRESH AIR.
*** TRANSCRIPTION COMPANY BOUNDARY ***
Woody Harrelson, Part 2: When War Comes Home
TERRY GROSS, host:
Last week, Woody Harrelson told us about his new film âThe Messenger.â Now we
have part two of his interview with FRESH AIR contributor, Dave Davies. For
eight seasons, Harrelson played a lovable and naive bartender in the TV series
âCheers.â Then he made the films, âWhite Man Canât Jump,â âIndecent Proposal,â
âNatural Born Killers,â âKingpinâ and âThe People versus Larry Flynt,â which
earned him an Oscar nomination for best actor.
He moved to Costa Rico for a while to flee celebrity, then settled in Hawaii
with his family and took five years off from acting. Heâs become a vegan and an
outspoken advocate of environmental causes. But heâs back in movies. He had a
memorable supporting role in âNo Country for Old Men,â and heâs now in the
comedy âZombielandâ and the drama, âThe Messenger,â in which he and Ben Foster
play soldiers assigned to tell family members that a loved one has died in
action. Letâs start with a clip from his first scene on âCheers.â The scene
starts with Ted Danson as Sam Malone.
(Soundbite of movie, âCheersâ)
Mr. TED DANSON (Actor): (As Sam Malone) Woody, did you say youâre looking for
Mr. WOODY HARRELSON (Actor): (As Woody Boyd) Well, actually, I came to Boston
on a fact-finding tour. See, I tend bar back home in Indiana. Well, itâs not a
bar, exactly. Itâs more like a pigsty with a jukebox.
(Soundbite of laughter)
Mr. HARRELSON: (As Woody Boyd) If we had a Jukebox.
(Soundbite of laughter)
Mr. DANSON: (As Sam Malone) Carlaâ¦
(Soundbite of laughter)
Mr. DANSON: (As Sam Malone) â¦Iâd like you to meet Woody Boyd. Woody, this is
Mr. HARRELSON: (As Woody Boyd) Hi, maâam.
Ms. RHEA PERLMAN (Actress): (As Carla Tortelli) Maâam?
(Soundbite of laughter)
Ms. RHEA PERLMAN (Actress): (As Carla Tortelli) Whatâs that supposed to mean?
(Soundbite of laughter)
Mr. HARRELSON: (As Woody Boyd) I believe itâs a term of respect.
Ms. PERLMAN: (As Carla Tortelli) No wonder it sounded so weird.
(Soundbite of laughter)
DAVE DAVIES, host:
The character that you played, Woody Boyd, was sort of this lovable, naive
hayseed from Indiana. And, you know, it occurred to me that you got this huge
role at a pretty early time in your acting career - not like you didnât pay
some dues. I know that you did, you know, plays in New York. But you had lot
more success in your 20s than a lot of people did. And Iâm wondering if being
in Hollywood then - you grew up in Ohio, I guess. Andâ¦
Mr. HARRELSON: Texas and Ohio.
DAVIES: Texas and Ohio, right. And that being in Hollywood then and having that
role, were you a little wide-eyed, like Woody Boyd?
Mr. HARRELSON: Yeah, I suppose I was. I was - you know, Iâd just turned 24 when
they started. I was 23 when I auditioned for it, but it was right just before
my birthday. And then, I donât know - doing it - I got to say I didnât have the
full realization of, well, Iâm replacing this beloved character. I mean, I kind
of knew that, but I hadnât watched the show. So, I didnât really know, you
know, that much. I think it would have been a lot more of a daunting task had
Iâve been watching the show.
But certainly, I remember standing back offstage, waiting for that red light to
go on and, you know, I could hear the dialogue and I could tell I was getting
closer. And then, boom, the red light goes on and Iâm entering into the bar, in
front of a live audience, and obviously a show thatâs going to be seen by a lot
of people. So it was pretty â I was nervous, I got to say. But thankfully, you
know, Iâd done enough theater in college that I think it really helped me get
DAVIES: After âCheers,â you made a transition to movies on a way that not that
many TV actors do as successfully. And one of your early films was âWhite Men
Canât Jump,â and I thought weâd listen to that. That really - I think, it
really put you on the map as a movie actor, and I thought we would listen to a
clip from that. And this is you and your costar, Wesley Snipes.
I mean, those who know the film know that you guys are basketball hustlers. You
go onto a playground and provoke games and fool people and take their money.
And in this scene, youâre about to compete with Wesley as a partner in a two-
on-two basketball tournament, and you suddenly start talking trash to a couple
of guys on the court whom you might have to play later. Letâs listen.
(Soundbite of movie, âWhite Men Canât Jump)
Mr. HARRELSON: (As Billy Hoyle) Hey, chump. Yeah, you, potato head. You know
who Iâm talking about.
Unidentified Man #1: Yeah.
Mr. HARRELSON: (As Billy Hoyle) If thatâs your best game youâve got? Because if
it is, you better just grab that free T-shirt and head home.
Mr. WESLEY SNIPES (Actor): (As Sidney Deane) Hey, man. What the hell are you
Mr. HARRELSON: (As Billy Hoyle) You hear? What did you bring over here? Mighty
Mouse? You know something? Youâre too pretty to play basketball. You know that?
You got that big Z in your fro, man.
Mr. SNIPES: (As Sidney Deane) Come on, would you stop already?
Mr. HARRELSON: (As Billy Hoyle) Hey man, what are you? Are you the black Zorro?
Mr. SNIPES: (As Sidney Deane) Oh man, look, thatâs enough.
Mr. HARRELSON: (As Billy Hoyle) Hey, no, seriously. You get your haircut at the
Unidentified Man #2 (beep) Whatâs Opie Taylor talking about, anyway, huh?
Mr. HARRELSON: (As Billy Hoyle) Opie Taylor? Opie â hey, I got your Opie, you
big bad Gomer Pyle droopy-eyed son of a bitch.
Unidentified Man #2: You and your cream-of-wheat ass take your ass back to
Mayberry and tell Aunt Bee she better have my bean pies, or Iâm going to kick
Mr. SNIPES: (As Sydney Deane) What are you doing?
Mr. HARRELSON: (As Billy Hoyle) Hey, Lurch and Morticia.
Mr. SNIPES: (As Sydney Deane) What the (beep) are you doing?
Mr. HARRELSON: (As Billy Hoyle) Hey, Iâm doing two things.
Mr. SNIPES: (As Sydney Deane) What? What are you doing?
Mr. HARRELSON: (As Billy Hoyle) Iâm making them mad. Most guys donât play good
when theyâre mad.
Mr. SNIPES: (As Sydney Deane) Look, you know, youâre embarrassing me. Thatâs
what youâre doing.
Mr. HARRELSON: (As Billy Hoyle) Yeah, thatâs the other thing Iâm doing.
Mr. SNIPES: (As Sydney Deane) You know, youâre not embarrassing me. Youâre
pissing me off. Thatâs what you are doing.
Mr. HARRELSON: (As Billy Hoyle) Well, good because unlike those guys, I assume
you play better when youâre mad. Am I right?
(Soundbite of cheers)
Mr. SNIPES: (As Sydney Deane) Iâm not listening to you.
Mr. HARRELSON: (As Billy Hoyle) Yeah. But you are hearing me.
DAVIES: And that is my guest Woody Harrelson with Wesley Snipes from the movie
âWhite Men Canât Jump.â A lot of fun, macho trash talk there, but, you know, a
character really different from Woody Boyd on âCheers.â And, you know, I have
to say, when I think of a Woody Harrelson role, what I think of is a guy who
brings enormous self confidence, just not a moment of self doubt, I mean, a
kind of guy that could start trash talking on the basketball court. Is that
closer to you than this naive kid from âCheersâ?
Mr. HARRELSON: You know, maybe somewhere right in the middle. I donât feel as
confident as that. I donât remember. Well, I guess I do some trash talking,
(Soundbite of laughter)
Mr. HARRELSON: You know, I guess - I feel a lot like that character, Billy
Hoyle. Yeah, I guess so.
DAVIES: Well, letâs talk a little bit about âThe People vs. Larry Flynt.â This
was a role that got you an Oscar nomination. I mean, Larry Flynt was, of
course, the publisher of Hustler magazine, who was shot and paralyzed from the
waist down - I believe the assailant was never actually caught. And you played
him in this film about his battles against censorship, as well as, itâs, you
know, a profile of his â his very interesting life. We should listen to a cut
here. In a way, you kind of had two â there were sort of two roles here. I
mean, he had to play the Larry Flynt before he was injured in the one after.
And the on after, the gunshot wounds affected his speech. And in this cut from
the film, youâve just come back to Hustler magazine, after being either in jail
for contempt in one of the court cases or in the hospital - Iâm not sure which.
But youâve come back to the magazine and sort of taken charge. Letâs listen.
(Soundbite of movie, âThe People vs. Larry Flyntâ)
Unidentified Woman: The pervert is back. The pervert is back.
Mr. WOODY HARRELSON (Actor): (As Larry Flynt) Circulation is down by a third.
Color reproduction is horrible. Models look like theyâre three-dollar whores.
The writing is by some moronic idiot.
Mr. SCOTT WILLIAM WINTERS (Actor): (As Blow Dried Jerk) Mr. Flynt? I donât want
to step on your toes, but things have changed since you were actively running
the company. I mean, I look back at the stuff you did in the 70âs and it was
sort of racy and crazy, but the country is different now. Reagan has rebuilt
America and the Moral majority is gaining power.
Mr. HARRELSON: (As Larry Flynt) Youâre fired.
Mr. WINTERS: (As Blow Dried Jerk) Excuse me?
Mr. HARRELSON: (As Larry Flynt) You get the (bleep) out of my building. Doug,
get him out of here. You blow dried jerk (bleep). Take him out of here and
throw him in the incinerator, cut him to little pieces and feed him to the
animals out there. Get out of here.
Mr. BRETT HARRELSON (Actor): (As Jimmy Flynt) Larry. Larry, you canât do that.
I mean, heâs our vice president. Heâs the VP of marketing.
Mr. HARRELSON: (As Larry Flynt) Hey, Jimbo, are you trying to challenge my
authority? You see that on the wall? LFP, thatâs Larry Flynt Publications. Not
JFP. Okay? Iâm the big kahuna here. Do you have a problem with that?
Mr. HARRELSON: (As Jimmy Flynt) No, Larry. Youâre the boss. So, Larry, whatâs
Mr. HARRELSON: (As Larry Flynt) Plan. The plan is simple. The establishment
took my manhood from me, but they left the half of me. They left the half with
the brain and Iâm going to use it to get back.
DAVIES: And thatâs â my guest, Woody Harrelson, making his mark as Larry Flynt,
the porn publisher, in the film âThe People vs. Larry Flynt.â Tell us what
interested you about doing this film?
Mr. HARRELSON: Well, you know, when they offered it to me, I was â I kind of
had a similar opinion, most people had, which â when they heard, they said,
well, why would you want to do a movie about this guy? And yet, you know, they
were, and Milos Forman was going to direct it. So, it really seemed like
something, you got to pay attention to. So I went and met with Larry. And my
feeling was, if I didnât like him I just wasnât going to play the part. But I
was kind of amazed by him, you know, he is a brilliantly funny, interesting guy
who likes to stir things up and yet, you know, whether or not agree with what
he does, heâs a kind of a fascinating character.
So, I was glad to get time with him. And when we start to make it, there was a
lot of work to be done, because the script just needed a lot of work and
theyâre ended up being a lot of improv in it. And that was fun, listening to
that scene because there was my brother in that scene. He played Jimmy Flynt.
DAVIES: Do you identify with Larry Flynt in anyway? I mean, youâre both people
who sort of arenât afraid of stirring things up and setting your own course?
Mr. HARRELSON: Well, I think probably during the course of it he kind of
activated me more, just for having played him, it made me, you know, it was
after that that I did things where I had brushes with the law and so forth
that, you know, probably I never would have done that.
DAVIES: May be you should explain what you mean by brushes with the law.
Mr. HARRELSON: Well, for example, I was upset by the fact that there was no
distinction made between hemp and marijuana, where I think in a free country
you should be free to grow whatever. But Iâm not going to pretend this is a
free country. But, however, I went to Kentucky and along with my buddy, Joe
Hickey, there. We kind of set up this thing where I planted hemp seeds and got
arrested. And then the concept of it was to go to trial, which we ultimately
did, and hopefully the jury would see the distinction between the two, and, you
know, farmers would be free to grow hemp which you can use for paper, or
clothing, or, you know, itâs a sustainable material. So, thatâs what ended up
happening. And doing things like that or climbing the Golden Gate Bridge, I
donât know if I would have done that kind of thing had I not played Larry, just
because it made me look at things differently. I â before, the thought of
getting arrested was just an impossible thought and I would never intentionally
do that. And after playing the part, I looked at it as a way to kind of get my
point across, you know.
DAVIES: Right because Larry Flynt, in fact, actively provoked the authorities,
and including â assaulting judges in courtrooms at times, we should mention
that the â you mention climbing the Golden Gate Bridge, that was â I think the
string of banner protesting the eradications of redwoods, right?
Mr. HARRELSON: Yeah, we were protesting the logging of the ancient redwoods in
Northern California. And Iâm not sure we helped any, but, you know, we tried to
bring some attention to it.
DAVIES: I read too, that there was a time when youâre having a rough time with
your - with Laura Louie, your wife â although, then I guess you werenât married
- and you spoke to Larry about it. And I think he even might have spoken to
Mr. HARRELSON: Yeah, Larry took it upon himself, unbeknownst to me, and called
up Laura and got together with her and actually was giving relationship advice,
because I guess he considered her, you know, being my wife, comparable to what
it would be like to be Larryâs wife.
(Soundbite of laughter)
Mr. HARRELSON: Iâm not sure why? But it was really - it was one of those
incredible, you know, things that true friend does, you know, that you just, I
was really grateful for that. And I think it did help.
DAVIES: Do you want to share the advice you got?
Mr. HARRELSON: No, not at all.
DAVIES: Weâre speaking with Woody Harrelson. His new film with Ben Foster is
called âThe Messenger.â We will talk more after a break. This is FRESH AIR.
(Soundbite of music)
DAVIES: If youâre just joining us weâre speaking with actor Woody Harrelson. He
stars in a new film with Ben Foster where they portray military officers who
have to give word to loved ones that a service member has died in action. The
new film is called âThe Messenger.â
People, who you know you well, know that your father, who I guess divorced from
your mom at an early age, was imprisoned. He was convicted of killing a federal
judge. And I know that you had a relationship with him and visited him in
prison and tried to help him get a new trial, âcause you felt that he did not
have a fair trial - died two years ago. But itâs interesting to me, as Iâve
read what youâve said about him, that he was a charming, well-read, really
interesting guy. And it struck me that, you know, one might say a lot of those
same things about you, and youâre both guys who arenât afraid to break some
rules. Do you feel like youâre like your dad in some way?
Mr. HARRELSON: Well, I guess you could say, you know, they have this saying -
the Japanese - there some kind of Japanese philosophy that when youâre born on
your fatherâs birthday, youâre not like your father - You are your father. So,
I donât know, I remember hearing that. And itâs kind of interesting, one time.
And I do think there are a lot of similarities. I think he had a much different
kind of sense about what he needed to do to make money in life. And who knows
what would happen to me if hadnât fallen into acting.
So, in that sense we might have been exactly the same. But fortunately, I ran
down this alleyway. And what about him? You know, he was an incredible guy in
many ways. And, you know, he did a lot that probably nobody could be proud of,
but so be it, you know? I still loved him and it was really sad for me that he
died in prison and we never got to go hang out and have a beer together and,
you know, just shoot the (beep) without being on telephones or having or having
things monitored, you know?
DAVIES: Mm-hmm. You had to stretch for a few years where you werenât making
films, right? Youâve made several recently. What made you want to take sometime
away from movie making?
Mr. HARRELSON: Well, I mean a part of it was - it was after Larry Flint and
this whole debacle where the movie was kind of destined to do quite well. And
then whole campaign against it destroyed any chance of that. And the studio at
the time didnât really fight it. They just of kind of let it go. And it was
really devastating because that movie meant a lot. And myself and Ed Norton and
Courtney Love and Milos, we â I mean we put tons of work into that and tons of
ourselves into that. And that was kind of a devastating blow.
Also, I was just - Iâd done movies back to back to back, and I was just - I was
not enjoying it. Like this is a job you should be enjoying. So, it was a good
opportunity to do another important thing, which was - and the most important
of all of it - which was to hang more with my family. And, so thatâs what I
did. You know, we moved off grid and out of sight, and just had a ball
together. So, one of my better decisions. I didnât think it was going to be
five years, but I thought it would be couple - three years. And then it was
just fun. And, you know, Iâll say this, Iâm a good worker and a hard worker,
but Iâm world class vacationer.
(Soundbite of laughter)
DAVIES: Good to have that talent.
Mr. HARRELSON: And a slacker.
(Soundbite of laughter)
DAVIES: Are you having fun with the job again?
Mr. HARRELSON: Oh, yeah. Iâm really enjoying it now. And Iâve just wanted to
make sure that every movie that comes along, I just try to do my very best, and
also that the movie has every chance of being great. In this case, with âThe
Messenger,â I think itâs the best movie Iâve been a part of. I think itâs truly
great and Oren Moverman, is like a young Hal Ashby, and he just truly, you
know, one of the most visionary directors Iâve ever worked with. And Ben
Foster, I think, delivers just a searing, beautiful, eloquent performance. And
itâs great to be a part of it.
DAVIES: We are about out of time, but Woody Harrelson, I want to thank you so
much for talking with us.
Mr. HARRELSON: Oh, thank you. Itâs a pleasure being on your show.
GROSS: Woody Harrelson spoke with FRESH AIR contributor Dave Davies. Dave is a
senior writer for the Philadelphia Daily News. Woody Harrelson stars with Ben
Foster in the new movie, âThe Messenger.â
(Soundbite of music)
GROSS: You can download Podcasts of our show on our Web site freshsir.npr.org.
And you can follow us on Twitter at nprfreshair.
Iâm Terry Gross.
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