Sunday, September 11, 2011

Richard L. Rosenthal, a Utilities Entrepreneur, Is Dead at 82

Richard L. Rosenthal, who took control of a small troubled company called Citizens Utilities after World War II and built it into a powerhouse of profit that made millionaires of many investors who stuck with him until he retired in 1989, died on Saturday. He was 82 years old.

His wife, Hinda, said yesterday that he died at home in Stamford, Conn., after a long illness.

Mr. Rosenthal not only made a mark as a builder of profitable companies like Citizens Utilities, which has its headquarters in Stamford, he was also known as a supporter of the arts.

He established the Richard and Hinda Rosenthal Foundation in 1948 to give cash awards to writers, painters and young film directors. Brian De Palma and Martin Scorsese were among the recipients when they were still making their way as young directors.

''Those of us who have been fortunate in society should make a real effort to put something back,'' Mr. Rosenthal said in a 1983 interview. ''I don't mean just money, but energy and thought -- the whole panoply of one's intellectual capacity and experience.''

Mr. Rosenthal stood taller than 6 feet, with reddish hair and a craggy face. He reveled in the limelight and tried his hand at acting. He had a small part, playing a judge, in a film called ''Bad Boys,'' directed by his son, Rick.

''It reasonably may be said that I have been too vainglorious,'' he said in a 1981 Forbes magazine interview. ''But it reasonably may be said that we have fulfilled what my objectives have been.''

His career was not a story of rags to riches through hard work. It was of an ambitious young man who, after the Depression, concluded that success required knowledge.

Mr. Rosenthal graduated summa cum laude from New York University with a Bachelor of Science degree and then went on to graduate studies. ''We were deadly serious about studying because we knew we had to know something -- and prove it -- in order to get any kind of job after leaving school,'' he once said of his graduating class.

He used his analytical abilities to land a $75-a-week job at Wertheim & Company, a Wall Street investment firm. While there he developed a research technique that involved traveling to study a business firsthand by interviewing management and employees instead of relying on material provided by companies.

Some friends on Wall Street were impressed with his abilities. They formed an investment group and asked Mr. Rosenthal, then 29, to buy control of some companies. He decided to focus on utilities because he considered their managements ineffective and thought that they failed to exploit fully their growth opportunities.

Mr. Rosenthal and the group acquired three small companies: Citizens Utilities, in 1946; Michigan Gas and Electric, in the Upper Peninsula of Michigan, in 1947, and the New York Water Service Corporation, a water utility, in 1948.

During most of his career at Citizens Utilities he held the positions of president, chief executive and chairman.

His approach was to be highly diversified by region to better ride out economic cycles and not be under the influence of regulators from a few states.

He acquired more than 40 companies to build Citizens Utilities. Its revenues rose from $2.4 million to more than $300 million when he stepped down in 1989. By then Citizens Utilities had about 460,000 customers in more than 500 communities in 12 states.

Mr. Rosenthal also found an innovative way to raise money for his ventures. Instead of paying out most of the earnings in dividends, as most utilities do, he issued a special type of stock in which shareholders got stock as dividends.

Investors enjoyed one of the highest annual rates of return in the utility industry during his tenure.

Unlike most utility executives, he rarely built new power plants to meet rising demand for electricity in the many fast-growing Western areas into which he expanded. Instead he bought power from other producers.

To manage the widespread businesses, he sought executives who could operate independently. He kept a tight rein, however, requiring them to submit weekly reports, and he visited them periodically.

Mr. Rosenthal also built the New York Water Service Corporation into a diversified company called Utilities and Industries, which owned such businesses as Mills Music Inc., a large publisher of music, and a recreation complex in the Virgin Islands. The company was sold in 1969. Michigan Gas was sold to American Electric Power, a large utility in the Midwest, in 1967.

He is survived by his wife of 53 years, Hinda Gould Rosenthal; his daughter, Jamie Wolf, who is a writer in Beverly Hills, Calif.; his son, Rick, of Brentwood, Calif., who is a director of movies and television programs; a brother, Herbert C. Rosenthal of Santa Barbara, Calif., and four grandchildren.

Source: nytimes.com

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