Autumn of the Moguls

by Michael Wolff

  I think it was his age—and a sense he had of the terrifying and disordered world without him. This is, in some sense, the ultimate narcissism: after me the deluge. But there wasn’t that coldness. It was more bittersweet. And there was the sense of loneliness too. There were these people around Murdoch but they were all clearly unlike him—even his son. The size of the experience and the accomplishment just made him too remote from everyone. In most companies, the divide isn’t so great; people have just worked in the company for longer or shorter periods of time. Even in Jack Welch’s GE, Welch was replaceable; people rose up through the ranks. That’s no small point of a modern corporation—in a sense, it’s even why they exist, to perpetuate themselves in an orderly way. But Murdoch, of course, wasn’t replicable. And he seemed even more lonely for understanding this. The thing with Murdoch was that you felt not just that he was unique, but that he knew it. And he carried this around with him. He shouldered this burden.

  “If I am right that you have held power in America longer than anyone, this is not something small. I would love to be able to get you to discuss that kind of perspective. This context of your experience. This sense of what you felt. This thing that has divided you from everyone else. The thing that has let you understand something about this business and this country and this time that nobody else has understood.”

  Everybody else around the table looked pretty dubious. But Murdoch looked quite pleased and up for it.

  5

  THE OTHER

  PANEL

  Compared to Murdoch, this other panel I was doing felt a bit like being relegated to the children’s table. I was the older kid who had to entertain the younger ones.

  Among my charges was Terry Semel, who, in an unlikely career turn, had become the CEO of Yahoo, and who before that had been the longtime cochairman of Warner Bros, and, arguably, the most powerful studio executive in the movie business, and an untoppable power within Time Warner until Jerry Levin had finally toppled him in 1999.

  Then there was Peter Chernin, who was Murdoch’s number two at News Corp. Being Murdoch’s number two was, of course, not like being anyone else’s number two (and came without the assumption that you might ever be number one).

  And then there was Jeffrey Bewkes, who had been running HBO—possibly the most successful media company in America, despite the fact that it was part of AOL Time Warner—until, in another frantic dislocation at the company, he had been elevated by the departure of Bob Pittman to the two-man office of the COO. Bewkes now oversaw the entertainment and cable side of the company. Don Logan, who had run the other top-performing segment, the old Time Inc. magazine group, also promoted into purgatory, was the other half of the COO job, running publishing and the online division.

  Semel, Chernin, and Bewkes were operators—as fair a representative group of the guys who actually made the trains run on time in the media business as you’d find. The panel we were doing together was called “Media Conglomerates—The Burdens of Scale.” They would certainly know about the burdens.

  Still, I had to summon my energy to want to talk to them. They were, in mogul terms, small-time. Worse, they were small-timers who you had to treat like big-timers. They were permanent government types—bureaucrats, jobholders. Like you and me, just with more entitlement.

  Of course, this is just from the perspective of having come from lunch with Murdoch. From the other perspective, in which one could never hope to become a mogul of the generation of real moguls, they’d done just about as well as you could do (each of these men would certainly finish his career worth hundreds of millions).

  Still.

  We were knocking elbows at a different level.

  I called Semel’s office to chat about how I saw the panel shaping up and his office had a PR person call me back. I said why don’t you have him call me. The PR person said why didn’t I first supply a little background so the PR person could adequately prepare him. I said I tended to like to work in a more ad-hoc, free-associating way than that. Couldn’t I give just a little background about what the panel was about? the PR person wheedled. I preferred, I said, to have this thing emerge contextually, so he should certainly call me at his convenience.

  At this level, it was always about who could be the bigger prick.

  Semel called me from an airport.

  The difficulty with Semel would be to get him to shut up. He was, in the Hollywood style, a famous gasbag. And, even from his mobile in the airport, he went on at quite some length. He had many views about consolidation; the vicissitudes of consolidation (that is, Jerry Levin consolidating his power over the consolidated companies that made up Time Warner), after all, had helped him lose his job, but, too, he was obviously, for want of any other real option, hoping to consolidate Yahoo.

  Gary Ginsberg, on the other hand, easily offered Chernin up—there wasn’t really any level of pretense of mogul-level treatment for Murdoch’s number two. “Do you want me to have him call you?”

  “That would be great. Have him call me.”

  Indeed, comparatively, there was an egolessness, an affability to Chernin. And, as with Ginsberg, you could bond immediately in a shared interest in Murdoch. Murdoch was the Grand Canyon and the people who worked for him were the National Park guards and rangers chatting with the tourists about the wonders of the natural monument.

  As for the subject at hand—the perils of consolidation—Chernin was going to be deeply unforthcoming. What could he say? That there was a flaw in Murdoch’s vision? Or, no flaw with Murdoch, but a flaw with everyone else?

  If I was going to get something from Chernin, I would have to trick it out of him. No matter. There was something so what-you-see-is-what-you-get, even something so guileless, about him, that tricking him seemed very possible.

  Bewkes, who on the surface had a fraternity-style convivialness, was likely to be the most interesting of the three.

  Simply put, everything paled before AOL Time Warner.

  There was just no argument—no spin. It was one of those rare business situations in which the businesspeople couldn’t really lie. You can get such a situation in a company that’s over with—in liquidation, or under indictment. But you seldom have a situation in which the people in a going concern can’t hide. In which everything is known. In which everyone has somehow grasped failure, incompetence, hubris, and even plain ridiculousness as part of their corporate identity.

  Indeed, all anyone did at AOL Time Warner these days was confess. They weren’t even looking for forgiveness. It was just everyone getting it off their chests.

  Embarrassment too was a prevalent feeling. If you were from AOL Time Warner you were from the company that had done the worst deal in business history. You had not just been fooled, you were a fool.

  You just had to accept this.

  Shame had given way to a kind of humor about the situation.

  Bewkes was going to have something to say—he was going to have to say something.

  “We’re either going to be talking about consolidation or we’re going to be talking about breakup,” I said to Bewkes.

  “Let’s talk about breakup,” said Bewkes, with a sudden, strange laugh.

  Every panel needed a desperate character.

  Bewkes was going to be my guy.

  6

  THE

  FIRST DAY

  The conference setting (“the venue” as they say in conference talk) was the Grand Ballroom of the Regent Hotel on Wall Street. The Regent was a new hotel which occupied the former headquarters of the 19th-century New York Customs House. The Grand Ballroom was, next to the floor of the stock exchange itself, one of the greatest public rooms downtown. On the other hand, one look around the place should have told you that the sound was going to be terrible.

  To spend, conservatively, $500,000 to stage an event that people won’t be able to hear very well must mean that you have some higher purpose for being here.

  That was the Wall Street point. The presence of t
he conference downtown was, in theory, about September 11 and a vote of confidence in renewal. But it was also more pointedly about Wall Street—that is, about money, or the nature of a certain kind of money.

  Behind the scenes, the relationship between Heilemann and Battelle and Quadrangle had begun to shift.

  Surely the media business was ripe for engaging in some deeply emotional encounter session, some massive family therapy, even some Maoist act of excoriating self-criticism (after which several cadre members would be taken out back and have a bullet put through their heads).

  If there ever was a time for something large to emerge, some fork in the road to be created, some existential business moment to be seized, this was it.

  In order for this to happen, Rattner and Quadrangle would have had to be the silent producers, or even more remotely, the silent investors, and Heilemann and Battelle would have had to be great provocateurs.

  But in this, as with virtually all other media ventures, the money is never silent. It’s opinionated, anxious, demanding, aggrieved—desperate for reassurance.

  There is nothing more neurotic than money.

  And Quadrangle, being itself a new and insecure business (and Rattner being a new and insecure would-be mogul) that had never before staged anything so publicly, much less staged something before the very people who would make or break their business, was especially neurotic.

  A series of accommodations to Quadrangle’s insecurities began.

  Both Heilemann and Battelle rolled the eyes, grimaced, shook their head, indicating vast long-suffering conference calls over the many months since they had first contacted me. It was an elemental issue: Is this an independent congress or one in service to the Quadrangle business? To the degree that an independent congress might make money for Quadrangle, independence might be worth it; to the degree that it became more and more apparent that making money in the conference business was elusive, then Quadrangle, perhaps naturally, wanted some other tangible thing out of it.

  A tonal shift occurred between the first discussions among Heilemann, Battelle, and Rattner and now. The orientation moved from media and chattering class to Wall Street. From creators to financiers. Indeed, this is the most basic divide in the media business.

  You could suddenly see it physically.

  The room filled up that first morning with many faceless men. In lackluster suits. With traditional haircuts. These weren’t people so much engaged in the media business as people waiting for the dénouement of the media business. They were bettors at the horse race. Or ambulance chasers. These were the people whose own funds might invest in Quadrangle’s funds, or who might invest alongside Quadrangle in a deal, or who might pass a deal to Quadrangle. These were deal-flow people. These were not media people at all—they had nothing to contribute, except money. They were onlookers. By the nature of their business, they were disengaged.

  These people, no doubt, reflected Quadrangle’s divided nature: to be mere profit takers, or actual players?

  The other element of the Quadrangle influence was a general business sense of requisite good tidings. Business, after all, is a generally optimistic discipline. If you’re not optimistic you’re not in the game, and even if you don’t feel optimistic, you had better act it. (As a child, my advertising business father once frighteningly told me: “You’re not bankrupt until people know you’re bankrupt.”)

  Nobody seemed angry, or out of sorts, or eager to lay blame. Sangfroid ruled.

  Judging by this genial complacency, you might even have reasonably concluded that the media business was a pretty healthy one.

  The opposite, and hardly extreme, position—that the U.S. media business is in about the same fix as the Japanese banking system—was not at all part of any discussion. This was no surprise: If there was such a crisis, then the people here—both on the stage and in the audience—would have been the people who created it. It was therefore not likely that they would now be confessing guilt, or proposing radical overthrow.

  This was business as usual—naturally.

  There was, finally, a lately imposed gag order. The Quadrangle people had insisted that the conference be formally placed off the record (of course, it was almost impossible to say what that meant, or who it applied to, or what enforcement methods were behind it). There was a hastily drawn-up sheet of paper handed out at the door spelling out the rule.

  Media industry people are almost always more neurotic about the media than anyone else.

  Indeed, Heilemann, obviously frustrated by the gag rule, constructed some elaborate rationale for me about the circumstances in which, actually, Quadrangle would like to be written about which so attenuated the basis of the gag rule that I felt determined to slip its bounds.

  There was a mountain of Danish pastries and bagels in the back of the soaring room. There were sentinel coffee urns and pitchers of orange juice.

  Above the rows of banquet chairs, there was an elaborate phalanx of lights. Behind the stage was the magnifying simultaneous-video screen.

  I sat down in the first row.

  Shortly, Pam Alexander arrived and made some Wall Streeters move aside to make a place for her.

  Even understanding all of the constraints, and all of the biases against self-expression, and the general reluctance at any business conference for anyone to truly speak their mind, and the difficulties of getting the people who broke the Japanese banking system to talk intelligently about how to fix it, I was not without expectation.

  It did not seem possible to entirely avoid or evade the monumental crisis we were in.

  This was as substantial a gathering of moguls and would-be potentates and true overlords as you were going to find.

  The occasion had to be revealing.

  What’s more, it was Election Day—the Zeitgeist was surely turning.

  7

  THE MISSING

  (MEL AND SUMNER)

  Sumner dropped out.

  There had to be one. He was in London meeting with Tony Blair, Heilemann announced—but he wished he could be here. (The spin was that only a meeting with Tony Blair could have pulled him away, and that it was only for the sake of protocol and propriety that he did not give Blair the dump for the conference, which was so much more happening.)

  The truth is that there probably never was much of a chance that Sumner Redstone would show up—or that he would be allowed to show up. Cooler and more practical heads at Viacom would have headed him off.

  You didn’t really want to let the 79-year-old Sumner out in public.

  With a striking head of orange hair, the Viacom chairman is a vainglorious, old-school egomaniac who has an operatic personal life that has been largely kept out of the media—undoubtedly because he controls so much of it.

  He benefits from an odd tolerance on the part of investors and bankers that lets a media company, more so than any other type of company, function as a hybrid between a public and private entity; Redstone’s Dedham, Massachusetts—based National Amusements owns a relatively small amount of Viacom (CBS, MTV, Paramount, Blockbuster, Simon & Schuster, etc.), but nevertheless has a lock on Viacom’s voting shares.

  Which means he gets to treat the company as his alter ego.

  “Viacom is me. I’m Viacom,” he told Fortune. “That marriage is eternal, forever.”

  Even if the prospect of Redstone running Viacom for, as he’s suggested, another fifteen years is unlikely (“I know I don’t look my age and I don’t act my age and therefore I will not accept that age,” he’s pronounced), shareholders are stuck with him for as long as he wants to hold on.

  The outlandishness of the conceit makes it almost endearing. (“I am on a high-protein diet,” he told an interviewer, spelling out his plan for longevity. “It’s a way of life. People don’t realize it, the culprit is not fat. The culprit is sugar … I am an expert nutritionist, by the way.”)

  Surely, we like our moguls to be over-the-top.

  But then there is Viacom’s CEO Mel
Karmazin—the mogul-in-waiting, and Redstone’s would-be successor—who, in fact, would have been the more likely representative from Viacom, but who would have purposely and smartly fobbed off this gathering on Sumner (it would have stroked Sumner’s ego to do the conference).

  Karmazin is the opposite character from Redstone, and even from most other moguls. He has seemed to discourage his own publicity—or at least the publicity he has encouraged is as someone discouraging his own publicity. His career, in which he has deposed a series of executives above him, has been a rear-guard action against the more puffed-up class of moguls.

  The Messiers of the world, or minor-league Messiers, have been Karmazin’s amuse bouches—he eats them happily and without much thought.

  And yet there are keen similarities between Redstone and Karmazin, who, in a Faustian deal, entered mortal mogul combat at Viacom.

  For one thing, they are both small-timers in the big time. Redstone spent most of his career running a chain of movie theaters in New England, then, at 63, got lucky when MTV, the fledgling cable channel that was part of his acquisition of Viacom (itself a fledgling enterprise), made it big, allowing him in 1994 to buy Paramount. Karmazin was a radio-spot salesman, and then a station conglomerateer, who was able to trade his way up (first he got control of the radio network Infinity Broadcasting, then merged it with CBS, where he pushed out management and took over the whole shop) because he owned the cash cow Howard Stern.

  What both Redstone and Karmazin do very well is topple others.

  Their decision to merge CBS with Viacom in 1999 was as potentially damaging to the company as, say, deciding to park a lot of debt in dubious partnerships: Karmazin and Redstone became one another’s secret liability—a massive problem they’d each have to deal with soon or later. Both almost certainly knew one would have to kill the other.

  But both thought they were up to it—both, likely, enjoyed the prospect.