Autumn of the Moguls

by Michael Wolff

  This is, after all, another key mogul attribute: a blood instinct for internecine war. To strike before being struck—that’s the talent.

  Both guys were doubtlessly sure: That toppler isn’t going to topple me. The logic of this was certainly on Karmazin’s side. While Sumner had mischievously gotten rid of his last several anointed successors, still… come on…. He can’t hold on forever, Mel must have sensibly figured.

  Certainly for Sumner, getting rid of Karmazin at this point would be the grandest of indulgences. It lacks any sort of business reasonableness. And yet it seems logical too. To be expected, even.

  It’s a primal gesture: I live! Which is probably the point, because what’s it all for, what’s it been worth, if you can’t keep control?

  And yet—to try to impose some logic here, being aware that this would be the cost—why would anyone do such a deal as Viacom-CBS? Why would other people not have challenged the deal? Why didn’t anybody say this is an obvious mess—a catastrophe afoot? That at any minute, at the least insult, or cross word, or sidewise look, it could blow up.

  This is to the heart of the matter. The mogul and the deal—or how can you tell the mogul from the deal? (A mogul is, after all, just the deals he does.) And why does the mogul do these ridiculous deals? (Aren’t there any nonridiculous deals?)

  There are three key aspects of a mogul deal. (1) Actually doing the deal itself—the bigger the better. (2) The kind of awe you inspire for having done the deal—the bigger the deal the more awe you inspire. (3) Making the deal work—or at least surviving the deal you do.

  Point 1 is obviously elemental (no deal, no mogul); point 2 is how the legend is made (no legend, no mogul); and point 3, while not just an afterthought, is existential in nature. The future, a mogul assumes, can be adjusted. What’s more, a good mogul is a lucky mogul.

  Now, understanding or celebrating a megadeal—dissecting the true nature of the deal, the possible permutations of the deal, the further implications of the deal—has become a mainstay of modern journalism.

  The kind of second-guessing and scenario-playing that used to go into political maneuvering and cold-war geopolitical alignments now goes into reporting and analyzing the great business pacts. And nowhere does the media become so enraptured with the epoch-shaping portent of mergers and acquisitions as when it’s the media itself that is combining or engulfing.

  The Times’ three-column front-page lead and almost five pages of inside coverage of the $80 billion Viacom-CBS deal in the autumn of 1999 was the most prominent play it had ever given to a merger agreement (until, four months later, AOL and Time Warner announced their merger).

  The nature of the coverage (not only in the Times but across the business- and entertainment-news spectrum) of the Viacom-CBS deal was noteworthy, too, because the actual details of the combination—an uncomplicated stock-for-stock trade—could be stated in a paragraph. (Add another obligatory paragraph concerning who first made the proposition and in what hotel, restaurant, or corporate dining room, and you have all the known facts.) Everything else is breathless speculation. What component pieces might be sold? Which heads will roll? How will Wall Street respond? How will two kings coexist in one kingdom? Will there be the slightest peep from Washington? What’s the next merger to come? Reporters, in other words, get to indulge in some of the speculation that speculators engage in. Well, why should speculators have all the fun (as well as the profits)?

  Part of the effort here is certainly an honest journalistic impulse to impose a logic on the transaction—to uncover the thinking, to find the strategy, to nail the vision of the deal. In some sense, journalists seem to demand a much more exacting and immediate rationale for a deal than Wall Street, which accepts a certain randomness and even senselessness in any deal (there are, after all, more stupid deals than smart ones). Journalists are literalists. They tend to assume that because a deal has happened it must have been well thought out—that by the fact of it happening it must have happened for a reason. And in that belief in intrinsic meaning, journalists tend to supply the rationale and to elevate the people who made the deal, as well as the deal itself, to levels of historic importance.

  Within hours, for instance, of the announcement of the CBS-Viacom deal, we were all interviewing one another, playing at being knowledgeable industry insiders and men and women of affairs. Charlie Rose (who took care to point out that he’s on the CBS payroll, although he did not point out that his longtime companion, Amanda Burden, is the stepdaughter of CBS founder William Paley—which may be a more nostalgic than strictly relevant note) hunkered down with the Times’ warhorse Geraldine Fabrikant, who has covered the media business for a quarter century; the New Yorker’s Ken Auletta, always on hand when the subject is media moguls; and David Londoner, one of a handful of Wall Street media analysts always quoted by the media. The deadly earnestness of the conversation, suggesting at the very least some alarming shifts among the nonaligned nations, teetered back and forth between journalists talking about journalism (“There will be fewer voices,” said Fabrikant, who also pointed out that there were now no newsmen running the networks—causing Rose to madly search his mental Rolodex for any newsmen who had ever run a network; “Edward R. Murrow used to sit with Bill Paley,” added Auletta) and journalists talking like investment bankers about duopoly, asset values, the “product,” distribution vehicles, synergy, and, of course, branding.

  “Is it a win-win?” Charlie asked his guests.

  It is a particularly striking and weird sensation when you know how little the experts being interviewed for a story actually know about what they’re talking so expertly about. Indeed, it is a pretty unsettling point about a journalism career today to realize how far removed (way down the food chain) we are from what the companies we work for actually do. What do we know, finally, about what makes these companies run?

  It’s partly this, our own insecurities, that I think causes us to adopt the language of investment bankers as a real analytic framework—we don’t seem to understand that investment bankers use investment-banking jargon mostly as sales talk. This language seduces us (that’s its purpose, after all: “He seduced us,” said Viacom’s Redstone about CBS’s Karmazin) into thinking that there is not only a grandness but a grand strategy to these deals. Someone, we believe, really knows what’s going on. Someone must be Bismarck.

  Accordingly, in the aftermath of the St. Regis news conference where the two masterminds announced the marriage, there emerged a wide range of authoritative, albeit contradictory, formulas for understanding the merger.

  Viacom needed a television network to provide an outlet for its television programming. (Spoilsports rushed to say that Disney had thought it needed one, too, when it acquired ABC in an unhappy deal.) Contrarily, CBS needed to minimize its reliance on the television-network business, which is why it sought the merger with the more diversified Viacom.

  Or CBS needed an affiliation with a movie studio, although, conversely, Viacom needed to minimize the position of low-growth, low-margin Paramount in its overall portfolio.

  Or both companies were mired in low-multiple assets (Wall Street pays more for some businesses than it does for others—television networks and video retail outlets are downers; television stations and cable networks are uppers), so what they really had to do was create a critical mass of high-multiple properties.

  Or content is king, which is why you would want to put together Viacom’s strong programming arm with CBS’s traditional network distribution model.

  Or content is a zhlob, and distribution is the reigning monarch, and in the end what this deal is about is what media deals are always about, which is how many eyeballs you can gather together and sell advertisers access to.

  Or the then 76-year-old Redstone needed a successor, and by buying CBS, he bought the hottest media CEO of the day; or not, and what we’ll have is an inevitable showdown (Redstone, after all, is one of the great sons of bitches in this business of great sons of bitche
s, a strictly “Jump!”—“How high?” kind of executive).

  Pick one of the above.

  Or conclude that the media’s capacity for blather, especially about itself, is unlimited; or that what we have in this, as in most mergers and acquisitions, is an absence of logic and quite a pure example of chaos theory; or even that there are secret forces, unknown agencies, hidden cabals that will get the real benefit of the deal (“some stuff in the fine print we don’t know about,” said Auletta).

  Or try my theory.

  There was no plan—moguls never really have plans.

  There’s only the roll. And Mel was on a roll.

  He used to hang around my dad’s ad agency in Paterson, New Jersey, 30 years ago. Mel sold radio time. My dad bought it (or did something to get it; there was a lot of trading—for several years running, in a great childhood humiliation, all my clothes were paid for with radio spots).

  There is something about radio that seems to be at the heart of what’s happened here. Real men were in radio; fancy country club Waspy, or would-be Waspy, guys (William Paley/Frank Stanton sort of guys) were in television.

  Certainly, a subplot of the coverage of the deal was the story of the Redstone and Karmazin careers. Redstone spends 40 years humping a chain of movie theaters, until at 63 he buys a cable company called Viacom, then Paramount, now CBS (Redstone, however previously humble, steps easily into the role of media mogul and major pompous ass; “We are indeed staggered by what we have wrought,” he said after Viacom nailed the Paramount deal). Karmazin, out in the boonies, puts together a bunch of radio stations, gets bought by the Tiffany network, then takes over the Tiffany network from McKinsey-trained swell Michael Jordan (Jordan had been the CEO of Westinghouse, which had bought CBS from the Tisch family) and seems to stay a pure suburban mensch—a pure suburban mensch ad-space salesman.

  Now, it is no secret that the secret of all this is share price. You’re successful in the eyes of your board, your shareholders, your employees, the media, and probably your family too if your share price is going up. You’re wearing a kick me sign if the price goes down. What makes one company a plotzer and another a Wall Street darling became, somewhere along the way, less about balance sheet and more about what is called “story.” The story is what turns fund managers into fans.

  And every good story has got to have a good character. The greater the character, the greater the story.

  The humper becomes a visionary. (All visionaries were once humpers—and many visionaries return to being humpers; Sumner Redstone was a humper, a visionary, a humper again—and now a visionary once more.)

  Of course, a visionary—a modern business visionary, anyway—isn’t a single-minded soul pursuing his lonely vision. He’s a salesman, a consummate salesman, and something of a quick-change artist, willing and able to do whatever is necessary to be what my dad used to characterize as “an operator.”

  And so Mel got on a roll.

  The fund managers and the analysts began to like what they saw after Karmazin deftly took CBS from Michael Jordan (that was very sweet). That set his roll in motion. The Karmazin roll translated into the CBS share price—indeed, they are extensions of each other. And when your share price is high, you’ve got to do something with it—obviously! It buys you more today than it will tomorrow. And trading is your job. So you buy—or sell; you act. Foolishly or not. When you’re on a roll, you go with it.

  And later, when the roll stops, with any luck there’ll be enough legend attached to you that you’ll make it to when the next roll starts.

  I was sorry I wouldn’t be seeing Sumner at the conference—the grand and ridiculous are exactly the things that make a gathering memorable.

  8

  CHARLIE

  AND MICHAEL

  Charlie Rose, the 60 Minutes correspondent and the host of the Charlie Rose show on PBS, has a casual yet elegant Eurotrash style. It’s mock aristocratic. Chic and yet conservative. It’s a Gianni Agnelli thing. The head of Fiat, famously, and eccentrically, never buttoned his sleeves or collars and wore his watch outside his sleeve. Charlie doesn’t bother to button up either.

  Network correspondents and anchorpeople of high stature often mix with the men who run the media companies they work for. Edward R. Murrow had a long and fraught relationship with William Paley. Likewise, Walter Cronkite was on the CBS board. Dan Rather often schmoozed with Larry Tisch when he was running CBS. Tim Russert was on the phone exchanging Washington gossip with GE’s Jack Welch. There’s a certain mutuality here: Businessmen get to be friends with some of the biggest celebrities in the nation, and the celebrities themselves get an added measure of job security.

  But even in this after-you-Alphonse world of self-congratulations, Charlie Rose is unique.

  Men of power are his metier.

  Moguls especially move him.

  They like him too. For a mogul to be on the Charlie Rose show is a kind of vanity—to be taken so seriously, and to have your eyes stared into so deeply.

  While Charlie has, of course, been accused of slavish sucking-up, he’s obviously on to something too—he may have the keenest understanding in American journalism of relative power and importance. (Not only is his girlfriend the stepdaughter of William Paley, she’s the former wife of Steve Ross.)

  Charlie may be the real Walter Lippmann.

  More than any other journalist (this does not seem like the right moniker for Charlie, but there is no other formal designation—“celebrity interlocutor” is not widely accepted), he has managed to transcend the usual preoccupation with politicians as power symbols and identify and cozy up to the financial-technological-media-social elite. Nobody really big is going to elude Charlie for very long—and, almost certainly, Charlie is going to have managed to know them before they’ve gotten really, really big.

  As is the case with Michael Bloomberg, the unlikely mayor of New York, who joined Charlie on stage for the opening discussion of the conference.

  Charlie has known the mayor since not only long before he was mayor, but long before anyone but the most socially tireless knew the mayor—indeed, when all the mayor had was money. But Charlie got to know him and, in some relationship of great convenience, even began to broadcast his show from the Bloomberg studios (of note too, Steve Rattner is a benefactor of Charlie’s show). Long before anyone knew the future mayor, Bloomberg was appearing on the Charlie Rose show and getting the Charlie Rose treatment. (There is surely an argument which goes: You can’t get to be truly anointed if you haven’t done the Charlie Rose show and gotten the Charlie treatment.)

  The two of them, Charlie and the mayor, on stage now, side by side in easy chairs, in an intimate discussion for the benefit of the three hundred people close enough to the center of power to be invited here, suggested a cat-who-ate-the-canary kind of triumphalism. Who was the cat and who was the canary was not really the point.

  Now, I too had been onto Bloomberg. But where Charlie, with some greater mogul sense than mine, had understood the Bloomberg power, I had dismissed it. Charlie understood that moguldom was an artful illusion, whereas to me, mistakenly, it was measurable. Michael Bloomberg was a fake, it seemed to me. A Wall Street guy (not even! A database salesman—what did he do besides collect bond prices and retail computer terminals?) with a dirty mouth, and a mean spirit, who had pathetically tried to reinvent himself as a media mogul.

  True, there were no studios quite like the studios in the television-radio-publishing company that Bloomberg set up (alongside his real business of pushing his data and his terminals) just in time for the business-media boom and the information revolution of the late nineties. CNN in its cramped and dreary quarters on Eighth Avenue near Penn Station, CNBC out in Fort Lee, Fox News in the basement of News Corp., all smacked of hard times in the television business—whereas Bloomberg was something like Oz. In city after city (there were 82 Bloomberg bureaus worldwide, with some 1,200 reporters and editors), he built movie-set versions of television studios —spiral s
taircases, wraparound news tickers, and the fabled and spotlessly clean tropical-fish tanks, along with open kitchens, coffee bars, and a bounty of free food.

  The only thing is, nobody was really seeing Bloomberg media—actually, few could watch. While Bloomberg had constructed what appeared to be a global-media juggernaut, he had never quite gotten his network, in any substantial fashion, onto the airwaves. Despite his theoretical billions, he was, it seemed, unwilling to pay the price or to make the deals necessary for getting wide pickup by the nation’s cable systems. So, along with all the fanfare, what he created was a media enterprise (TV, radio, books, magazines) with revenues probably no greater than $30 million to $50 million, which is hardly anything at all. It was a minor business-news company in the guise of a powerful and visionary media empire. It was, in other words, an illusion.

  Rich guys, of course, are always trying to buy themselves into the media business—and profitability is often the least of their concerns. They write their losses off against the stature they gain from owning a bully pulpit and having an audience. But Bloomberg appears to have more finely parsed his desire: Mogulhood was clearly what he was after—having an audience was much less important. Certainly, Bloomberg’s illusion seems to have paid off—or created a reality. He’s become a much-vaunted media player, an information-age visionary, not only interviewed by Charlie but invited to speak on industry panels and to confer with his fellow moguls in Sun Valley (which would not have been the case if he were just a financial-data vendor).

  This, it turned out, was political genius. Again, the illusion is the thing. When he began to think about running for office in 2000, the illusion that he owned an important and powerful media enterprise was integral to perpetuating the illusion that he was a credible political candidate; this worked by getting the media, which deeply respects and fears media moguls (certainly more than it respects and fears politicians), to treat him very seriously—not at all like a pretender or flake, or eccentric or naked emperor. It was illusion on top of illusion—a personal Ponzi scheme.