Autumn of the Moguls

by Michael Wolff

  Are we the two Darren Stevenses of the media world?

  This other Michael Wolf(f)—he is Michael J. Wolf—has even written a book titled The Entertainment Economy: How Mega-Media Forces Are Transforming Our Lives. In it, he decrees that the economy is driven by fun, by the pleasure principle—the “E-factor,” he calls it. People won’t buy your services or products unless you entertain them, he maintains.

  As it happens, his book is ghastly—unfortunately for me, or perhaps fortunately. (Would I feel better or worse if it were good?)

  “Hilfiger realized it’s not about clothes; it’s about being cool” is one analysis he offers.

  “Case had seen the future, and the future was online,” he says in an effort to explain the foresight of the AOL chief.

  Most characteristically, he has never met a mogul he didn’t like. “Like the conquistadors of the Age of Exploration, the heads of the major media companies are planting their flags everywhere,” he tells us.

  Now, I suppose, that while a world based on entertainment doesn’t sound like such a bad thing, as it happens, his version of entertainment is the singing chicken at Stew Leonard’s superstore supermarket. He confuses kitsch with entertainment—a common but fatal mistake.

  “I had a blast trying out a mountain bike on the 470-foot biking and hiking trail,” he says about a store he visits in Seattle (I have been to this store and you have to wait on line, and the salespeople would obviously rather you not try the mountain bike).

  Describing Ralph Lauren’s flagship store on Madison Avenue, he says: “When I visit that store I feel as if I’m making a visit to an exclusive British club, that somewhere between the underwear counter and the neckties I might bump into the cast from Upstairs, Downstairs or Remains of the Day.” This is obviously just PR talk. He is marketing the marketing. Indeed, he doesn’t seem to distinguish between marketing and entertainment.

  While this is probably not a book that many have read, it has nevertheless become important and influential by virtue of the author’s client list, which has included Bertelsmann’s now former-CEO Thomas Middelhoff (Bertelsmann owns Random House, which published his book), Pearson chief Marjorie Scardino, Virgin king Richard Branson, Hasbro chairman Alan Hassenfeld, Universal president Ron Meyer, and a host who need no introduction: Ted Turner, Rupert Murdoch, Sumner Redstone, and Barry Diller among them.

  Am I envious?

  I am certainly curious about what it takes to get along with so many of these guys. What is he whispering in their ears? What megamedia strategies is he cooking up? What’s the nature of the flattery he must engage in?

  Figuring that we were in an awkward situation—two people with the same name in the same business, but him extolling the virtues of the great moguls and testifying to their inevitably greater successes, and me excoriating them and predicting their inevitable failure—I called him up sometime before the conference and proposed a friendly meeting.

  A PR person returned my call and invited me to breakfast at Lespinasse in the St. Regis Hotel to meet my double. This is not, they seemed to assume, just a friendly meeting—but a press meeting.

  In the consultant-banker-CEO world, breakfast and where you breakfast are significant. The choice of the heavily brocaded Eurotrashy Lespinasse suggested to me that he was a serious Hollywood type—or saw himself in that role. (He says in his book he’s in L.A. at least once a week—he goes to Mortons on Monday nights, he says, when everybody’s there.) A kind of business-school Jon Peters (Barbra Streisand’s hairdresser-turned-mogul) was what I was thinking.

  But Hollywood doesn’t at all describe him—no flash, no chains, no charm even.

  Rather, he’s a small man with rimless glasses, parted hair, white shirt, and tie, accountantlike.

  He is, in other words, a suit. Except for the Nurse Ratched PR person by his side, he seemed remarkably unassuming. (Why would he bring a PR person? Was she there to protect him or monitor him?) He seemed like anyone’s father; he’s 40-ish, but could easily pass for an old-fashioned 50. It is kind of a visual joke that this is the person who has written a book about entertainment.

  He didn’t seem to want to dwell on the weirdness of the name thing (maybe he’s above it—or, like a schoolboy, embarrassed by it), so I dove straight into the conversation, which instantly became an interview (we can’t escape our roles): “I’m interested in the argument you’re making in your book, it seems so …”

  “Entertainment,” he dove in and restated crisply, “is increasingly having an impact on business.” He gave the example of McDonald’s and Happy Meal premiums.

  “Haven’t banks been giving out toasters for years? What’s the difference?”

  “Now consumers,” he said proudly, “are making choices based on entertainment.”

  “Can we talk about the implications of an economy based principally on entertainment, or, even more to the point, on hype?”

  He hesitated over his scrambled egg whites. “Everybody,” he said, “has tried to copy Disney, but only the highest-quality products are successful.” In addition to not being particularly responsive, this is also surely not true—God knows my kids have had U-Hauls full of toys that instantly fall apart.

  “Consumers,” he said, “are looking for fun in all parts of their lives.”

  I couldn’t help wondering how much money this sort of world-view commanded. I’d guess partners at big consulting firms are in the million-plus range.

  But I suppose that’s not the point. His real job is to get along with moguls and their lieutenants, which takes, obviously, a rarer talent. The consulting business is a business about “validation.” When the CEO is about to do a ridiculous thing, a prideful thing—like going into the media business—he needs the cover. McKinsey is completely behind the move, the CEO tells his board. McKinsey (or Booz Allen, the consultancy Wolf used to work for) says anybody can be in the entertainment business—and everyone should.

  I tried to engage him in a discussion about the instant obsolescence of plush toys, the fading of the major television networks, the expansion of the cable dial, and suckiness of movies. (This is the only time the PR person says anything, to heatedly defend the movie industry.) I threw down the gauntlet: Here we are the two of us, in the same business, not to mention with the same name, but whereas I believe this spread of media into all walks of life is absurd and debasing, you believe we are in the Camelot reign of the mogul kings.

  He said no, he doesn’t really think we are so far apart in our thinking. In fact, he said, he reads my column all the time and enjoys it immensely.

  “So what is it that you do, actually?” I asked. It is, of course, my real question, and, I suspect, the source of my envy, that he has found the way to get big money out of all these opinions we trade in.

  “My firm,” he said, “works with the seniormost managers of the largest entertainment companies to help them with their most important strategic decisions. How they should compete. How they should sell their products. And who their partners should be.”

  But who and what and how, he won’t say.

  “Can you tell me about a big success you’ve had?”

  “I’m afraid that would not be appropriate.”

  But before I departed he offered a significant crumb. He told me he knows why people are consuming more media. “They’re sleeping less,” he said. “I have studies that prove it.”

  No doubt, he is just another guy with his hand out in the entertainment economy—any doppelgänger envy I might feel is misplaced. He doesn’t know more about the media business than anybody else. Oddly, I find myself thinking: Why would he be writing a book if he really had valuable things to say? Wouldn’t he be selling his secrets for a lot more than $24.95?

  Still, I know that whether he is whispering sweet nothings or brilliant windfall business strategies into the ears of CEOs, he has clearly articulated an average business guy’s yearnings: Everybody wants to be in the media business.

  To me, the en
tertainment economy represents the banality of fun, the homogenization of culture, the commodification of creativity. (As the other Michael Wolf(f) says, “Consumers who are already well acclimatized to multitasking in their business and professional lives will look to products and services that include entertainment content as an additional part of their offerings.”) And I’d argue that in the end, it’s bad for business, too, that the entertainment economy is run by people who aren’t entertaining.

  But that is obviously naïve. The new world entertainment order is also clearly about bland and unfunny guys who want to do some strutting. (Once, an airline analyst explained to me that the industry was ruined by an influx of businessmen who knew nothing about airlines and flying but who liked stewardesses.) And it needs other bland and unfunny guys to tell them that it’s okay to be in the media business. That it’s just business after all—complicated, hard-nosed, heavy on the M.B.A. theory, rather than just an obvious vanity play.

  On stage, a mousy Michael Wolf now sat close by an immensely puffed up Michael Powell.

  Powell, a Bush appointee, is certainly the latest in a succession of lynchpins of the entertainment economy—which is, by another name, the vast, hapless, consolidation of the media industry.

  It is only fair to point out that in this vast consolidation the Clinton Democrats are as culpable as the Bush Republicans.

  The Democrats allowed incremental consolidation because it was in their interest to be nice to the media business—not only are media business power brokers pervasive in Democratic politics (and, of course, big contributors too), but the single most powerful force in politics is media. What politician would be so dense as not to realize that if you alienate the lawyers and executives and big shareholders of media enterprises that it will come back to bite you harshly?

  The media is of course as courted and as accommodated and as sucked up to as any other big industry. What’s more, the Clintonites had special reason to bend over backward for the media—hence, they began a significant cutting back on long-standing media regulation, and took a tolerant position when it came to media antitrust enforcement.

  The Republicans, on the other hand, more honorably perhaps, but more frightening too, seem wholly to have bought the rationale for consolidation. Consolidation, they do truly believe, is good for you—really good for you. An excellent adventure. That’s the mantra.

  Consolidation is “proconsumer.”

  It’s nicely Orwellian.

  Without consolidation there will be no more “free” television.

  Consolidation protects choice.

  Michael Powell is a happy believer in the absurd, and ironic, and unreal—without knowing that what he believes in is any of those things.

  Perhaps because of his father, Colin Powell, the secretary of state, and growing up an Army kid, he has the kill-for-peace attitude.

  There’s no piercing the contradictions.

  There’s a benighted self-satisfaction about him too. The arrogance of the military without having had to be in the military. A banana republic dictator thing.

  He’s enormously confident, confiding to the other Michael Wolf(f) that consolidation is the way to protect a free media.

  It’s easy to suspect that he’s an ideologue because he doesn’t seem too bright. But his extremism may also come from a certain amount of impatience. The alternative in a job like his is to weigh and sift each element and request and petition—better to have some sweeping approach.

  It is, too, arguably a technology thing. He is a technocrat. And, in that vein, you do see that technological growth and enhancement almost always depend on consolidation. On single standards. On research efficiencies. On massive investment. On building infrastructure.

  It was a frightening but lackluster discussion that he was having on stage with the other Wolf(f). The consultant, who certainly had no interest in ruffling the FCC chairman’s feathers, and indeed had every interest in smoothing them, fed him a series of eager-to-please questions.

  Their assumptions were shared and embraced:

  Big is destiny.

  Big is powerful.

  Big is what powerful people want.

  Because powerful people wanted big, big is what would happen.

  Big is the universe and if you don’t accept the universe, well, there’s no place for you in it.

  Big is our business.

  At the moment of the Foursquare conference, almost every media mogul in the country had lawyers petitioning Powell and the FCC for the further—indeed, nearly final—dismantling of media-ownership rules, of any protections which existed to prevent media monopolies and single-source information control.

  It was easy to close your eyes and imagine the penultimate spasm of consolidation in which there were only two media companies left standing—one strong and one less strong. This is inevitable, you find yourself concluding, because it’s what everybody but the most marginal wants—it’s where the big money is.

  You have to slap yourself to realize that this isn’t true—or at least that two parallel realities neatly exist.

  On the one hand, you have the mogul class that is continuing to lay the groundwork for a further paroxysm of media mergers and acquisitions.

  But on the other hand, you have investors who are shunning these companies, and managers who are eager—even desperate—to unhitch themselves from their troubled overlords, employees who hate their jobs, and consumers who continue with increasing speed and perturbance to abandon and reject the products offered by these companies. Indeed, it would be almost reasonable, on this side of the reality chasm, to conclude that virtually everyone in the media business, save for the very topmost people running the consolidated media enterprises, has come to question the ideas of consolidation and synergy—even to accept the likelihood that the great media combines will imminently be shaken apart.

  In other words, what we seem to have is a generation gap.

  There are the grandees of the business with ever-greater dreams of bigness-as-usual, and then a restive, younger media class using AOL Time Warner, Vivendi, and Disney as punch lines.

  It is, in fact, worth asking what happens when the older generation, the mogul generation, dies; that might have been the better debate to have before the FCC (or now, up on the stage).

  This is part of the analysis often performed by investors and business students: What happens if the top dog gets hit by a bus (not to speak of being eliminated by natural causes)? In other words, how dependent are these companies on the idiosyncratic forcefulness of their mogul leaders? And in what new direction do they evolve without them? Can they even exist without some brute ego holding them together?

  Both AOL Time Warner and Vivendi are helpful here, because they have offed their leaders—moguls-in-chief Jerry Levin and Jean-Marie Messier.

  These deaths were by palace revolt instead of accident or attrition, but they highlight the fundamental divide: The men who invented these companies are egomaniacs and fabulists; the men who took them over are managerial rationalists.

  Which prompts the question, what does a rationalist do with an irrational enterprise?

  This conundrum may account for the caught-in-the-headlights look of both Dick Parsons, now the CEO at AOL Time Warner, and Jean-René Fourtou, who is running Vivendi. In neither instance can you imagine these men creating or envisioning the kind of companies they now are responsible for—hence their palpable sense of uncertainty and even, it seems, despair.

  Indeed, the theme of virtually all great consolidations is the complexity of the financial schemes that created them (the better the deal, the more difficult it is to understand). But Parsons’s managerial credo at AOL Time Warner, a company built almost entirely out of confounding transactions, has been a pledge of “no more complicated deals.”

  His most significant move as of the autumn of 2002 had been to try to untangle AT&T’s (soon to be Comcast’s) investment in certain AOLTW properties (you don’t want me to explain this
deal—no one, really, has ever been able to explain it). Parsons’s proposal was to pool the company’s cable assets into a separate public company. So although AOL Time Warner would still be running this new company, it would have a fiduciary and legal responsibility to maintain an independent relationship with its sister divisions (which, come to think of it, may be even more unwieldy than the former arrangement). In any event, in a stroke of rationalism (or at least attempted rationalism), Parsons, if he can accomplish this untangling, will have undone all possibilities of synergy, the shibboleth upon which the entire foundation of media consolidation has rested. In fact, by spinning off the single largest part of AOL Time Warner, Parsons will have taken what is obviously a clear step toward breakup.

  Fourtou, for his part, is also in retreat from complexity and entanglements. For Vivendi, at this point, it is all about negotiated retreat and undoing the ties of empire. Of course, Fourtou and Vivendi are in the humiliating position of having someone from the mogul generation as the local strongman. Barry Diller was not only running Vivendi Universal that autumn but—because he, a real mogul, bested Jean-Marie Messier, Vivendi’s would-be mogul, in their initial, and vastly complicated, mogul-to-mogul arrangement—had effective control over whom the company can be sold to (i.e., him—if that’s what he wants). Fourtou, no doubt, wished the bus would run over Barry.