Autumn of the Moguls

by Michael Wolff

  “Well, this current generation of media executives? What’s your frustration with them? What do you think this generation of executives lacks? What talents don’t they have? What inclinations do you wish they have but don’t? Jean-Marie Messier, for instance.”

  He used a clear bit of body language—a turning away, a shaking off—to dismiss Messier.

  Then, somewhat oddly, he began to make a point about newspapers. “One of my frustrations may be because I’m old-fashioned. I come out of the newspaper world. In America you really only have really good newspapermen and good newspaper organizations in a few remaining cities such as New York and Chicago. The Times and the Tribune. Across the rest of the country you only have lazy monopolies where their owners take no responsibility for the words they print which are often right out of tune with the interest of their readers. There’s nothing interesting in print.”

  It is odd that in these kinds of public settings you often can find people who seem to be addressing large groups actually talking to themselves. Almost nobody saw the world in terms of newspapers anymore, but clearly Rupert did. There was some dying thing here that obviously bothered him.

  “Ever since you arrived in the U.S.—in some sense because you arrived in the U.S. and began to run your business the way you did—the theme of the modern media business has been consolidation. Do you think that theme continues?”

  “I wouldn’t agree with that at all,” he replied, precisely on message. “I think our record has been one of creating or maintaining competition. We created the Fox television network and we were considered mad to do that. We created the Fox News network. We fought very hard to keep the New York Post alive. These are competitive things. These are not market consolidators.”

  Of course, he couldn’t admit to consolidation and monopoly. Duh. “I accept that,” I backpedaled. “But nevertheless, obviously around you, in a sense to compete with you, we’ve had massive consolidation in the media industry. Since you arrived in the U.S. a thousand media companies have been essentially reduced to five. Is this the continuing theme?”

  “I think you can argue it either way,” he said, off message. “I had an argument yesterday that within two years if AOL or Disney got their act together one would take over the other one.” This, I imagined, was precisely the kind of discussion that filled his days—and had now for 30 years.

  “What side of the argument were you on?”

  “I was just, ahhhh, listening in to it.” Somehow I couldn’t see him as the passive listener. “And, I don’t believe that will happen. They’ll probably both be there big and strong—but you can also make the argument that if they falter they are more likely to be broken up than taken over whole by anybody.”

  “Let’s look at News Corp. itself and scenarios for the future. Does it acquire? Why won’t it be News Corp. that acquires Disney? Or is News Corp. broken up? Or sold—or is there an alternative?”

  If I had to read his answer by his face, I’d say he didn’t know. Even, I suspected as he paused, this was the great existential question for him. The dream would be, of course, to acquire, to become one of three, or one of two—or the primordial last man standing. And yet, he had to know that was the least likely outcome. In the scheme of things, the media business was still inchoate. We hadn’t arrived at a stable automotive or jet-engine design. Nobody would even be able to say, at this point, what our vehicle actually was. Indeed, each of the component technologies—television, newspaper, magazine, celluloid, recorded music—was crumbling. The last man standing was a generation off.

  “Disney wouldn’t interest me,” he said, with another passing slap. “I’m not interested in theme parks or cruise ships, let alone the things that go with them. I think we’ve got a very full plate of things that we can expand and make more profitable. We can build our station group—certainly if the cap is lifted by the FCC. It’s growing brilliantly right now—a great support for our network. We can expand in book publishing—either by organized growth or buying other companies.” Within minutes, this statement, I was sure, would be circulating through the higher echelons of HarperCollins. “We have just made a very advantageous deal in Italy where we are going to be the only distributor of pay television—tremendous upside, probably bigger than SKY in Britain which has to contend with government-subsidized competition and cable. You take these opportunities as they come and they create a pattern. In Brazil and India …” he began but then trailed off. “Well, we have a lot of fun around the world.”

  Helplessly, I loved the sweep of his talk. The certainty. It was hard not to beg for Rupert to buy more.

  “Just about a year ago, Rupert, I argued in a column that you would inevitably close the New York Post—I was obviously right about that.”

  “Dream on.”

  We laughed together.

  “Let’s talk about the family nature of media companies,” I then said, moving to the real subject, the D subject, that I would, of course, not get to. “Is there another family-owned media company that you study and which informs how you talk to your children about the future?”

  “I’m not aware of the inner relationships of the other families you might be referring to,” he said, seeming to get caught on the question. I wondered if he was thinking about the relationships in his own family or if he stumbled because he was, in fact, keenly aware of the inner workings of other media families. “I certainly look at and respect greatly the Sulzbergers at the New York Times and the Grahams at the Washington Post. And who knows what’s going to happen at Viacom when Sumner’s daughter takes over,” he added as an interesting slap, I thought, to Mel Karmazin. “I’m too diplomatic to point to other companies that have been passed down where the generations haven’t been much good and the companies ended up going broke or getting sold.”

  Bringing up the Sulzberger family and the New York Times lent this a poignant note. Surely, at least from the Sulzberger family’s point of view, there could be no two families more inimical. Not only did the Sulzberger family represent a singular tradition of journalistic respectability and responsibility, but they were basically a one-horse operation. Murdoch had an entirely different view of the nature and uses of journalism, and had created a company at philosophic business odds with the Sulzbergers’ historic view of what media was. And yet the Sulzbergers had gone on for a hundred years.

  It was not a small character note that in some large sense (although one that might not override a host of business decisions), Murdoch wanted that.

  “I would be curious to hear—after holding power in this country effectively longer than anyone else in the modern era—what you’ve learned about being powerful in America.”

  “You make a lot of enemies.” He smiled, and I noticed we were out of satellite time.

  “Rupert, our time”—his satellite time, in fact—“is up. I thank you very much and look forward to seeing you in New York.”

  “I look forward to that too, Michael.”

  And we were out of there, his face fading from the screen.

  15

  UNRAL

  PROPERTY

  Stealing Stuff. This was one of the basic themes of the second day of the conference.

  The stealing-stuff subject was exciting because it drove business guys into a great lather of agitation, and because it opened the possibility for absolute anarchy in the business. It was the revolutionary element.

  There’s an almost frightening passion in the way film and music executives talk about people downloading their products for free. It’s a moral position. Their fervor is genuine. These normally pretty bland, very business-language-y guys—suits—become incredibly intense and bent out of shape on the file-sharing issue. The ferocity of their counteroffensive—in lawsuits, in government lobbying, in semidemented technological-protection schemes—also seems as personal.

  This is real pain—and real fury.

  The disconnect here occurs on several levels. For one thing, it is very strange to have e
ntertainment executives—generally regarded as among the most amoral, conniving, and venal of all businessmen —taking the high ground. And yet here they are delivering heartfelt defenses of artists, and even art itself—they see the very essence of the nation’s cultural patrimony at risk. And you really don’t sense a phony or opportunistic note. Rather, these guys actually seem to be losing sleep over this. It’s right and wrong they’re arguing about here. Good character versus a virtual barbarian deluge. They believe, with feeling, that bad or sadly misguided people do this digital pilfering. Every time I get buttonholed (at this conference and at almost any media gathering these days) by both suity and formerly hip types (the formerly hip have an especially plaintive air), I find myself feeling incredibly guilty and resolve to have a word with my children about this whole downloading issue.

  The other odd thing is that these guys who have built their careers and their industry on trying to give an audience exactly what it wants—no matter how low and valueless and embarrassing—are now standing with a High Church rectitude against the meretricious desires of this same audience. It is a bizarrely out-of-character role: holding the line. Censuring the public. Suing the public! Indeed, branding the great American mass-media audience as a craven and outlaw group.

  And, personally, I find the technology aspect of the discussion funny too. Almost all of these guys now aghast at the limitless possibilities of digital reproduction are salesmen and promoters and -talent tenders, with a limited grasp of the actual mechanics of the products they produce and amazingly short attention spans for most detail-oriented issues. But now, when they buttonhole you, you get an earful about encryption and magic keys and electronic watermarks and digital policing. It’s mad-scientist stuff, but it’s also a new, determined, almost messianic belief that the technology that caused all this trouble is what’s going to save them now.

  Obviously, self-interest is the driver of this new effort at radical reformation of the American audience. The music business, which ignored this consumer revolution, is in a crisis that almost no one expects it to fully recover from. It has gone from the most profitable and desirable sector of the entertainment business to the most troubled and reviled. Film executives believe that without Draconian measures, they are the likely next victim. So they’re going to war—by whatever means necessary.

  But it’s not just a selfish crusade. Rather, they think they’ve seen evil of a kind. It’s like Bible Belters in the face of the sexual revolution. It’s the end of civilization. It’s everyone’s reason for being that’s under attack. It really isn’t just business.

  They don’t, for instance, see file sharing as just a change in the nature of the transaction: a fundamental, but not unfamiliar, discrepancy between the ask price and the bid price.

  But here’s the merciless trend (which obviously has big and heartbreaking implications for weakened media conglomerates): The price of content keeps falling.

  This trend is sweeping and across-the-board. It’s not just in music, where the bid price approaches zero. It’s in cable television, where hundreds of channels and premium-programming offerings are only incrementally more expensive than the price of a handful of channels. (While the consumer often thinks he’s paying more, on a per-hour-of-programming basis he keeps paying less and less.) And it’s in the new market-share-grabbing retail strategy of low-price DVDs, as well as the longtime practice of dramatically discounted (indeed, nearly free) magazine subscriptions, and the relentless downward price pressure on once-expensive specialty databases. Information in all its forms gets cheaper and cheaper.

  And this isn’t just a simple one-cause effect.

  There’s the Internet, of course, which, flooded with free content, has undermined (to say the least) content value. It has also, as dramatically, altered the idea of the content package—being able to take only what you want and leave the rest has a powerful negative pricing impact. But then, too, there are the desperate or overeager music companies, which have marketed and licensed music so that it has become ever more freely atmospheric. Music stars, often as part of great synergy plans, saturate TV shows, movies, and advertising; in addition, since movies and television are seldom scored anymore, cuts from CDs (otherwise for sale) become incidental background music. Music itself, in other words, is now Muzak.

  And then there are magazines, which, to court advertisers, have become not just cheap but are virtually shoved down your throat. And there are mass-market-media retail chains—Barnes & Noble, Blockbuster, the warehouse clubs—which have a Wal-Marting effect (as psychological as it is economic) on books and videos. What’s more, the ever-falling price of consumer electronic equipment, instead of creating more and more platforms for expensive content, may also have contributed to the general sense of deflated entertainment value.

  Ubiquity has become the main media standard.

  So this is elemental: The more available content is, the inherently less valuable it is.

  In some sense, the anomaly of music and movies is not that they are, suddenly, in free circulation, but that they have existed for so long, against the trend, as paid, premium items. What’s more, that the cost of movies (at least in theaters) and music, on a unit basis, has continued to go up instead of down is, in fact, an odd and exceptional business model—which a prudent person should have logically assumed would never last.

  While the movie and music people see their lost revenues as a moral issue, everyone else is feeling the pain, too, and trying desperately to buck the trend.

  Much Internet business talk is now all about putting content back “behind the wall” and getting people to pay for it. Everybody is dreaming of electronic subscription services (the plan to save AOL seems to be mostly based on the idea of making it the HBO of the Internet). Alas, there are virtually no examples (except porn) of content subscription services working anywhere online. Even the Wall Street Journal online service, which has always been the grail of Internet paid-for content, is little more than a break-even operation—and it’s had to curtail original-content-creation efforts in order to reach break-even.

  In the magazine business, the most coveted number is the newsstand number, even as cheap subs (and, arguably, free Internet content) progressively erode that business. There is, too, a kind of Utopian talk about getting the consumer to pay for actual content value—but I don’t know of anyone who really believes that after two generations of subsidies (and now with infinitely greater and cheaper information distractions), consumers would now pay full fare.

  The great cable scheme for restoring some kind of parity between content consumed and content compensated for is pay-per-view. Indeed, on my Time Warner system, the relatively feeble pay-movie offerings are being replaced by the kind of vast, play-anytime, choose-anything-you-want system that we used to check into hotels for. The problem is that, so far, nowhere on any cable system in the U.S. has there been any meaningful use of pay-per-view stuff; even for sports it hasn’t developed into anything more than a marginal business. We just don’t do it. We don’t pay for content.

  Notably, Europeans do. They slice and dice and pay for content in droves. From the TV, from the cell phone, from the PC.

  But paying for content—at least content for content’s sake—has become an un-American trait. We believe in getting it all, a bigger and bigger bundle for a lower and lower price. The flat fee rules; we don’t even pay for long-distance telephone calls anymore. And a flat fee is very close in function and perception to no fee.

  It’s easy to understand why for the movie and music guys it’s primal-scream time. They maintained a very basic relationship with the consumer—we make, you buy—which suddenly was messed up, not least of all by the media empires to which the movie and music business belonged.

  The West Coast movie and music guys have always had a simpler view of the world than their New York counterparts. Indeed, their New York counterparts have always treated the movie and music guys like dimmer cousins. Just off the farm in many
ways.

  They just didn’t understand how the whole media view came together, how synergy happened. In the empire’s view, consumers had to be made to consume—growth depended on media being everywhere, media being transparent, a utility. And as with a utility, it was better that you not really even be aware of how you consumed the product. It would just be on and available all of the time. The way to do that was to commodify the product and to make it ever cheaper—or in the case of the Internet, to make it free—and then to figure that with a giant audience and vast brand awareness and utility-like dependency and this incredible cross-platform cross-marketing apparatus and an instant star-making and self-promotion machine, you couldn’t help but make a big pile of money for the conquering empire. (“DISNEY TO PUSH RETAIL GEAR TIED TO ITS TV SHOWS,” read an ever-so-hopeful headline in the Wall Street Journal.)

  The thing that I always try to say to the movie and music executives frothing at the mouth about this stealing issue (accusing my children and, one might fairly suspect, their own) is that everybody can’t be an outlaw. If everybody does it, it’s normal rather than aberrant behavior. It’s not so much the consumer who is on the wrong side of the law, but the entertainment industry that’s on the wrong side of economic laws.

  It’s the transition from high margin to low margin that the media business seems to be having the most psychological trouble with.

  For instance, the music business doesn’t end, or even face true obsolescence. Rather it just becomes something like—however horrifying this must be to almost everybody in the music industry—the book business.

  Hemingway, after all, had rock-star status (and even impersonators). Steinbeck was Springsteen. Salinger was Kurt Cobain. Dorothy Parker was Courtney Love. James Jones was David Crosby. Mailer was Eminem. This is to say—and I understand how hard this is to appreciate—that novelists were iconic for much of the first half of the last century. They set the cultural agenda. They made lots of money. They lived large (and self-medicated). They were the generational voice. For a long time, anybody with any creative ambition wanted to write the Great American Novel.