Autumn of the Moguls

by Michael Wolff

  And yet as the whole mess unfolded, it remained, in the media mind, a pretty good war, with or without the discovery of the weapons of mass destruction.

  And the FCC thing graciously sailed through.

  And then there was something else. Not the power of the media, but its weakness. Finally, in the midst of the most dismal year the media industry has ever had, with each company in some not inconsiderable turmoil, with the future as uncertain as it had ever been, with nobody deserving of any sort of confidence, it was starting to seem obvious—to employees and shareholders and even consumers—that consolidation was just some further example of failing upward.

  These are the people you wanted to give more authority to, more responsibility, more companies to screw up—the folks who gave us AOL Time Warner?

  AOLTW had created a simple but profound disturbance in the equation. If the biggest company was strong, then all other companies had to strive to be big. But if AOL Time Warner was vulnerable, then the entire superstructure was, with a little critical interpretation, potentially ready to blow.

  Steve Case went down early in the winter. He went down sulking, aggrieved, hurt—apparently not understanding why he had to be blamed. But somebody had to. Somebody else, somebody more, had to be blamed. The company had steadily fed bodies to the blame monster. Now it was hurriedly trying to reform and cleanse itself, hoping that it would accomplish some transformation before the next body had to be sacrificed.

  But the transformation was not going well. The plan was to sell some assets. To mini-disaggregate. The first step was to roll out the cable company in a public offering—but as plans got under way for this IPO in the early months of 2003, the Wall Street signs, the word on the Street, were not propitious, and the move was delayed. A deal was floated about selling or spinning off the AOLTW musk company, but this too got bogged down. And the book company was put up for auction, but, without anyone bidding in a meaningful way, was withdrawn at the last minute. A broken auction.

  Nobody seemed to want the whole deal—and nobody seemed to want the cast-off pieces either.

  More and more the question was not so much how to fix the company or how to turn it around, but, much more existentially, what to do with it. What did AOL Time Warner mean?

  There were different answers from different parts of the company. Indeed, there was less and less a sense of any center of the company—of any actual AOL Time Warner entity.

  A Wall Street/media business/consulting guy I know was chatting me up one day a few weeks after the Foresquare conference, talking about his various projects and possibilities, as consultants do, when he said he was doing a little work for Warner Bros, studio—giving some advice “related to the possibility of an eventual public life for the studio.” What this meant, it occurred to me, was that the various parts of the company were each planning their own exits. Everybody was pulling away.

  Including Walter.

  The week Case resigned, Walter announced he was giving up the chairmanship of CNN—instead, he would take over the Aspen Institute, a think tank for liberal internationalists.

  It was always worth paying attention to the nuances and direction of Walter’s career moves.

  If he got out of new media and the Internet because it was doomed, and got out of magazines because they were in trouble, and, arguably, got out of journalism itself because it was so over with, he was, likewise, getting out of CNN now because it was hopeless, and, as the ultimate brush-off, out of AOL Time Warner (where he had spent his entire career) because there was just no longer any advantage in being associated with it.

  Trust me, if Walter was going, AOL Time Warner was gone.

  Indeed, Walter, by taking over the Aspen Institute, was not just getting out of AOL Time Warner, he was getting out of the media business.

  (A prediction: The well-endowed Aspen Institute, which had been in minor eclipse, will now rise to great new prominence by virtue of Walter’s publicity talents. It will provide Walter, in Washington and New York and Aspen, with a platform from which to say reasonable and intelligent things and get great press. He will host innumerable cocktail parties—which are, in many ways, his real medium. He will find a solvable conflict and broker at the Aspen retreat a big peace in the world. And when the Democrats emerge from their wilderness years, there will be, I promise you, one inevitable secretary of state: Walter.)

  Walter wasn’t the only brilliant careerist making meaningful career moves early in 2003. Walter’s good friend and Bronxville neighbor Andy Lack announced he had been lured from the presidency of NBC to run Sony Music—which, on the face of it, made virtually no sense.

  There were two areas here of interesting and telling desperation: the network mess, which no one was going to be able to fix, ever, and the music mess, which no one was going to be able to fix ever either. And yet it was possible to argue there was some management art, or something that might pass for art, in substituting a guy who had not been able to fix the mess in television for a guy who had not been able to fix the mess in music. The logic here would be, I think, that a guy who hadn’t created a particular mess (although he might have created other messes) had a better chance of fixing the mess than the guy who, in fact, had created it. At Sony Music that would be Tommy Mottola, one of the great talent handlers (indeed, he sometimes married the talent), but who, in this age of angst and uncertainty and profoundly unanswerable questions, was nobody’s idea of a philosopher king.

  What was going on here, with Andy Lack who knew nothing about music replacing Tommy Mottola who apparently too did not know enough about the music business—or the new music business—was this move toward an acknowledgment of a generalized condition in which nobody really knew anything anymore about what they were doing. (In fact, this was not a small bit of the psychology behind putting Walter, a career print guy, in charge of CNN in the first place—Walter might not know about television, but then who did?)

  If consolidation didn’t work, if technology was providing consumers with the wherewithal to steal the stuff that consolidation produced anyway, and if, on top of that, whatever else happened, the one thing that you could count on was that audiences, invariably, got smaller and smaller and more distracted—then fuck it.

  The only chance you had was to do the wrong and even ass-backwards thing and just hope that it would—capriciously, serendipitously, randomly—turn out to be the exact right thing. It was all more and more a blind experiment.

  These were the people who wanted the FCC to let them buy more stuff that they wouldn’t know what to do with.

  There was, it was true, one person who seemed to have figured out how to make it work. Poor martyred Martha Stewart, possibly the only media genius of the age (she didn’t need special dispensations from the FCC), our Newton, was indicted in the spring.

  Actually, there was somebody else who had figured out how to make it work, but who, it seemed more and more certainly, had figured out how to make it work through a growing antipathy to the media business.

  In March 2003, Barry Diller gave up his role as chairman of Vivendi Universal.

  What exactly, everyone asked, did this mean?

  What did it mean that we were left here and Barry was now somewhere else?

  There was, it seemed, even an implicit contempt here on Barry’s part for the media industry—he was giving us the finger.

  More and more, it became clear that he had this other, parallel business life, as the head of one of the largest online companies in the world—indeed, with 24,000 employees at companies including Expedia, Match.com, and Ticketmaster.

  And that by embracing this life instead of the old mogul life as head of a television and movie and music company, he was walking away from the thing we did.

  The fundamental idea that we would entertain and inform and call attention to ourselves and make a buck doing it was what he was walking away from.

  Media does not equal content.

  Stars were passé; stardom, as the gre
at media accomplishment, was over.

  You didn’t need an expensive television show to make people want to buy stuff. There were more efficient ways to skim pennies off of a transaction than having to make up stories and hire actors and produce hits.

  What’s more, in some final slap, Barry seemed to be turning against moguldom itself. Rather, he was an efficient, by-the-numbers, entrepreneurial businessman. No excesses. No grandiosity. No show.

  Indeed, it was Edgar Bronfman Jr. who was back trying to get control of Universal. Edgar Bronfman Jr. was the once and future mogul—which surely said something about the status and character of moguldom these days.

  Of final note, Barry—in something of a classy good-bye to all that—was the only mogul to oppose the FCC rule change.

  And what of Rupert? And Sumner and Mel? And Michael?

  Their intransigence and invulnerability and fierceness and mastery of all the elements of keeping and amassing greater and greater amounts of power along with the obvious fact that they couldn’t go on forever—that, indeed, a countdown was in progress, secret office pools were forming—had begun to give them all something of a comic book quality.

  “Anyone,” I happen to have heard the 79-year-old Redstone say to an 80-year-old Don Hewitt as they left the CBS Christmas party that winter, “who thinks age is chronological is an asshole.”

  After bickering for a year, Sumner and Mel signed a truce in the winter of 2003 which would let them, together, continue to run Viacom. And yet there wasn’t anybody who wasn’t aware that the two were trying to behave well in public. And that control of this company would soon enough pass to people—Redstone’s children, who already held titular posts in the company—who, it is likely, could not maintain control. The waiting was the game—or, rather, the game was to live for the moment. Within these companies—possibly as a reflection of their hard business heart—there is no mechanism by which to consider death. Or natural transition of any sort. It is the dictator thing—a narcissism which can’t acknowledge anything after itself. In fact, everybody assumes that in some sense they die too with the Patriarch, or at least, life as they have known it is over with, and something unknowable, something that can’t be planned for, begins. So … fuck it.

  Meanwhile, the idea, which gained at least conversational credibility through the winter—that Mel Karmazin would replace Michael Eisner at Disney—was suddenly off the table.

  Eisner was alone again and still standing. Again the conventional wisdom was that he had one more season—of television and movies and theme parks and deals—to save himself. And yet, this one-more-season thing was in many ways his own myth, his own measurement. It was his way to say that he was judged as everyone else was judged, but, in fact, he had been putting this one-more-season thing out for years now. The message was clear: There was no orderly transition possible here. Here, too, everybody just waited. Until something happened nothing would happen. But when something happened it would happen cataclysmically.

  And Rupert.

  The odd accomplishment of Fox News was that it had created itself as the media insurgent (indeed, in the early days, this stance was aided by Time Warner Cable trying to keep Fox off of its cable systems so it would not compete with CNN). The subtext of its agenda was always that there was a media which was keeping the truth from you—a big, monolithic, liberal media. Fox had succeeded in part by demonizing the rest of the media. The established media.

  The great and hilarious irony here is that it may well be this take, this opposition, that has helped crystallize the idea that a vast, ungoverned, ungovernable media actually does exist. Indeed, that the media, the idea of media, the system of media, is a negative force. And, if to some of the rabid faithful, Fox is an antidote to this negative force, to a larger silent majority, Fox of course is inevitably part of the antimedia analysis.

  The further irony is that it was ultimately Murdoch himself (through Roger Ailes) making an argument against the great media oligarchs. It was logical to wonder, in fact, if the Fox faithful even knew who Murdoch was—and what would they think if they did know that Fox was the product of the greatest media oligarch who ever lived. An Australian at that—with a Chinese wife.

  When the forces against consolidation and the FCC rule-change started to wake up from their long sleep, it was quite obviously Murdoch himself whom they would choose to demonize—it was his grim and forbidding face put to effective use in the ad campaign by the anti-FCC-rule-change organizations. Rupert became the poster mogul for the campaign against moguls.

  As much as Fox, it may have been the DirecTV deal that woke up everybody.

  Again this has to do, I think, with Michael Powell’s Orwellian logic. In essence what he said was not just that EchoStar’s purchase of DirecTV would be monopolistic, but it would be more monopolistic than letting Rupert Murdoch buy the satellite system. In other words, giving the nation’s biggest satellite system to the world’s leading media oligarch, who already controlled newspapers and television networks and movie studios and book publishers, who regularly retailed his own politics through his far-reaching media apparatus, was better for the public than giving the satellite business to somebody else who just operated satellites. No matter that giving Murdoch DirecTV is the ultimate anticompetitive, content-distribution-stranglehold media play. That he’ll have the power to make a hermetic News Corp. content world. He’ll be able to black out, or downgrade, or otherwise screw with NBC and CNBC and MSNBC or, for that matter, CBS-MTV, ABC-ESPN, and any other offshoot of any content producer that doesn’t have a distribution system that can threaten massive retaliation. Pay no attention …

  Enough. This was, on Powell’s part, some serious bit of tone deafness.

  But let me add a further irony to this: Honestly, I don’t think Murdoch is buying. I think Murdoch is selling—or preparing to sell. Or to devolve.

  Now, he could be as blind as any parent. He might really think that his sons, Lachlan and James, are thoroughly created in his image and can truly run his creation. But as likely, he is also as clear-sighted as any parent, with a loving understanding of what his children can and can’t do. And, reasonably, they can’t be their father.

  Bear with my speculation.

  He now owns two other satellite companies: BSkyB in the Euro market and StarTV in the Asian market. The satellite strategy has been his technology-vision thing, and also allowed News Corp. to maintain that it is the only truly global media concern. But it’s also a business that has failed to achieve predicted levels of market penetration, tied up an enormous amount of cash, and seen other technologies supersede it (like the whole digital revolution). What to do with this business has long been the Murdoch conundrum.

  When he first tried to do the DirecTV deal two years ago—before he was ultimately rebuffed by General Motors, DirecTV’s main shareholder—he envisioned it in a financial structure that would have included his other satellite properties and that would have taken substantial third-party investment from the likes of Bill Gates and John Malone. Indeed, News Corp. would have been left with something like a 30 percent stake.

  While News Corp., with its minority interest, would have been in control of the new entity, control is a complex and variable condition—especially when you’re the minnow in an enterprise full of really big-fish investors (i.e., Gates and Malone). As such, it was a company that would have, inevitably, mutated beyond the Murdoch interests.

  Nor would this be the first instance of such an independent entity within the great News Corp. conglomeration: Murdoch has already done a “carve out” with the Fox group—the studio, network, and stations—creating a separate public entity.

  The view has always been that this is part of the News Corp.’s brilliant or cunning financial engineering. But, as possibly, there’s something here that is larger and more poignant and even more far-seeing.

  It does make a certain sort of sense, after all, that, just at the penultimate moment of consolidation, Murdoch, who always s
ees things first, would, of course, begin to deconsolidate.

  It’s reverse-engineering the corporation. It’s breaking the unwieldy nation into city-states. It’s a plan for a more or less sensible network of loosely affiliated enterprises, over which Lachlan and James might ceremonially, and less powerfully, preside.

  So here it is, my theory: that he really wants to buy DirecTV and to have the FCC further relax its rules so he can give up control before he loses control anyway.

  Part entropy and part sensible business.

  And then there is the New York Times—and its unfortunate spring of 2003.

  In some sense there is no more successful moguldom than that of the Sulzberger family. They have amassed great wealth and profound influence and have held it for a hundred years. Indeed, in many ways, they have transcended mere vainglorious, craven, temporal moguldom.

  But suddenly, in the middle of scandal—Jayson Blair, a 27-year-old Times reporter, is revealed to have made, with the tacit support of the newsroom’s managers, a mockery of the Times’ valued probity—it seemed like Arthur Sulzberger Jr. was not at all a sun god, but merely a mogul manqué.

  The Times seemed, in fact, to be caught between seeing itself as a special media circumstance—the one true church—and a desire to be a bigger, newer, hipper, cooler, more exciting place.

  Glib Jayson Blair was part of an effort to modernize, deritualize, give up the Latin mass.

  Though, in the midst of the scandal, the Times rushed back to defend the religion. Indeed, those who are in the Church of Our Gray Lady believe they suffer ever so much more than others. They flagellate piously—and assume they deserve special forgiveness because of it. They confess copiously. (One reporter from an Italian news-magazine called me in the midst of the scandal wondering if I could help him understand “why the New York Times would shoot itself in its own balls.”)

  And yet it was hard not to also see the other impulse—the modern media managerial impulse—all over the place.

  The furies descended most heavily on the unpopular executive editor Howell Raines. Now the Times has long suffered under newsroom despots and egotists. But Raines seemed to be something different. Not just a son of a bitch but a son of a bitch out to change the world—or, worse, the paper. To make it a different kind of product. A stronger brand. Howell seemed clearly to be the agent for the transformation of the Times from its cautious, culturally insular, frequently obsessive-compulsive identity as World’s Greatest Newspaper into a more freewheeling, glamorous, un-Timesian World’s Greatest Information Brand. While the rap, in the angry-white-man interpretation, was that Jayson Blair, who is black, had been given favorable treatment for reasons of race, the more savvy view was the he was favored because he was un-Timesian—not dour, literal, grave, but amusing, charismatic, and eager to please. Not to mention, he could turn a phrase. Jayson was slick.