Читать книгу Autumn of the Moguls: My Misadventures with the Titans, Poseurs, and Money Guys who Mastered and Messed Up Big Media - Michael Wolff - Страница 13

As Rattner was assembling his war chest, the media business was focusing its attention on another investment banker—a former colleague of Rattner’s from the Paris office of Lazard—who was the brightest and newest star of the media firmament, the first among a next generation of would-be moguls. Heilemann and Battelle, through Rattner, had already drafted him as the first big name of the autumn conference.

Now it is true that within two months of when I met Heilemann and Battelle for lunch, this star, the 45-year-old French-born-and-bred Vivendi chairman Jean-Marie Messier, would be out of a job, the punch line of every business joke. And yet the fall of their head-liner was not so much evidence of Heilemann and Battelle and Rattner’s foolishness, or lack of prescience, but of the weird surface existence of the media business.

The business is really quite a courtly affair, in which the most extraordinary manners and rituals are taken at substantive face value, right up until the point that disgrace intrudes. A mogul is a mogul, with all due consideration, until he is deposed. The king must be killed for him to cease being the king.

If Heilemann, Battelle, and Rattner had not been able to attract Messier to their conference—even when the smart money was already predicting his overthrow—his absence would have marked it as a pallid affair.

If his was a high-wire act, all media acts are. There isn’t any mogul who has not risked absurdity and death, so absurdity and likely death should not exclude you from mogul acclaim.

This is, indeed, a crux of the matter: How is it that people vastly unworthy, by all evidence and logic, so palpably precarious, are taken so seriously?

Why don’t we all break down in laughter?

How is it that our critical faculties come to be so readily suspended?

What made us such pushovers?

Certainly, from the start, the Messier proposal was an exceptionally ludicrous, even slightly surreal one: The idea was to take France’s leading water utility and turn it into a global media-technology-communications company.

Why?

A substantial part of the reason, oddly, lies in the uses of metaphor.

Metaphors as much as spreadsheets are key investment banking tools. The more abstract business became, the greater business there was for investment bankers, and the greater need there was for metaphors to give some structure to the abstruse forms everybody was talking about.

In fact, it was very French: Business, as well as life, was philosophically complex. It required new tools of language and consciousness to decipher.

A water company supplied great metaphorical opportunity.

A water company was an objective correlative for the media business.

The point was the pipes. Here you had a company that moved its product—water—through a complex distribution mechanism right into people’s homes.

That, in a nutshell, defined the challenge of the modern media. How do you take our content—a kind of water by any other name—and efficiently get it into people’s homes? (It used to be that you wanted to get in into their heads—but the home offered the truer point that you really didn’t have to think about, or even register, content for it to be part of your life.) And how do you get it into people’s homes so efficiently that it becomes a transparent part of their daily activities? (Media ought to be on the unconscious level of water and electricity.)

Owning the pipes was the key.

Owning pipes was the millennial secret (as plastics had been the secret circa 1967 offered to Benjamin Braddock in The Graduate).

Literally, there were oil and natural gas companies in the U.S. emptying (and one would assume cleaning) their pipes and filling them with the fiber-optic cables that, shortly, would glut the market.

A water utility, with only a little critical interpretation, is therefore the same as a media company—indeed, let us call it a media utility.

This wasn’t just French sophistry.

Everybody who was rising in the media business was obsessed with distribution. HOW WE GET OUR PRODUCT TO OUR CUSTOMERS.

This reflected two issues:

There was the example and threat of cable television. Nobody took cable television seriously in the seventies. It was exclusively a distribution business—“a pure distribution play”—and everybody thought the effort and cost was going to be way too great. What’s more, you already had free television. So why would you choose pay television over free?

The fact that everybody turned out to be wrong here, that consumers would pay, and that owning the pipes meant you controlled what went into people’s houses, was a vast shock to the media system. The paradigm, and the metaphor, changed. Instead of a media menu, with consumers selecting the radio and television and magazines and books that appealed to them, now the idea was a version of force-feeding. Could you be the doctor administering the nutrients and medication that flowed through the media IV?

At the same time, we were entering a further new paradigm in which all of the capital and technological barriers to controlling distribution began to fall, in which we were becoming a world of broadband and Napster. That made it all the more imperative, and all the more valuable, to be able to argue that you were, somehow, going to be able to control distribution and maintain control, or at least as much control as it was possible to maintain.

And then there was the second issue: the investment bankers. In addition to controlling the business language—the basic means of business expression without which you could not communicate with other businessmen—investment bankers also controlled the market. You could not sell something without bankers.

Now, if you controlled distribution, or if you could merely argue a reasonable case that you would be able to control distribution, then the bankers would certify an altogether different type of pro forma than if you were just a mere content purveyor. The difference was a difference in scale. Scale. After covering fixed costs, how do we grow exponentially with only incremental new expenditures?

That’s scale. Bankers would say: “How do we scale this? I don’t see any scale here. How do we show scale?”

If you controlled distribution, you had scale.

And if you had scale, then the value of your business—what someone, some investor, or some other business that might acquire you, would pay you for every dollar you earned (the “multiple”)—increased geometrically. At least according to the bankers.

The fact the Messier’s and Compagnie Générale des Eaux’s water pipes had nothing to do with media was beside the point. He’d nailed the metaphor.

There were two other big themes in the rise of Jean-Marie Messier and the transformation of Compagnie Générale des Eaux: national pride and personal vanity.

Neither should be underestimated.

Each European country had its media barons who could play on an international stage. The Germans had Bertelsmann. The Italians had Berlusconi. The English had Murdoch (however strained this relationship might be—and, even though he was actually an Australian). Being a media power was something like being a nuclear power: It brought you to the table; you were a player in the world. Another world now existed which was made of digital networks and cross-culture brands and, largely, the English language. You didn’t want your country to not have a stake in this.

So Jean-Marie came into the media-mogul game not only with the right metaphor but with lots of French capital.

And then the vanity: What was required in the transformation of Compagnie Générale des Eaux was someone who was willing to gamble very safe and stable wealth and power in a business of fathomless risk and low reward. Someone who valued the reward by a different measure than just a financial one. You had to understand the value of personal exaltation—of being a powerful individual and puffed-up popinjay on the world stage.

Now, possibly the vainest thing a human being can do is go to Hollywood. More precisely, the vainest thing a human being can do is go to Hollywood with money. A step further: The vainest thing a human being can do is to be a foreigner who goes to Hollywood with money. You are, ipso facto, conceited and deluded enough to assume that while all other foreigners who have gone to Hollywood with money have had it ignominiously taken from them, you will not.

It is possible, perhaps, that Messier was thinking something like, Lightning doesn’t strike twice in the same place. Considering that his vehicle of going to Hollywood was a vehicle that, previously, had been the instrument by which another ludicrously vain pretender had been fleeced.

This was Edgar Bronfman Jr., who, in the same way that Messier was trading his stable and conservative water business, had cast aside Seagram’s, his family’s old-hat liquor business (with a big and lucrative interest in chemicals which Edgar sold to finance the Hollywood adventures), for the high-risk entertainment business.

The Bronfman story is an unexpected and extreme tale of paternal love. A father, Edgar Bronfman (along with his brother, Charles, the uncle, who must really be pissed off) acts as a good, if passive, steward to a great family fortune based around the Seagram’s liquor company. He has a son, Edgar Bronfman Jr., with few demonstrable business talents or career focus. Rather than go to college, Edgar Jr. goes out to Hollywood, begins a long association as a friend to movie stars, and, briefly, considers a career as a songwriter (he writes “Whisper in the Dark” for Dionne Warwick) before being given unspecified duties in the family business. Then, placing filial regard above profit motive, the father allows the son, now in his mid-forties and still keenly infatuated with Hollywood, to redirect the family’s historic business interests. The company liquidates its enormously profitable holdings in the chemical industry and in 1995 acquires, from the Japanese, Universal Studios, and then goes on to buy a substantial interest in the music business. After vastly overpaying for these acquisitions, Edgar Jr. engages in several years of almost nonstop mismanagement during which many of his Hollywood friends, most notably Barry Diller, take great advantage of him. The family fortune is not only compromised, but the family is suddenly the object of great ridicule—almost as hurtful as great financial losses. Father and uncle direct Edgar Jr. to sell all of the family holdings.

Edgar Jr.’s single victory in the entertainment business is managing to sell his company, at what seems like a significant premium to its worth (although at a significant loss for the Bronfman family), to Jean-Marie Messier. (“The best thing about owning an entertainment company,” Edgar Bronfman Jr. memorably said, “is selling it.”)

This would have been the reasonable point for everyone to break down in laughter. But no one does.

Jean-Marie Messier, heretofore unknown, is treated as a great foreign potentate—rather than a doomed and comic figure engaged in an act of hubris and narcissism so transparent as to, in any melodramatic rendering which Hollywood people ought to understand, broadly foreshadow an inevitable and desperate end.

Let me offer a conspiracy theory here. People in the entertainment and larger media business did know that he was doomed. But they had a clear self-interest in making Messier believe he was safe and proceeding successfully. The greater his delusion, the larger his failure, the richer other people’s take.

This analysis shouldn’t be shocking or extreme. There is, everyone knows, a kind of flattery that happens in Hollywood that is very much akin to fattening a pig.

Jean-Marie Messier was given the pig-fattening mogul treatment.

Certainly there was lavish press attention—the kind that comes not just from Jean-Marie’s own people saying loving things about Jean-Marie, but from everybody talking him up, pumping him greatly.

And wouldn’t this have been a smart idea?

For a period after Messier did his deal for Universal, which would bring him into frequent dealings with Barry Diller, Diller went around telling everybody who would listen how astute Messier was. He’s the real thing, Barry kept saying.

At the same time, let’s just assume that Barry knew Messier was the opposite of the real thing. That he was entirely a made-up creation. A self-actualized creature. A … joke. Let’s assume this not least of all because Diller has made his career on the basis of the best instincts for other people’s weaknesses.

Now, surely, Diller wants to foster goodwill with the new owner of a business he’s in substantial partnership with. But too, let’s consider the advantages of getting your partner to believe he’s vastly more capable and cunning and astute than he really is.

Messier receives the full Vanity Fair treatment—Vanity Fair being a kind of Debrett’s of Hollywood power and royalty—proclaiming him the new mogul.

He is invited everywhere to speak.

He is drawn in. He even begins the process of moving to America, of becoming an American.

I saw him speak at a Variety conference. Messier, who spoke a French person’s idea of good English, went on and on about his vision: convergence, the digital world, handheld devices, transactions, cell-phone movies.

What was this, if not a setup?

If you don’t know who the fool is in a room full of bankers and deal makers and media bigs, it’s you.

There is, further, a belief among deal doers that as a result of language and cultural barriers and compensatory arrogance (with the French, of course, being among the most compensatorily arrogant), foreigners are incapable of doing proper due diligence—that is, making a basic assessment as to the substance of what they are buying, whether the land is underwater or not. Therefore you can sell them anything—especially in the media business, where what you’re buying is such an uncertain affair anyway.

This was true of the Japanese when they bought Hollywood studios, the Germans when they bought book companies, the Dutch and the French and the English (who have their own linguistic—and emotional—issues) when they bought magazines, and the French and the English when they bought ad agencies: They all bought much less than they thought they were buying. (Murdoch, as it happens, is the exception to the foreigners-always-get-brutalized-and-robbed paradigm. But then, he did what most foreigners would never do: He became an American—which, oddly, and comically, and in Murdoch’s image, Jean-Marie Messier tried also, haplessly, to do.)

Foreigners may do okay when they buy factories (although the Germans don’t seem to have done great buying Chrysler), but media really complicates the buy-sell equation.

The cool factor is one of the big complications. You buy media to be cool; and paying attention to details (like leases and contracts and trademarks, and, in general, who owns what, and what moneys are reliably due and what the kettle of fish should actually be worth in a reasonable world) is not cool. Indeed, foreigners to assert their own cool often cultivate a dismissive attitude about the silly American obsession with details (and low-class obsession with money).

This casualness and assumption of superiority on the part of the French allowed the Bronfman family to sell Jean-Marie Messier an illusion as much as a film studio.

“Everybody makes a lot of money when the French come to town,” said the advertising man Jerry Delia Femina when I called him to ask about his experience when the French bought his advertising agency. (The French company that bought his agency became, in the great sweep-up, part of Vivendi too—and then later was spun out.)

It is, though, in all fairness, not just a case of American (or, in the case of the Bronfmans, Canadian) media people taking advantage of foreign media people (indeed, the Japanese took advantage of the Bronfmans).

Hollywood people are surely crooks, and even if they were virtuous, they might not have been able to resist taking money from foreigners who are so guileless and yet so arrogant. (Sometimes foreigners who are ruined in Hollywood are crooks themselves. Let us not forget that Gian Carlo Paretti, who bought MGM, took the French bank Crédit Lyonnais, which financed the deal, for nearly all it was worth and has been on the lam pretty much ever since.) But at the same time, you have to consider the intent of the foreigners: Their desire is to out-Hollywood Hollywood.

The process of becoming a mogul is the assumption of mogul-like powers—you start to believe that you can outhondle any hondlers, that you can take advantage of anybody before they take advantage of you. It’s a straight-up Hollywood syndrome: They’ve seen it done in the movies, so they think they can do it.

And so Euro moguls, in deep cross-cultural celluloid thrall, try to ape (or outape) American moguls.

In some sense, they achieve even more outsize egos and a greater sense of entitlement than their American mogul counterparts because in Europe there is a greater tradition of the one true strutting supremo (together with milder accounting rules and securities oversight).

Everyone’s favorite Euro-media supremo is of course Berlusconi, the Italian in the guise of the very American figure of a smiling, affable salesman. He has managed to monopolize his nation’s media (half of its television, its largest magazine publisher, its leading newsmagazine, a major national newspaper, and the biggest book publishers) as well as its political system.

Indeed, it is this connection between the government and the media, a deeply incestuous relationship in almost every European country, that suggests, not unreasonably, a lot of self-dealing and tends to create a culture of people saying things with the assumption that other people know they are saying something else.

“The French,” in Delia Femina’s analysis, “are simply incapable of telling the truth.”

The Europeans, of course, accuse the Americans of small-time literal-mindedness, hypocritical moralizing, and intellectual dishonesty. Life and business, the Europeans argue, are complex, shaded, many-layered.

As it happens, this live-and-let-live, you-scratch-me-I’ll-scratch-you attitude results in many European countries in a national web of interlocking companies so tight that all companies become one and monopoly is truly complete (or else unnecessary). On the other hand, the Euros would argue that this is exactly what AOL Time Warner is about, so shut up.

Here’s a Euro-media snapshot:

Havas, one of the early pieces of the Vivendi media empire and the largest and oldest publisher in France, collaborated with the Germans during World War II and, as punishment, was nationalized after the war. (So, along with Bertelsmann, that makes two of the most important media companies in the U.S. former Nazi accomplices.) Under the management of the French government, Havas added advertising agencies, bus-tour companies, and pay television to its portfolio.

Under chairman Pierre Dauzier, an associate of French prime minister Jacques Chirac, Havas arrived in the U.S. in the late eighties, when it took a small stake in the English advertising group WCRS, which owned the U.S. agencies Della Femina McNamee and HBM/Creamer. As the English group encountered financing difficulties, the Havas agency, Eurocom, continued to raise its stake, taking over all of the WCRS advertising and public-relations interests by the early nineties.

In 1991, under the firm encouragement of the French government, Eurocom merged with the ailing French advertising group RSCG (“Why should we?” perhaps the conversation went with government authorities. “Why? Because you are French” was perhaps the answer), which owned U.S. agencies Messner, Vetere, Berger, McNamee & Schmetterer and Tatham-Laird.

In 1995, Havas, officially privatized but with the French government still a major shareholder, exchanged part of its shares with French telecom giant Alcatel Alsthom, another partially government-owned entity, and took over its publishing operations. In 1997, utility conglomerate Générale des Eaux, also partially owned by the French government, and run by Jean-Marie Messier, the former Finance Ministry functionary who had headed the government’s privatization team, acquired 30 percent of Havas. In 1998, Générale des Eaux, now renamed Vivendi, bought the 70 percent of Havas it didn’t own, which included a 49 percent interest in Canal+. Then Vivendi bought Cendant’s computer-game division for something close to $1 billion. It also took a 24.5 percent stake in Murdoch’s BSkyB satellite operation. It allied too with Vodafone AirTouch, the world’s biggest mobile-phone company, to create Vizzavi (for vis-à-vis), a wireless Web portal, which promised to revolutionize the world of media and communications by rerouting content to handheld devices all over the world.

This is what Messier was trying to do in America—and this was his fatal error. He thought that in America he could enter into a realm of Euro-ish we-all-understand-each-other-and-we-all-get-rich-together. That the mogul class, which he thought he was joining, was such a rich-get-richer realm.

And so he got close to Barry Diller, assuming that there was a great, even historic, alliance being formed here.

It’s almost painful to recount the details of what happened. Diller had already taken the Bronfmans, when, in an effort to “play” with Barry, Edgar Jr. had sold Barry an undervalued position in the Universal television holdings. While this deal exposed the Bronfmans to great ridicule, the connection to Diller probably held great attraction for Messier. By getting Universal, he got Barry. I’ll bet Messier’s fantasy was to turn Diller into his consigliere, his Zen master even. And such a relationship—perhaps he even thought he was hiring Barry, that Barry would become something of a French civil servant—would put him in some front rank of mogul masters. Together, Jean-Marie and Barry would be a new axis.

In fact, suddenly, in a kind of ultimate conquest, an annexation even, Jean-Marie seemed even to buy Barry. The same television properties that Universal had sold to Barry at a steep discount, it now bought back from Barry (plus much more) at a great premium.

And, briefly, many people saw this as a Messier triumph. He was lovingly attended in Vanity Fair. The deal was part of his strange, public, and ultimately embarrassing metamorphosis, or supposed metamorphosis, from French bureaucrat into major world leader. There were other deals, more publicity, more speeches.

There are two points here:

You, the mogul, might naturally come to believe, because of all the machinations and alliances and dramatic as well as subtle shifts of power, that you are involved in a process of geopolitical moves, even that you are engaged in an historical process of taking over the world (God knows, Messier had the French briefly believing they meant something again in the global community).

But the other point is that with everything getting so very heady and estimable, it’s very easy to forget that you’re a con man too—that being a con man is what keeps you alive, that if you don’t keep getting the better of someone, that probably means they’re getting the better of you. It’s easy to forget that your great historical significance depends on your workaday opportunism.

Deals are complex things: You get conned (sometimes you have to even let yourself be conned in order to do a deal) and then you have to con someone else. You have to keep the balance (and balance sheet) right—that is, you have to con more than you get conned.

Messier, in a way that you can almost bring yourself to admire (there is a certain innocence to it, at any rate), got swept up in his historic, world-beating, grandiose role—and kept letting himself be conned, without conning anyone.

Now Messier became not an exception, but a kind of example of the inexorable forces that work on all moguls—the need to be bigger and bigger, to grow beyond proportion, to be transformed.

I live On the Upper East Side of Manhattan, on the margins of the neighborhood where the great moguls live. You’ve got Barry Diller and the former Mrs. Sumner Redstone (Mrs. Redstone threw out Mr. Redstone) at the Carlyle Hotel (and Mr. Redstone nearby). You’ve got Mort Zuckerman on Fifth Avenue. You’ve got Michael Bloomberg on East 79th Street. You’ve got Sean “P. Diddy” Combs on Park and 75th Street. You’ve had Edgar Bronfman Jr. in the East Sixties (he recently sold this home). Michael Eisner grew up just a few blocks away. And Rupert Murdoch always kept a place here before moving to a younger neighborhood with his newer and younger wife (I used to see Murdoch jogging around the reservoir in Central Park; I’d follow steps behind him—a small man in a too-dapper running suit—thinking how fragile he looked and how powerful he was and how easy it would be to snatch him away). And, of course, all around the East Side you’ve got the bankers and lawyers who do the media deals.

Then—and you know how the realtor must have sold him the property, telling him all about Barry and Sumner and Edgar and P. Diddy—we got Jean-Marie Messier, who moved into a $17.5 million Park Avenue apartment that the company paid for (even on Park Avenue, $17.5 million is a lot of dough for an apartment).

At the height of Messier’s reign, I was walking on Madison Avenue in my mogul neighborhood with my son Steven, who was shopping for an ice-cream cone, when we saw a figure who prompted Steven to exclaim, “Look at that guy!”

There was, languorously moving up Madison Avenue, a small man, with a coat cast capelike over his shoulders and the most pleased-with-himself expression I have ever seen on an adult, whom I recognized, after the slightest moment of surprise, to be Jean-Marie himself (I quite doubt anyone else recognized him). He occupied a wide swath of the sidewalk, with a strut to the left and then a strut to the right, nodding and smiling, or rather bestowing blessings, on passersby, who gave him wide and incredulous berth. He seemed to see himself as some combination of Pope and maestro—his idea, I suppose, of an American mogul. (Not something, of course, you could see yourself as, if what you are is a CEO of a water and sewer company.) I do not think he would have considered spontaneous applause to be out of order.

I would have thought that this was it. I could even make the argument that Messier is the final flowering of the mogul. That, with the arrival of Messier and Vivendi—the overnight international media conglomerate—it suddenly became clear to everyone that the jig was up. That the long joke had reached its anticlimactic punch line.

But if the media puts a vast premium on association, it also has a special talent, and keen appreciation, for disassociation.

He is not one of us. That was only his delusion—his overreach.

What’s more, one mogul’s failure is another’s success.

The market is speaking.

And then, in a complex social realm—Edith Wharton’s New York updated—there have to be morality plays. You cannot have an inner circle of the influential and powerful if people are not regularly, and dramatically, expelled from it.