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

It was not just the biggest deal that had been done by any company ever—the capstone of twenty years of more and more outsized business mergers—but it was a statement of philosophy too. This is how the world will be; this is the future. Indeed, all big deals had always portended more big deals—you were just upping the size of the big-deal measure.

As I sat in the auditorium, I was pretty sure nobody was thinking about how we had reached this point.

It took an odd person to be able to remember all the deals that had led us here.

Indeed, part of why we were here was that Time Inc. was a terrible deal maker.

All but faded from corporate memory was the name Temple-Inland, a paper mill that Time Inc. had bought in the seventies—though, arguably, the paper mill had bought Time Inc. Forest products became a third of the Time Inc. business, and the Temple family, from Diboll, Texas, among Time’s largest shareholders. This hilarious combination was undone not too many years later in a deal that led Arthur Temple, who, in effect, was given his company back, to remark (apocryphally or not) that he felt like a whore—he sold what he was selling but got to keep it too.

But then you had Warner’s Steve Ross, who had converted his father-in-law’s chain of funeral parlors into a controlling interest in a parking garage enterprise, which in turn he had traded into a talent agency and then acquired the fabled, but mostly moribund, Warner name—and, virtually overnight, reconstituted an entertainment empire.

And yet, being a good deal maker did not necessarily mean you did successful deals. Because a great many of the deals that Steve Ross did were lousy. There was, for Ross and Warner, most memorably, and in a weird foreshadowing of what happens when old guys get enamored with technology, the Atari deal. In 1976, Ross acquired the go-go technology enterprise, and, in short order, it brought Warner to the edge of bankruptcy.

Indeed, most deals, we learn from the fine print of the history of mergers and acquisitions, turn out to be lousy deals.

But there are good lousy-deal makers and there are bad lousy-deal makers.

The Time Inc. guys were historically bad lousy-deal makers.

The good and the bad in this context most often emerges from what is called company culture.

The Time culture (which does not exist anymore at Time) was aloof and clubby. Working at Time was a higher calling than other professions. It was avocational more than vocational—you worked there because you were better than the people who were not working there.

If you looked a certain way, had a certain sort of Ivy League, good-sport-jacket, furrowed-brow assurance, the elevator crowds would really part for you at the Time Life Building. The secretaries and salespeople and whoever else worked there expressed an almost physical deference to the true Time man. And you always knew who he was, as clearly as you would a priest among the functionaries at the Vatican.

Much of this culture—this aloofness from the real world—came from Time founder Henry Luce himself: the son of missionaries, inheritor of Wasp rectitude and old-money Republicanism, he valued assorted snobberies more than mere money.

Hence, Luce’s corporate offspring, or the offspring of his corporate offspring, were, or feared themselves to be, corporate weaklings.

They were, for instance, afraid of Steve Ross. And, out of that fear, admired him.

Because he did deals.

But it wasn’t only gonifism on the rise, the triumph of the vulgar Hollywood Jews over the buttoned-down Wasps. It was not just a philosophical or temperamental tide, but a technical one as well.

You had to understand deals not just as the process of putting companies together to make bigger companies, but as a process of using money in a way that increased your ability to use more money.

Leverage was the thing.

Media was a financing game. Media was like real estate.

One asset was meant to mortgage another.

The more you mortgaged, the more you could mortgage.

The more deals you did, the more deals you could do.

It had been said before: If you borrow a little, the bank owns you; borrow a lot and you own the bank.

This required a head for numbers and hubris too—somebody with a big ego who could count. (Although there were many failed instances of men who tried to step up merely on the basis of hubris.)

Such men became the instruments for the creation of vast companies that were—sometimes to a fully realized degree, other times frustratingly falling short of their radical idea—not really companies at all, not collegial enterprises, not thematic expressions, not coherent functions, but extreme reflections of themselves and of their ability to do deals.

Simply, moguls led media companies. If you didn’t have a good mogul, you didn’t have a good media company.

The entire Darwinian process of the media business was not about the winnowing out and promotion of good media, or good companies, but the natural selection of good moguls.

And the whole game was the rise and fall of these sui generis, savantlike beings—around them, you might argue, the business itself became something of an afterthought.

And so, in the nineties, there was the Time and Warner merger. Then there was the deal under which—to hold down the massive debt incurred from the Time and Warner deal—a piece of Time Warner’s entertainment and cable companies was sold to John Malone, another of the media business’ great lousy-deal makers. Then CNN was acquired (ruining that company). And along the way there were hundreds of other transactions, bigger and smaller. Then, on January 10, 2000, Time Warner announced it was merging with AOL. (Days before the announcement, I was flipping channels and paused for a moment on a CNN show that had on its panel Jerry Levin, Isaacson, media and culture commentator Kurt Andersen—also a former Timer—and the New Yorker’s mogul-fanzine writer Ken Auletta, talking about the future of the media. Suddenly, in the discussion, Levin, who probably knew he was soon to announce the largest merger in history, started to talk about governments‘ fading and some new sort of corporate city-states’ rising and how the world would be mediated in some vaguely sci-fi-ish New Agey Rollerball digital way.)

The Time Ivy Leaguers (grown weary and depressed through the nineties), the Warner Hollywood heavies (many of them alter cockers now), and the ever-more-furious Ted Turner were married to some suburban database hucksters from Dulles, Virginia.

There was certainly no sense in the auditorium that this was the last merger. That this deal might define a level of overreach and prompt a turnaround.

After all, deals had always gone wrong, and we all still had jobs.

But, in fact, no deal had ever gone wrong like the AOL—Time Warner deal was in short order going to go wrong. This would be the worst deal ever made, defining not just a level of bad deal making, or of inimical corporate cultures, but of the profound lack of science in any deal. Not just a tissue rejection, but a whole set of doctors who had no idea what they were doing. Forevermore, in every media deal, this would have to be an operative question: Do they know what they are doing? Do they know what they are talking about? What planet are they on? And what do they smoke there?

Nobody knew it yet, but we had commenced a new phase, a whole new era, of resistance and revision.

January 10, 2000, was the beginning of the end.

The media business is collapsing. The structure is caving in, like a monarchy, or colonial rule, or communism.