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

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.

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IN THE SAME BOAT (#ulink_ca3fda5c-8dd9-5634-8ef2-b8f7081e5f87)

After Messier Was fired, Thomas Middelhoff, the über manager’s manager at Bertelsmann, bought the farm; then Bob Pittman, the COO at AOL Time Warner, got the shiv only months after AOL Time Warner CEO Jerry Levin’s sacking. In the summer of 2002, three of the six largest media companies, almost in tandem, dismissed their CEOs and top managers. When any big company throws out its management, you know something pretty extreme is going on—it’s akin to a coup in a mostly stable nation. But when half (to date) of the leading companies of one of the nation’s leading industries all at once begin firing their leaders, it’s destabilization on a continental scale.

And too, in the summer of 2002, it seemed increasingly possible that Martha Stewart, that symbol of media wholesomeness and ubiquity, was going to go to jail.

This was all, of course, against the background of Enron and WorldCom.

It seemed highly problematic for Heilemann, Battelle, and Rattner—they were going to celebrate the media business just when there wasn’t one. They had called a meeting of the crown heads of Europe in 1915.

We appeared to have gotten to one of those historically precarious moments when any catastrophe that you predicted was sure to come true. Anyone could go for it: What’s your most satisfying darkness-at-noon vision? Who do you want fired and humiliated? Who do you want convicted?

Indeed, what if, after thriving for twenty years, the business culture itself—the broad social power of private enterprise, the no-guilt thrill of making vast amounts of money, the inevitability of an ever-increasing net worth, the great art of the transaction—was finally over? Kaput?

Thinking just this, on a fine Manhattan summer evening, as WorldCom was collapsing and Messier was getting the boot, I found myself on the Forbes family yacht—once a very potent symbol of upper-class American capitalism, before capitalism got hijacked by the arrivistes and entrepreneurs and spreadsheet accountants.

It was one of those meet-and-greet affairs that magazines are always hosting for advertisers and other media people. Forbes, the capitalist tool, had once had an advantage in this kind of promotional thing because of the yacht, the Highlander. But in the age of G4s or even larger personal jet transport, the boat seemed quaint.

Still, if the business culture really was kaput, I was thinking, we could well go into a new era, or back into an old era, in which one could not be self-respecting (that is, a self-respecting liberal-type person) and be on the Forbes yacht. The Forbes yacht might again stand for something other than what it stood for now, which was just a promotional thing; it could, possibly, go back to being a resented symbol of wealth, class, and exclusivity.

Now, I like Tim Forbes—son of Malcolm, the over-the-top father and protomogul, and brother of Steve, who keeps running for president—who is a kind of counter media mogul. He’s a self-effacing, none-too-hip, always somewhat-pained-looking anomaly of a modern media executive. Tim might be, you suspect, a lot happier having inherited a more anonymous sort of business—for instance, a water utility—but he seems dutifully to make the best of his fate. In fact, this aura of dutifulness, rather than ego gratification, may be one of the reasons that he seems popular among his staff—something unusual for most ego-charged media executives.

We sat together at one of the little tables on the yacht, eating the catered dinner and marveling at this whole breathtaking moment of corporate humiliation.

Now, we were both old and jaded enough to appreciate that in all likelihood this was just a periodic blip. Various deserving people would be pilloried and hung out to dry, and there would be a requisite shocked, shocked, moment of sanctimony and contrition, and then the markets would get going again. This made sense.

“It’s very hard to imagine the end of this,” said Tim.