There is no one in show business who keeps a busier schedule these days than Sumner Redstone, the feisty, fiercely competitive chief of Viacom. Having sent Frank Biondi, his CEO, packing, Redstone is at work scrutinizing every nook and cranny in his vast empire as he prepares to start over — his way.
Redstone’s strategizing is especially noteworthy because it signals a new epoch in the entertainment industry — one in which the hands-on owner will be the dominant player rather than the corporate apparatchik.
As Redstone seizes center stage, he joins such fellow owners as Rupert Murdoch, Edgar Bronfman Jr. and even John Kluge, who seems bent on playing a more expansive role once again. In the new “Napoleonic Era,” as Howard Stringer terms it, the owners, like Jack Warner and Louis B. Mayer of old, will be quick to remind everyone of one overriding reality: Namely, it’s their candy store and they will run it as they see fit.
What impact will these titans have on the future course of the industry? Since they are the owners and write the checks, will they have greater success in curbing the fiscal excesses of their businesses than did their corporate hired guns?
Arguably, the hired guns had a mixed record in running the candy store. Kirk Kerkorian concluded that the corporate managers he placed in charge of MGM/UA, ranging from Jim Aubrey to David Begelman, all but ransacked the company. Martin Davis, during his years managing Paramount (previously called Gulf & Western), kept blowing away rising stars like Barry Diller or Michael Eisner when their profiles became too substantial.
While the highly successful Bob Daly-Terry Semel reign at Warners has been a notable exception, the corporate hired guns, by and large, seem to have failed as often as they succeeded.
To be sure, Michael Eisner gave us a signal of things to come when he dispatched Jeffrey Katzenberg from Disney two years ago — a Napoleonic stroke if there ever was one. While Eisner technically may not qualify as an “owner” of the Redstone-Murdoch model, his pivotal role in “reinventing” Disney and his power over his board clearly establish him as a major force in the Napoleonic Era. Now Katzenberg and his DreamWorks partners Steven Spielberg and David Geffen are bent on building their own credibility as owner-managers by creating a new company from scratch.
In exercising their authority, the owners clearly enjoy certain advantages over their predecessors. Though presiding over huge enterprises, they can nonetheless turn on a dime — witness Murdoch’s machinations in the area of sports or the dispatch with which Eisner nailed down his CapCities merger. Or the resolute maneuverings of Ted Turner in steering the Turner-Time Warner negotiations. Ironically, Turner, arguably the original owner-manager, now appears temporarily to have his hands tied thanks to the megamerger.
Similarly, the owners can make face-to-face deals with other owners or with government regulators without eliciting approvals from colleagues, directors or fund managers.
On the other hand, there are several important areas in which the owners have yet to prove themselves. To wit:
Despite their exalted power, the owners have yet to have any impact upon talent prices or other spiraling costs. If anything, the owners are so fiercely competitive with one another that they are bidding up prices.
Though they own much or most of the stock in their companies, the owners are still obsessively pursuing quarterly earnings at the expense of long-term objectives to impress Wall Street, fund managers and corporate rivals. Edgar Bronfman Jr. technically may not have to “prove himself,” but he still sets fiercely ambitious targets in terms of growth and profitability.
While the owners believe they can become a magnet for creative talent, there’s little evidence as yet that this is indeed true. Given the fact that their empires are as expansive as their egos, the owners may prove to have neither the time nor the patience to cultivate the filmmakers or rock stars the way Steve Ross did a decade ago.
Though the owners may feel they can mandate synergies in their companies, again there is little to suggest that this is achievable. The sheer size and wealth of showbiz megacompanies encourage the creation of rival fiefdoms — corporate enclaves that compete with one another for rewards and resources rather than working together to improve efficiency.
Lastly, the owners feel they have the vision to “grow” their companies on a worldwide scale but, while Murdoch’s messianic vision for his company is vividly apparent, the same cannot be said for all his rivals. It’s one thing to give lip service to the various catch phrases of the day — build the brand names, globalize strategic objectives, enhance the role of a content provider, etc., etc. — but these are mere phrases, not strategies. In their fervor to take command of their armies, the new owner-oligarchs must be careful not to scare away the true strategists who understand the future.
As they find their way through the confusing maze that constitutes the worldwide entertainment industry, the owners would do well to remember that Napoleon himself was more successful as a warrior than as a ruler. Indeed, his ardor for being downright Napoleonic ultimately became his fatal shortcoming.