MGM/UA is getting ready to sue Sony for trying to steal its James Bond franchise. Paramount and 20th Century Fox are feuding over the marketing and distribution of their jointly financed megamovie, “Titanic.” Universal and Viacom are still smarting over their bitter litigation over the USA Networks. Michael Eisner is about to go to court against Jeffrey Katzenberg, and few believe the “truce” between Rupert Murdoch and Ted Turner will endure.
Anyone see a pattern here? It’s fear and loathing time in showbiz, folks. The major entertainment companies, which used to operate in an atmosphere that was almost clubby, are at each other’s throats. I’ve been canvassing executives lately, asking them if they can recall a time when feelings were this raw and all said they could not. “I cannot remember a time when there was so much hostility,” observes Warners’ Bob Daly, an eminently reasonable man, who admits to being puzzled by it all.
“So let the moguls fight it out,” I can hear someone out there saying. “Why should the rest of us care?”
Well, for one thing, the bickering is getting in the way of business. It’s also becoming very costly, which should be of interest to stockholders. And think what it must be like to be Jack Valenti: As president of the Motion Picture Assn. of America, he actually has to sit around the table with the “last angry men” and enact policy. Good luck, Jack.
The strange element to all this acrimony, to be sure, is that it hasn’t inhibited the powerful media companies from becoming increasingly linked in a complex web of global alliances. Murdoch and Sony are joined in JSkyB, the Japanese satellite TV company, for example. Disney and Murdoch are partners in ESPN Star Sports in Asia. Everybody seems to have a link to Primestar, which provides direct broadcast satellite TV, not to mention still other inter-connections with John Malone’s TCI and Liberty Media Group. Liberty owns 30% of Barry Diller’s HSN, which has just acquired Universal’s TV assets, including the USA Networks.
In a recent article in the New Yorker, Ken Auletta points out that all these links are close to resulting in something akin to a Japanese keiretsu. This is a spiderweb of companies that have so many cross-holdings that they effectively all but strangle true competition without the appearance of doing so.
If the media business becomes locked in a global keiretsu, Auletta argues, there is an incipient danger not only of “cultural imperialism,” but also of price gouging. And what would be the implications of an international news oligopoly?
So we find ourselves with an intriguing question: Which is the greater reality — the public feuds or the private deal-making? If the moguls really irritate each other that much, will these global cross-holdings have any staying power?
Or, to be downright conspiratorial about it, are all the angry charges and counter-charges an elaborate cover to permit the backroom dealmaking to continue without notice?
Since I do not subscribe to conspiracy theories, I have a problem with this one. I don’t believe people as rich and volatile as Turner could be enlisted in this sort of subterfuge.
Besides, there are legitimate reasons why the global media moguls are clashing. For the first time since the creation of Hollywood, the people who run the companies are actually the owners, not the hired hands. Arguably, the Murdochs, Turners and Redstones are more competitive than their hirelings.
They also take things personally. “The reason everyone is so grumpy is that the profit margins have vanished,” observes one of the town’s top lawyers.
Moreover, it’s unclear whether anyone, other than Murdoch, has a clear scenario as to where they want to take their companies. And Murdoch’s rivals are skeptical whether he can command the capital to take him where he wants to go.
Certainly Edgar Bronfman Jr., the Seagram scion, has produced some astonishing zigs and zags. Initially, his signals indicated a fervent desire to buy EMI or some other global music company. His next set of signals hinted at growth in TV, all of which culminated in his deal with Barry Diller, which suggests distancing himself from his TV assets.
When people aren’t quite sure where they’re going, they become a little unsettled in the process of getting there. This simple truism may help account for the acrimony that Daly was alluding to.
On the other hand, all the noise may suddenly stop one day, and we will awake to find that great keiretsu smiling down at us from on high. Suddenly it will be peace at last — albeit a potentially expensive one for the consumer.