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Big deals portend big power shifts

Major buys challenge balance of power

It was precisely 10 years ago that Ted Turner, one of the sharpest minds in television, uttered one of the dumbest remarks in corporate history.

In announcing that he was selling Turner Broadcasting to Time Warner, he said, “I’m tired of being little my whole life. This is a chance to see the world from a different perspective.”

As things turned out, the “perspective” would be far different from what Tumultuous Ted had imagined. He was quickly shoved to the sidelines, his influence marginalized. A decade later, he’s raising bison.

All this came to mind in pondering the impact of two new deals — Viacom acquiring DreamWorks and Disney absorbing Pixar. Orgasmic praise was promptly heaped on both deals by bankers and their acolytes, all of whom revere deals irrespective of the numbers or the management implications.

To be sure, the “new Paramount” had seemed a bit tentative in pulling its slate together; the hyperactive leaders of DreamWorks would surely energize the lot. Similarly, Disney’s sputtering animation slate will benefit from being Pixarized.

But did either of these deals justify the prices paid? Executives at rival companies were scratching their heads as they ran the numbers. Michael Eisner had shot down a proposed Pixar buyout several years earlier at a vastly lower number, some recalled.

And then there was the other issue: Who would be running the show? Having survived many years at Eisner’s side, would Bob Iger build a blissful partnership with a one-man show like Steve Jobs, who now becomes his biggest shareholder? Jobs may be brilliant, but he likes to do things his way — witness the fact that the skimpy Pixar board consists of six people, all close friends or associates.

At Viacom, the official word was that Paramount will remain the Tom-and-Brad show — that Freston and Grey will forcefully pursue their plans to build a new company and probably even initiate a new TV unit.

Talk to those doing business at Paramount, however, and you hear a confused scenario. The clout of the DreamWorks triumvirate over studio policy has become pervasive, some top players say. DreamWorks executives already have insinuated themselves into the Paramount hierarchy and their voices and ideas permeate the studio environs.

All this may represent bureaucratic paranoia, to be sure, but the ghost of Ted Turner hovers over the studio. Even Sumner Redstone, the ultimate supremo of Viacom, alluded to it in his remarks to me a few weeks ago.

“Ted surrendered control,” Sumner intoned. “Look where it got him.”

No one would suggest that Iger or Freston is in danger of losing control, but clearly subtle shifts in the balance of power are inevitable. A true test will be whether the paranoia and power plays inhibit the creative output of the companies.

Iger and Freston both find themselves, in Turner’s immortal words, seeing the world “from a different perspective.”

They may find themselves wondering, from time to time, whether raising bison isn’t a more rewarding endeavor.

**************

Subhed: Walt’s vision redrawn?

Brief historical footnote: Unique among Hollywood companies, Disney’s roots were in animation.

It is thus all the more amazing to find the studio essentially outsourcing animation to the Pixar playpen in Emeryville, California. The details are still fuzzy, but certainly there’s a suggestion that many of the 700-plus corps of studio animators will be laid off — certainly the unit set up to do sequels to Pixar’s films — and that the focus of activity will be transferred to Pixar headquarters under the creative direction of John Lasseter.

Will old Walt be turning over in his grave? Or, having seen Disney’s recent animation releases, maybe he will say, “Thank goodness someone else will be minding the store.”

******************

Subhed: Ace of clubs

No discourse on power could ignore the extraordinary secrecy maintained over the reinvention of the WB and UPN. Corporate machinations involving the careers of hundreds of people and millions of dollars were carried out without anyone knowing except the small circle of negotiators.

The lesson, as one senior agent reminded us, is that the TV business more than ever operates like a club. Most of its members came up through the same corporate channels (many through Warner Bros.).

There were many corporate players last week who had felt they were members of that exclusive club, only to wake up to the realization that they’d not been let in on the CW secret.

Hence, a cold wind blew across the floor at NATPE, where the happiest visitors were executive head-hunters who suddenly were deluged with attention.

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