Pay attention to what’s happening at AT&T as it takes charge of WarnerMedia, the TV and movie businesses formerly known as Time Warner. In addition to changing names and leaders — with telco vet John Stankey replacing Jeff Bewkes, who’s now a “senior adviser” — you’ll see a different leadership model that’s about to become the industry norm.
The sun is setting on superstar CEOs including Disney’s Bob Iger, CBS’ Leslie Moonves, and Fox’s Rupert Murdoch — thought to be indispensable due to their abilities to identify popular infotainment, attract creative people, or craft strategically savvy deals.
They’ll be replaced by less flashy executives who’ve mastered comparatively mundane, but important, management skills: building efficient teams and workflows, and meeting budgets. Consider it a victory for process over personality.
As the media business becomes more competitive, and stock prices decline, investors and the public are discovering that “some CEOs aren’t nearly the sine qua nons they think they are,” says former AT&T Broadband chief Leo Hindery, who wrote “It Takes a CEO: It’s Time to Lead with Integrity.”
That’s a big change. Most media companies have spent years making the case that they owed much of their success to their CEOs’ Midas touch.
For example, Disney’s board gives Iger credit for having “driven spectacular financial performance.” When Sumner Redstone controlled CBS, he frequently called CEO Moonves a “super genius.” Fox directors gush in the company proxy over Murdoch’s “invaluable insight and expertise.”
Those beliefs paid off for these and other media CEOs. Most became entrenched, holding their jobs far longer than their peers in other industries. The average head of a large cap company only lasts five years, Equilar reports. But Bewkes ran Time Warner for more than nine years while Iger’s had Disney for 13, Moonves has been in charge for 15 years, and Murdoch has run Fox since he bought the studio 33 years ago.
And, of course, media chiefs make much more than their corporate peers — including those who employ more people, oversee bigger enterprises, and make decisions that have a more profound impact on social welfare. Moonves and Bewkes ranked among the nation’s 10 highest paid CEOs in 2017, Iger made the top 20. Murdoch wasn’t far behind.
The AT&T deal helps to put the pay disparity into perspective: Although considered a big player in media, Time Warner would have only accounted for about 15% of AT&T revenues if the companies were combined last year. That was so small that the telco didn’t need a shareholder vote to approve the deal. Yet Bewkes’ nearly $49 million compensation package was 70% higher than the one for AT&T CEO Randall Stephenson — and 385% more than Stankey made. (That should change soon: AT&T’s proxy says that when the Time Warner deal closes, the board “intends to reevaluate Mr. Stankey’s compensation, as appropriate to recognize new duties.”)
Yet the cult of personality has lost its allure. It’s hard to make the case that a single person deserves credit for the performance of companies that juggle multiple businesses across multiple continents.
“The days of an individual driving the success of an entire business have diminished because these companies are so large,” says long-time media analyst Christopher Dixon. As a result, “the skills to run them well will be traditional management skills, and you’ll need a team.”
The #MeToo movement demonstrated how risky it can be to give a single person out-sized credit for a company’s success. Disney recognized that when animation chief John Lasseter — long seen as the mastermind behind the revival of the company’s foundational business — faced disclosures of sexual transgressions. The company said last week that he will leave at the end of this year.
And Wall Street has lost confidence in media CEOs’ magic. It was easy to give leaders credit while their companies reported extraordinary profits from pay TV — a business dominated by a handful of network owners and distributors.
But executives who looked like wizards now look more like the Wizard of Oz as they scramble to figure out their futures in an internet-driven infotainment industry that may soon be controlled by much larger telecom and tech companies.
“When vertical integration was largely killed off, most of the [media] industry’s monopoly power died as well,” Hindery says. “The industry simply doesn’t do as well in a competitive environment, and this reality is now reflected in many of the public stock valuations.”
Murdoch’s decision to sell most of his Fox entertainment assets suggests he recognizes that it’s time for a change.
But others appear reluctant to leave the spotlight. No one’s more deeply entrenched than Comcast’s Brian Roberts, who controls a third of the company’s votes. The by-laws allow for him to be Chairman, CEO, and President if he’s “willing and available to serve.”
Iger probably could stay at Disney for life if he wants: In December he agreed to stay to the end of 2021 – he says to see through his company’s agreement to buy the Fox properties. (That might require him to lead a bidding war now that Comcast has made a higher offer.) It was the second extension to follow his plan to leave in mid-2016. “This time I mean it,” he said in October, although he and Disney’s board have yet to identify a potential successor.
Meanwhile Moonves has launched a do-or-die power struggle with CBS’ controlling shareholder: Shari Redstone. They’ve asked a Delaware court to determine whether the CBS board can issue a dividend that would dilute Redstone’s voting power to 17% from 80%.
Despite their differences, Moonves and Redstone seem to agree that the next leader should have traditional managerial skills. When they discussed a possible combination of CBS and Viacom, now off the table, Moonves lobbied for his COO, Joseph Ianniello, a finance and deal guy, to be his No. 2 – and heir apparent. Redstone preferred Viacom CEO Bob Bakish, who held corporate, sales and development jobs as he rose through the ranks.
Will the shift in focus from personalities to process affect storytellers? AT&T on Friday told Time Warner staffers not to worry.
“As different as our businesses are, I think you’ll find we have a lot in common,” CEO Randall Stephenson said in a first day memo. “We’re big fans of your talent and creativity. And you have my word that you will continue to have the creative freedom and resources to keep doing what you do best.”
Still, professional managers typically hate risk. And underlings, eager to succeed, will surely sense that – and adapt. But Dixon notes that “we’ve been here before,” in the early days of television. The movie business declined, yet managers including MCA’s Lew Wasserman found ways to generate new business in the new medium.
So while Hollywood studios now crank out about 18 films a year, “that’s what Netflix is doing in two months,” he says. If professional managers can revive the business, then the departure of superstar CEOs “is not all bad. This job no longer requires Cecil B. DeMille.”
David Lieberman is an Associate Professor in The New School’s graduate Media Management program.
