No matter how high the bidding goes--no matter how many Baby Bells or Blockbusters kick in their billions--the hot pursuit of Paramount by QVC's Barry Diller and Viacom's Sumner Redstone really isn't about synergy, strategic software or redefining tomorrow's media. This is an acquisition that reveals much less about the future of media than it does about the industry's past.
On the other hand, the contest between Paramount's prospective paramours is important precisely because it reveals much about what drives the business of America's pop culture media: the personalities at the top.
More than any other global industry, the destinies of America's major media companies are shaped less by cost imperatives or technological opportunity than by the intuitive impulses and iron whims of their CEOs. Today's awkward multimedia a trois of Diller, Redstone and Paramount's Martin Davis affirms that, when you're a mogul, what you feel can matter far more than what you think.
That's not at all to say that Paramount-in-play represents a multibillion-dollar exercise in corporate ego conflict. Quite to the contrary, there are excellent business reasons for a Diller or a Redstone and their partners to ante up.
But the idea that these bids are irresistibly driven by tectonic shifts in the media landscape is simply false. These bids are driven by what the moguls claim will be tectonic shifts in media. Unlike the 1980s, when undervalued media stocks, strong cash flows and ready access to debt ignited a firestorm of acquisitions, today's media deals are fueled as much by the promises of personality as by profit potential.
What's happening--as moguls like Rupert Murdoch, Michael Eisner, Ted Turner and Tele-Communications Inc.'s John Malone amply illustrate--is that media companies are embracing their roots as entrepreneurial buccaneers rather than trying to become paragons of institutional predictability.
When it comes to media in the 1990s, investors are betting more on the individuals than on their companies. Savvy investors don't buy home shopping networks; they invest in Barry Diller. They don't just buy TCI; they invest in John Malone.
Once asked what his major weakness was as News Corp.'s CEO, Rupert Murdoch replied, "Well, I suppose it wouldn't be good for the company if I were hit by a truck . . . " True enough. People who invest in News Corp. are not just investing in global media, they are investing in Rupert Murdoch's version of global media.
To be sure, virtually all companies in all industries go through phases of entrepreneurial management. A Henry Ford or an Andrew Carnegie could be as capricious as any press baron or Hollywood mogul. With a few notable exceptions, however--Henry Luce's Time Inc., the Wallaces' Reader's Digest Assn., maybe Murphy's Capital Cities/ABC--most media companies haven't aspired to become well-managed, enduring institutions; they just want to be lucrative businesses.
When the CEO changes, the new leader typically supplants the old culture with one of his own--just as Martin Davis did with Charles Bludhorn's Gulf-Western and, subsequently, Michael Eisner and Jeffrey Katzenberg did with Walt Disney Co.
So in flagrant contrast to the energy, automobile, aerospace or electronics industries, the media business is becoming even more personality-driven and individualistic--if that's possible. Call it the legacy of Steve Ross, the richly compensated, charismatic visionary who masterminded the questionable Time-Warner merger. What we're now seeing is a re centralization rather than a decentralization of organizational power in media firms.
Decision-making power and vision is being ever more tightly consolidated at the top. Bold innovation in these places is driven more by edict than by encouraging ideas from the bottom. William Randolph Hearst, CBS' William Paley and RCA's David Sarnoff would no doubt approve.
But what are the implications of The New Moguldom for the Paramount deal and the future of media? The most obvious--as Time-Warner shows--is that it's easier to marry two companies than to get them to give birth to something new. Whether Viacom or QVC gets Paramount is almost irrelevant to the challenge of implementing the sort of multimedia future that Redstone and Diller have publicly forecast. Neither QVC nor Viacom has experience in implementing digitized media on a large scale.
What's more, the most successful implementation of such a network--notably, the Internet--has been more of a bottom-up endeavor than a top-down design. It's ironic that at the same time we're seeing the business of media recentralize, we're seeing the technologies of media encourage and enhance decentralization.
More people with more money will have more access to more media. Can companies that are run from the very top swiftly and flexibly exploit such opportunities? Or will they have to redesign themselves as surely as they must redesign their networks?
These questions--not who wins Paramount for how much--will determine what's on tomorrow's video displays and who gets to put it there.