I don’t think it was a case of Michael having issues with me—I’d gotten to know him when he joined the Turner board and we got along fine—but he cared a lot about reporting relationships and his place on the company organization chart. After being rumored to be one of Levin’s likely successors, he saw reporting to me as a slap in the face and he resigned. Bob Daly and Terry Semel—the co-chairmen of Warner Brothers, who had their share of clashes with Michael in the past, wound up with responsibility for the music business. As for HBO, we were fortunate that they had a talented number two guy named Jeff Bewkes who was ready to take Michael’s place.
A TED STORY
“It’s All Too Complicated!”
—Jeff Bewkes
(JEFF BEWKES IS PRESIDENT AND CEO OF TIME WARNER.)
Ted showed up in my office as the new boss and it was the first time for him that he had a business reporting to him that he didn’t create and a guy running it that he didn’t put there. So this was all new to him and he started pacing around my office, talking loudly and asking questions like, “How much money do you spend with Bob Wright and Rupert?” He was asking how much we spent advertising HBO on NBC and Fox. I told him the number was about $40 million and he told me I’d have to move all that to TBS and TNT because we shouldn’t be spending any money with our competitors.
He then started telling me about how we should make our documentaries with the TBS producers in Atlanta and combine our film production group with TNT’s, etc. Now, I had grown up in a family with three brothers and was used to a very lively debate around the family dinner table so having someone raise his voice and argue with me wasn’t anything new.
When Ted was finally finished I looked at him and said, “You know, you must really think I’m an asshole.” That was my opening line. He stopped pacing and looked at me and said, “What? Why do you say that?”
I said, “Well, I’ve been here twenty years and you come up here and start telling me we ought to do this we ought to do that, you don’t think I know that Rupert Murdoch owns Fox and it competes with us? You don’t think I know that NBC isn’t part of our company? I know that, but I’m trying to release big shows and big movies on Saturday night or Sunday night, I can’t, I need a splash on Thursday on
Seinfeld
or on
Friends.
I need the young people that are our subscribers. They’re watching
Friends
and
Seinfeld
—not TNT’s forty-third rerun of
The Sands of Iwo Jima
!”
Now that I had his attention we started to debate and at one point I looked at him and said, “You used to sail, right?”
And he said, “Of course I used to sail, what kind of question is that?”
I said, “When you were sailing did you let other people hold the tiller?”
When he said, “No,” I said, “Well neither do I and here’s how I think it should work. I should get to make these decisions and if you don’t like our results you get to fire me.”
“Okay, I’ll give you three months,” he said. And about three months later he told me I was doing all right and we had a great relationship from that point forward.
From there we’d meet just periodically and one time he was in New York and he came in to ask me about my to-do list. I think he came in thinking that HBO was a pretty simple business but he started to realize that it was actually pretty complicated. I was telling him about VOD this and digital that and all of the other challenges we faced when he fell to the floor of my office and curled up into a fetal position with his hands over his ears. “Please don’t tell me more,” he shouted, “it’s all too complicated!”
That same night Ted was being interviewed on stage at the Museum of TV and Radio and there were a lot of important people there from the media industry and I was sitting in the audience when he started to tell the story about our meeting.
“I was meeting with Jeff Bewkes, who’s sitting right there,” he said, pointing at me in the audience, “and he was telling me all this new digital stuff so I just rolled on the floor,” and he literally threw himself out of his chair onto the stage at the Museum of TV and Radio and reprised his fetal position, covered his ears and yelled, “It’s too hard, too complicated, don’t tell me!”
The audience loved it, and so did I. To me, he was telling me that he appreciated that what we were trying to do at HBO was complicated and that he wasn’t going to try to do my job. I remember going back to my staff and telling them that Ted was going to be a great boss, and he was.
Jerry Levin and I worked well together during those first few years. I’d known of his reputation for being pretty astute in the ways of corporate politics but I saw him more as a hardworking, shrewd businessman with whom I’d been collaborating successfully for the past twenty years.
Now that he was officially my boss we spoke in person or on the phone almost daily—generally updating each other or talking about strategic issues—and for the most part he let me do my job. When we gave our presentations to employees and investors about the virtues of our companies coming together they were well received. People on the Time Warner side, who were used to seeing a more sedate leader like Jerry, seemed to respond well to my energy and enthusiasm. Our fellow employees saw us working as a team and no one could argue that the assets of the two companies didn’t make for a powerful combination.
In the months following the merger, we pushed each operating division to find cost savings, and we did everything from laying off nonessential employees to closing entire companies in the case of overlapping operations. These cuts weren’t easy and in one case, my own son was a casualty. Now that we were part of a company that owned Warner Brothers, having a second home video division was redundant and when we closed Turner Home Video, my son Teddy was laid off. Prior to this, he and I were having dinner with Jane and some friends at a big restaurant in Atlanta. At one point during our meal, Teddy asked me, “What happens to us after the merger?” He was referring to the Home Video division and I responded, “You’re toast.”
My hearing has deteriorated over the years and as it has, my speaking voice has gotten louder. Apparently, unbeknownst to any of us, there must have been a reporter near us in that restaurant, since just a day later articles appeared describing this exchange, but making it sound like I was singling out Teddy. Actually, I was just answering his question honestly and when these stories ran, the two of us got a laugh out of it.
I think the story actually helped our terminated employees understand that we were making tough decisions and weren’t playing any favorites—even with my own son. (By the way, while all of my kids worked at least some time at the company, and I helped them get jobs there in the first place, once they were hired I never believed in giving them special treatment. Some other businesses are run like family dynasties but as the CEO of a publicly traded company, I didn’t think it was appropriate to favor my children.)
As a businessman, I believed in running a lean operation and I accepted these post-merger cost cuts, but it really bothered me when I saw how much money was being spent at the higher corporate levels. Time Warner executives ate in fancy private dining rooms and their offices and boardrooms were full of expensive artwork. When I found out that the value of these paintings ran into the millions, I was upset. At one of our board meetings I said, “So while we’re laying off $30,000-a-year employees in Atlanta, we have million-dollar oil paintings hanging on the walls in New York?” The contradiction was plain to everyone and soon the paintings were removed and sold. For months thereafter, dark rectangles on the faded walls served as a reminder of the expensive artwork that used to be there.
I also spoke up whenever I saw a lack of cooperation between divisions. I was used to running a business where everyone worked together, but at Time Warner the corporate culture was different. There, the division CEOs generally ran their individual businesses as they saw fit, but I merged with Time Warner with an understanding that this would change. In particular, I expected our entertainment networks to have access to newer programming being produced at Warner Brothers. Historically, after theatrical movies ran on pay channels like HBO they were then licensed to the broadcast networks, and I wanted TBS and TNT to move into that advanced position.
I knew that by doing this we could grow the ratings of TBS and TNT and increase their overall value. We had done these deals with New Line and Castle Rock on some hit movies like
Dumb and Dumber
and
The Shawshank Redemption
and the results were positive. But the Warner Brothers people had been doing business with the networks for years and didn’t like the idea of changing. I thought I’d been clear with them about how this strategy would work and when I found out that a package of movies was instead being sold to CBS, I was furious. I called Bob Daly, co-chairman of Warner Brothers, and explained again that we were now part of the same company—one that I happened to own about 10 percent of—and he needed to get with the program.
Daly didn’t like it but I hadn’t sold my company to Time Warner so we could continue to do business as usual once the deal was done. Jerry Levin generally supported me and I think he appreciated my speaking. The role of CEO at Time Warner had been weakened so much over the years and the division heads had been allowed to operate so freely that it would have been hard for Jerry to change his behavior suddenly and become more assertive after our merger. I filled that role on occasion instead and it all came naturally to me.
Jerry and I worked well together even though there were times when our differences were apparent. The corporate floor at Time Warner headquarters in New York was a pretty staid environment. Between his secretary’s area and his office Jerry had a meeting room. Once I got my own office on the floor and started to spend more time in New York, whenever I wanted to see Jerry I simply walked through the meeting room and right into Jerry’s space. This always seemed to surprise him and I never understood why until someone explained to me that he rarely let visitors into his own private office. So, unbeknownst to me, I’d been violating some unspoken corporate protocol.
Despite our differences and the fact that we never became particularly close personally, Jerry would often describe me at public events as his “best friend.” After doing this several times I finally asked him, “Jerry, if I’m your best friend, who’s your
second
best? I’ve never even been over to your home for dinner.” Looking back with 20/20 hindsight, I can see that the personal differences we experienced when business was good should have warned me about how we’d get along when times got tough.
But there were plenty of issues on which Jerry and I agreed. Shortly before our merger officially closed, in the fall of 1996, the two of us were united in a dispute with Rupert Murdoch’s News Corporation. Rupert was launching Fox News Channel and was trying to get distribution on cable and satellite systems. When you roll out a new advertising-supported cable service like Fox News you want to be available in as many households as possible. You also need to be carried in major markets if you want to attract national advertisers, and for a news channel, no market is more important than New York City. It so happened that the bulk of the cable households in New York were owned by Time Warner Cable, and when the system managers balked at carrying Murdoch’s channel, war broke out.
I’d never made a secret of my dislike for Murdoch’s business practices, and given the poor journalistic standards his newspapers exhibited, the idea of his getting into television news didn’t make me happy. From CNN’s earliest days I was concerned that someone would come after us with a right-wing network and now it was happening. But when Time Warner Cable originally passed on carrying the Fox News Channel, I had nothing to do with the decision. Back then, there were several new services trying to get launched, and channel slots were scarce. They already carried CNN, Headline News, and NY1 (Time Warner’s own local news channel), and they were being actively pitched by MSNBC (the channel that Microsoft launched with NBC after their deal with us didn’t materialize). Given all the news programming they already carried they probably wouldn’t have added any more but when the Federal Trade Commission approved the Time Warner–Turner merger, Time Warner Cable had to pledge to carry a CNN competitor on at least half their systems. After looking at both Fox News and MSNBC, they decided to take the latter.
It’s important to understand that the programming people at Time Warner Cable were tough negotiators and even after our companies merged, it was difficult to get them to carry newer Turner channels like the Cartoon Network and Turner Classic Movies. Once the Time Warner–Fox dispute became public, it was portrayed as if we were picking on Fox and that the behind-the-scenes battle was really between Rupert Murdoch and me. While that wasn’t true I figured out that the press attention would give me the opportunity to explain to people that Rupert had a history of manipulating his media’s coverage to advance his political purposes. At the height of this public feud I even went so far as to challenge him to a boxing match in Las Vegas. He declined. (By the way, professional wrestling was popular on our entertainment networks at this time and one of our executives suggested that instead of boxing Murdoch, I should wrestle him on a pay-per-view event. But I passed on this idea. I didn’t want to wrestle Rupert, I joked, I wanted to
hit
him!)
Murdoch didn’t respond to me directly; instead, his media outlets started to go after me. That October, when the Braves were playing the Yankees in the ’96 World Series on the Fox Broadcasting Network, I learned that the producers of those games were instructed not to show me on camera unless it was unflattering. The first three games they never put me on the air, and when they did finally put the camera on me, with Jane and Jerry Levin during game 4, the announcers didn’t say a word. When the Braves went behind 8–6 in the tenth inning, they put me back on to show how upset I was. After that, whenever they showed me they tried to make me look silly, like when I turned my Braves hat into a rally cap—upside down and sideways on my head—or the time I dozed off a little during a game.