Jihad vs. McWorld (25 page)

See for yourself: although many of the deals are mergers rather than takeovers, in almost every case the target is a company that controls creative product for McWorld—a movie studio, a film library, a video distributor, or a broadcast network or cable company. And these represent only a select number of the largest deals. Each of the companies in play already was involved in smaller acquisitions and mergers, which accounts for the variety of entities owned by what is technically a movie studio like Paramount. Paramount is a veritable festival of McWorld’s goods and products. Back in 1989 when it tried to prevent Time’s merger with Warner Communications via a $10.7 billion hostile bid for Time, it already had added to its extensive film and video properties the publisher Simon & Schuster (itself a publishing conglomerate including Prentice-Hall), as well as Madison Square Garden along with the basketball and hockey teams that play there (the Knicks and Rangers now spun off by new owner Viacom to still another infotainment company, Chuck Dolan’s Cablevision Systems, with financial backing from ITT). Time, Inc., on which Paramount was mounting an unsuccessful raid, meanwhile controlled along with its traditional magazines (including
Life, People, Sports Illustrated, Fortune
, and
Money)
, the Home Box Office cable network, Cinemax, the American Television and Communication Corporation cable operating company, Time-Life Books, and Little, Brown and Company. By the time Paramount was in play at the end of 1993, by then itself the target of a bidding battle between friendly (and ultimately victorious) suitor Viacom and unfriendly raider QVC, its properties also included the Trans-Lux Theater Corporation, USA network, Famous Music Corporation, the Miss Universe organization, and Paramount Theme Parks. No conglomerate is complete without its signature theme parks.

In the midst of its trials with Viacom and QVC, Paramount stopped to acquire still another major publisher—Macmillan Publishing Co., Inc.—and to contemplate a deal with Chris-Craft to start a fifth television network (Fox’s being the fourth). Paramount’s holdings are mirrored by the properties owned by its half-score of competitors, including Time Warner, Sony-Columbia, Matsushita-MCA, Murdoch’s News Corporation, S. I. Newhouse’s Advance Publications/Newhouse Broadcasting, and Capital Cities/ABC. Throw in the remaining independents (MGM/United Artists under
the temporary financial tutelage of Crédit Lyonnais, and Disney, the last of the true independents) along with the seven regional Bells and their new cable and foreign acquisitions who are pursuing soft-product production companies themselves, and a handful of strictly publishing giants like Bertelsmann (which recently acquired Bantam Books and RCA Records along with a New York City skyscraper), Dow Jones and the New York Times Company, as well as computer chip and software powers like Intel and Microsoft, and there are still only about two dozen companies dominating nearly every pixel of the vast infotainment telesector. We will talk a great deal about free markets and their virtues and vices in the last part of the book, but there is not much of a free market in the infotainment telesector. The absence of government regulation has not and apparently will not produce anything like true competition or real diversity of product and ownership. Here, as in so many other sectors, deregulation in the name of competition has meant conglomeration and monopoly in practice.

The complicated, interlocking corporate structures of these companies cannot eclipse the powerful light cast by the handful of luminous personalities who have followed Cecil B. DeMille and Sam Goldwyn up Hollywood’s Mt. Olympus. Michael Eisner, Ted Turner, Rupert Murdoch, Sumner Redstone, Barry Diller, Martin S. Davis, David Geffen, George Lucas, Michael Ovitz, Bill Gates, Jeffrey Katzenberg, H. Wayne Huizenga, John C. Malone, and Steven Spielberg currently stand at the summit, far above the uncertain corporate tides. They are (changing metaphors) sharks in a Gulf (& Western, now Paramount) Stream who dream of a world they alone imagine and image.
⁷
The alliances shift, the tides sweep in, but the players do not change: disappointed by Eisner, Katzenberg has joined Geffen and Spielberg; having digested Paramount, Redstone looks to dine with Huizenga; maltreated by Davis, Diller joins with Murdoch, only to cut himself loose and eventually go after Davis’s Paramount.

The story of this last figure, QVC’s Barry Diller, can stand as a symbol of the new media monopolies’ predatory politics, which, though they may serve shareholders’ interests in the short run (apparently the only public interest for which the courts have any concern), serve neither competition, nor choice, nor creativity, nor
the public good in the short or long term. Barry Diller has been a force in Hollywood for many years, and in the early eighties, after an apprenticeship in film production, ended up at Paramount, quickly rising to a production post where he was a mentor to young producers like Scott Rudin. Tensions with Martin Davis, head of Paramount then and now, led to Diller’s ouster. Diller went on to Fox where he established the Fox Television Network and prospered until Fox was purchased by Rupert Murdoch in 1992. Though invited to stay, Diller wanted a financial stake in Fox that Murdoch would not give him, so he moved on and into what many observers thought would be a career-ending cul de sac—QVC, the home-shopping network. QVC had stumbled on to one of McWorld’s simplest and profoundest truths earlier than most players: television
is
consumption and commercials constitute its most popular programming. Let consumers buy what they watch, and you have united television and mall-dom—McWorld’s two most powerful domains. As MTV and the newer and highly popular and profitable half-hour and one-hour infomercials demonstrate, the public scarcely can tell where commercial programming ends and programmed commercials begin. And, to the extent they can tell the difference, viewers may actually prefer the latter to the former. For Diller, QVC not only embodied the corporate philosophy of the bottom line that was driving mergers, it gave him a platform from which to create his own empire. When Sumner Redstone made a friendly offer to buy Paramount in the summer of 1993, Barry Diller saw an opportunity to parlay his emblematic company into genuine Hollyworld power and at the same time to even accounts with Martin Davis, his earlier nemesis at Paramount. Personal ambition enhanced by communications synergy yielded a still higher synergy that, with the help of court decisions critical of Paramount’s favoritism toward Viacom, nearly enabled Barry Diller to complete the unfriendly deal that would have let him annex the last major independent studio save Disney.

In Hollywood, where no man is an island and every takeover demands at least a corporate archipelago, Diller had help. Viacom’s Redstone was lining up financial support to the tune of $600 million from Blockbuster Video under H. Wayne Huizenga (with whom he eventually merged and who was already in control of Republic Pictures and Spelling Entertainment as well as three Miami sports franchises);
and $1.2 billion from NYNEX, which had just struck another synergistic deal with the Tomem Corporation in Japan to develop cable and interactive television there—the Baby Bells were looking for product to pump through their telephone wires and cellular systems. So Diller called on Cox Enterprises and S. I. Newhouse’s Advance Publications (which controls twenty-six newspapers, a cable system, and Random House, Inc., inter alia) for an initial pledge of $500 million each. Diller also was moved, if a little reluctantly, to rely on John C. Malone, one of the richest men in America and the acknowledged “King of Cable,” a controlling force in the country’s largest cable system, Tele-Communications (itself later involved in a gargantuan plan to merge with Bell Atlantic for $33 billion, although that deal may fall through), and in Liberty Media, a television programmer that owns Black Entertainment Television and the Family Channel and is itself a 22.5 percent owner of QVC. With Time Warner (which has a 25 percent share), Malone’s Tele-Communications (with a 23 percent share) also controls the Turner Broadcasting System, which was forced to turn to outside funding when Turner’s own burgeoning acquisitions outran his pocketbook. QVC, as the hostile would-be buyer of Paramount, is itself then owned not only by Barry Diller himself (12.6 percent) but also by John C. Malone (via Malone’s Liberty Media, which owns 22.2 percent of QVC), and Brian Robert’s Comcast Cable, which owns another 12.5 percent. Time Warner, which with Malone’s Tele-Communications owns Turner Broadcasting, controls another 9 percent. Nothing is quite as it seems. Everybody owns a piece of somebody and nobody is really on the outside. As with the shopping malls, the outside is all on the inside.

The details of the linkages and relationships are not the point here. A year from now, the mergers and alliances will have again shifted and some successful owners will be some other corporations’ prey. The players will not have changed, however, only the line score on their current game. There will still be a great many interlocking corporate structures shifting precariously on uncertain turf. Among the interstices of those structures just a few powerful individuals will continue to circulate—and only a tiny handful of them will be critical players on either the management or the creative side. Malone is a monied manager (“billionaire flunkey,” as he terms himself in his
new role as Bell Atlantic vice chairman), Diller is a putative creative genius.
⁸
In the bidding war between QVC and Viacom, Diller and Malone were bested and Sumner Redstone and Martin Davis have a temporary advantage. But in the process, the compass of players has narrowed again, and the interest that the public at large has in full access to the information highway, in maximum variety of fare and cultural diversity, and in real freedom of choice and expression, has in each case been further diminished.

The victory of the dollar over every other conceivable interest, public or private, entails not just a crass commercialism in the place where quality information and diversified entertainment should be, but also a monopoly antipathetic to democratic society and free civilization, if not also to capitalism itself. That “creative geniuses” like Spielberg, Katzenberg, and Geffen join up gives their rivals nightmares, but will not necessarily enhance competition—or even creativity, though observers will once again celebrate synergy. Yet how can an Edgar Bronfman (Seagram) take on a Matsushita/MCA/ Universal Pictures without creating his own megamonopoly? Whatever else McWorld’s mergers may serve in the vital infotainment telesector, they serve neither culture nor liberty nor democracy.

This lugubrious conclusion brings us back to the same questions raised in the previous section by the impact of economic markets generally in McWorld. Spectators can vote with their dollars as well as with their private viewing and purchasing prejudices, but who speaks in the Hollyworld domain of McWorld for the public? Is there a global equivalent of even so weak an institution as the F.C.C.? If theme parks are now talking about “privatizing government,” and taking over many of the functions of a state, is there a way for citizens to do the opposite and “publicize private markets,” compelling them to be accountable, and demanding from them at least some degree of public-interestedness? Which institutions can exert countervailing pressures on malls or theme parks or media monopolies in the name of quality or diversity or community?