The mogul crunch.

The mogul crunch.

The mogul crunch.

Moneybox
Commentary about business and finance.
March 19 2002 1:01 PM

The Mogul Crunch

A great deal has been said about media consolidation, but there's been little discussion of one of its byproducts: the mogul crunch. The fact of the matter is that as media giants make acquisitions to achieve even more mass, there are simply not enough jobs for all the moguls-presumptive out there. One can only imagine what it's like to be on the mogul track one day and off it the next, with little hope of finding a new entry point to the scuffle for the ever-smaller number of truly top-dog positions.

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One can only imagine because most such folks don't seem to want to talk about it. How refreshing, then, to find an exception in Peter Guber, former chairman of Sony Pictures. (In that role, he had a rather brutal star turn in the scathing Nancy Griffin and Kim Masters book Hit & Run.) Since his 1994 firing, Guber has led a lower-profile life as head of a Hollywood production company. And in a chat a little while back, in fact, he spelled out for me a cheerful rebuttal to what I had artlessly referred to as the problem of "underemployment."

"You're only underemployed if you're undervalued in your own mind," he said and went on to offer a full-blown theory of post-mogulness and self-worth that bears consideration. "You are the actor-director-producer of your own life," he went on. "If you do a lousy job of it, you have a lousy life. The reality is that you have to live the life you want to live. I've lived all the different lives. Head of production, president of a studio, president of a big international company, chairman and CEO of a multinational company." Guber has indeed spent years in the executive suites of major entertainment companies. He now runs his own production company, Mandalay, which dabbles in various media on a less grandiose scale—a film here, a TV show there, some sports investments, a few non-starter Internet projects. Mandalay will have a film called Serving Sara, with Matthew Perry and Elizabeth Hurley, out this summer and has lately begun shooting Beyond Borders, with Angelina Jolie and Clive Owen, on locations in northern Canada, Africa, and Asia.

The importance or unimportance of scaling some corporate mountain, Guber continued, can "carry a value really, truly only to you," the individual. Among moguls and aspiring moguls, "everyone thinks somebody else is looking." That notion is wildly untrue, he says. "Let me be sure to tell you: Nobody is looking at … Jerry Levin or Rupert [Murdoch]. I haven't spent three seconds in the last five years thinking, 'I wonder what Rupert's doing' Or, 'I'm concerned about Rupert.' Or, 'John Malone—I've gotta spend some time thinking about him.' Really, that's a complete fiction." Later in the conversation, speaking of those who would pursue mogulness for its own sake, Guber blurts, "Most of these people are legends in their own minds!"

Perhaps so. The mogul crunch is intriguing largely because media chieftans seem to revel in their roles more lustily than, say, your average pharmaceutical executive. Take Viacom CEO Sumner Redstone, who clucked in his autobiography A Passion To Win that Fortune anointed him as "the king of moguls." Redstone's sense of self seems inextricable from his pleasure in the raw mass that Viacom has achieved. "Viacom is me," he wrote, and "the Viacom brands reach and influence tremendous numbers of people around the globe from the cradle to the grave."

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The trouble for Redstone wanna-bes is the inverse relationship between the power of media companies and the number of slots at the top of them. Consider AOL Time Warner. What is now one vast kingdom used to be four: America Online, Time Inc., Warner Bros., and Turner Broadcasting. As free-standing companies, each of the latter three was led by legendary figures: Henry Luce at Time, Steve Ross (not to mention Jack Warner) at Warner, and Ted Turner. The present-day division heads seem decidedly mortal by comparison. And lately, so did Turner, when post-merger corporate reshuffling left him a visionary without portfolio.

He is by no means the only one whose power over a rapidly growing media empire seemed unstoppable and then stopped. Michael H. Jordan, pushed out of CBS, went on to serve as chairman of Clariti, a telecom firm whose shares trade in the pennies. Former Viacom and Universal CEO Frank Biondi started a venture capital fund, backing various lackluster Internet firms. Michael Fuchs, the former HBO chief, and Mickey Schulhof, once a Sony honcho, had brief runs at the top of ill-fated tech start-ups. Philippe Dauman and Thomas Dooley, forced out of Viacom, started a media-investment vehicle whose activities remain below the radar.

It's no surprise that mogul-level comebacks are rare: The landscape in which media types operate is likely to have changed enormously by the time an attempted repeat performance rolls around. Some find their skills worked better in a large company environment, and others simply face inflated expectations—not least their own.

But let's face it: There are worse things to be than a crunched mogul. Most of the folks mentioned above got multimillion dollar buyouts. And as Guber described it, executive life outside of mega-corporation-land doesn't sound so bad. Cheerily winding up our phone conversation, he had words sure to hearten mogul aspirants past, present, and future. "I make most of the decisions [for Mandalay] intuitively and from my heart. I have no quarter-to-quarter pressure. I don't really care what the media says; it's irrelevant to me. This is the only business where you can crash and burn cataclysmically in the winter—and the next summer return to the same stage with a giant home run," he observed. "I like to say that I'm in a business where failure is an inevitable cul de sac on the road to success." Then he rang off and caught his flight to Greece.