The Willy Loman of media moguls.

The Willy Loman of media moguls.

The Willy Loman of media moguls.

Moneybox
Commentary about business and finance.
June 3 2004 4:24 PM

Exit the Antimogul

Saying goodbye to Viacom's Mel Karmazin, the Willy Loman of the entertainment industry.

1_123125_123051_2093511_2101624_040603_melkarmazin
Karmazin's out

Mel Karmazin resigned as Viacom's president and chief operating officer this week, ejecting himself from the catbird seat overseeing CBS, MTV, Paramount, Simon & Schuster, and Infinity Broadcasting. Long seen as the heir apparent to Viacom's chairman and CEO, crusty octogenarian Sumner Redstone, the 60-year-old Karmazin had concluded that he would never ascend to the top post at the glamorous media company.

Karmazin parachutes away with a severance agreement worth $30 million and an intact reputation as the ultimate antimogul. A child of the Lower East Side and graduate of Pace University, Karmazin started out selling radio ads. In his quirky memoir, All in Good Time, radio host Jonathan Schwartzrecalls working at iconic New York radio station WNEW in the 1970s when Karmazin, "a speedy little guy who conducted crucial talks while practically trotting down streets or hallways," was the general manager. Schwartz, the son of lyricist Arthur Schwartz, couldn't abide Karmazin's relentless focus on the practical. "To him, language was only utilitarian; it slipped from his lips as he hurried through his days, while clumps of financial declarations dribbled down onto his lapels during flurries of cost-cutting meetings and memos and phone calls and one-paragraph letters." Schwartz concluded: "All of it served the dismal fact that Mel had no interest in music, news, sports, books, theater. It mattered not what a station proffered, only how it profited."

Advertisement

This attitude made him an attractive employee. And in 1981, Karmazin was hired to run Infinity Broadcasting. Over the next 15 years, by dint of tight operating control and a string of shrewd acquisitions, he built Infinity into one of the largest radio companies in the nation. His most brilliant managerial stroke came in the late '80s, when he hired Howard Stern after a New York station had cashiered the longhaired shock jock.

At Infinity, Karmazin proved the rarest of creatures—a self-abnegating CEO. He eschewed publicity—Stern could say virtually anything he wanted on-air but wasn't permitted to talk about Karmazin—and was almost allergic to public relations. At most publicly held companies, the annual report is an expensively produced celebration of the CEO's vision, complete with airbrushed photos. At Infinity, it consisted of a 10-K filing with a cover slapped on top.

I interviewed Karmazin in the mid-'90s, when the Federal Communications Commission was targeting Howard Stern. I was struck by his resolute lack of interest in any complicated First Amendment debate about Stern. His response was simple and sarcastic. "We've asked that every radio manufacturer install something called an on/off button. If people don't like what they hear, they can use it."

Because he didn't pontificate to Charlie Rose about the possibilities of convergence and new media, Karmazin didn't earn much of a following among Vanity Fair editors and gossip columnists in the '90s. But he did build a large one among the audience that mattered—investors. And almost from the moment CBS acquired Infinity in 1997, investors were clamoring for Karmazin to take over the whole operation from CEO Michael Jordan. Within two years, Karmazin had nudged Jordan aside. The following year, Sumner Redstone came calling.

Advertisement

Wall Street hoped that Karmazin would function as the practical counterweight to Redstone, who favors gambles and big acquisitions. Karmazin burnished his image by holding himself out as a humble schlepper. When they announced the merger, the two CEOs planned to travel to Washington to smooth over anti-trust concerns. While Redstone would take his private jet, Karmazin noted, "I am going on the shuttle."

Unlike many other media moguls, Karmazin didn't view his job at an entertainment company as a springboard to greater things. The public never learned much about where he spent the summer, where his kids went to school, and which charities he backed. His political donations were comparatively small and quiet: He's given about $30,000 in the last three cycles, virtually all to Democrats.

In fact, Karmazin's refusal to conform to Redstone's more traditional conception of an entertainment mogul may have caused their falling out. Karmazin kept a close eye on expenses, a discipline anathema to entertainment moguls. The New York Times reported that in 2002, Karmazin opposed throwing a Christmas party at Sotheby's. As a result, Redstone dipped into his own pocket to fund the bash. Karmazin also opposed paying a dividend, which would have directed a huge torrent of cash into Redstone's wallet. (Viacom started paying a dividend in 2003.)

More significantly, Karmazin didn't like the high-risk, potentially high-reward game of making blockbuster pictures. For him, the entertainment business was about controlling costs, selling ads, and watching pennies—not laying daring bets, dating starlets, and counting Google mentions. He wanted to hold on to Blockbuster, the boring, withering cash machine. And after nearly 40 years in the entertainment industry, he remained singularly uninterested in the arts of music and film. The Wall Street Journal noted that he dismissed "the creative parts of the business as 'arts and crafts.' "

Even though he's grown rich—Karmazin owns more than 4 million shares of Viacom stock—the antimogul would have us believe he's more Willy Loman than Sammy Glick. Upon resigning, he didn't mouth the usual platitudes about wanting to spend more time with his family or getting back in touch with his poetic side (disgraced former AOL Time Warner CEO Gerald Levin's claim). "I'll take this week off," he told the Wall Street Journal. "Then I'm going to look for a job, and we'll see what is or isn't out there."