Autumn of the Moguls

by Michael Wolff

  Now, moguls believe that other moguls will die or be eliminated, but not them. This is one of the reasons the remaining moguls were petitioning the FCC. The prospect of the end of AOL Time Warner, Vivendi, and Disney meant good pickings. According to business mythology, all industries reach a point where, in a final spasm of consolidation, there is a last man standing.

  Murdoch? Redstone? Diller?

  But what happens if the bus heads their way?

  It is certainly reasonable to believe that with Murdoch still safely in place, a whole new dimension of consolidation is in store for his company. What—or how much—might he want of a disaggregating AOL Time Warner, Vivendi, and Disney?

  But what happens without Rupert? His son Lachlan is faithfully by his side and is, one would suppose, getting a thrilling education. And there are numerous loyal executives who would step into the breach. And yet, after Rupert, is it even necessary to argue that News Corp. will be a more realistic, less adventurous, even gentler place?

  And then there are Mel and Sumner at Viacom.

  Which one will the bus hit first? Or, more to the point, who will be driving the bus?

  And then there’s the 60-ish Diller, whom I find I am reluctant to kill off. I just can’t forgo the spectacle of watching whatever it is he will do.

  This is the problem with my dead-mogul analysis: We know that the media world is teetering near collapse and will inevitably be divided and administered by more modest men. And yet, for better or worse, so many of us have this helpless mogul worship (or fixation). It is hard to escape the thrall. It is hard to believe that all of this—big companies as well as big men—will pass. That this generation is done. (Once, when asked about Murdoch’s brush with prostate cancer, Barry Diller described the extraordinary steps—stake through the heart, deep-excavation burial, concrete reinforcement—it would take to kill him and keep him dead.) Especially because this generation is so much larger, meaner, more heroic than the one coming next—which will be dealing with all the problems caused by large, mean, heroic fathers.

  I have seen Michael Powell, who is meant to restrain these men and their companies, laughing dreamily and schmoozing delightedly in the presence of moguls. He can’t escape his awe. You bend to the larger power, the bigger ego.

  Even now, on stage, it was striking, and almost embarrassing. The smaller Michael Wolf was bending to the larger Michael Powell, who in turn was rationalizing why he was going to bend to the greater moguls.

  I wonder if anyone believed the words here—the clinical distinctions between this apparent monopoly which wasn’t one and that apparent monopoly which wasn’t one either. Or if they were even listening. The body language was so much more compelling. Powell flexing his arms, shooting his cuffs, crossing his feet at his ankles, ennumerating his issues on his fingers. He understood his power. His power was in giving other people power. He sucked up.

  10

  KEN AND

  STEVE

  Before Ken Auletta and Steve Case, the most awaited interview of the day—the train wreck moment—there was a strange interlude at a sluggish moment in the afternoon.

  Heilemann sat on the stage with Jim Barksdale, the former CEO of Netscape, now on the board of AOL TV, and with John Doerr, of the venture capital firm—the most successful venture capital firm of all time—Kleiner, Perkins, Caufield & Byers. Each man balanced half-awkwardly on a stool.

  There was a self-conscious listlessness or what-me-worry sheepishness about Barksdale and Doerr. And, too, an arrogance—they were in the dock, but they weren’t contrite. Although, God knows, there wasn’t much question of guilt.

  These were two of the most successful men of the epoch, and yet, from this early 21st-century perspective, they really hadn’t done much right. Or, even more to the point, what they had done, what bets they had made, had often turned out to be largely wrong for everyone else but themselves.

  They were vastly rich, but the great majority of the people who had invested with them were now significantly poorer. What’s more, it had been the pronouncements of these two men which had fueled much of the great Internet bull market—so there were, far beyond their own companies, a multitude more who had lost money because they had believed what Barksdale and Doerr had said.

  Hence, their sheepishness.

  Now, of course, they would not have entirely subscribed to this indictment—no matter how sheepish they appeared. But, no doubt, in the dark of night, in their fabulous homes, and their carefully decorated bedroom suites, Barksdale and Doerr must have had moments of wondering if they weren’t charlatans, too.

  Barksdale was a clipped, no-nonsense, no-bull, western sort. He was Reagan-esque in a way, but clearly not dumb. When he spoke, with great practicality and some humor, he carried the day. Doerr—mild, pale, fragile, cryptic—was the nerd type. At the top of the boom he had been eerily charismatic; now he was just eerie. Very Martian-like.

  These were Heilemann’s goombahs. Heilemann had spent the better part of the boom and now several years beyond trying to get their story. Part of the problem now may have been that he knew them so well, and they knew him so well, that they didn’t much have to say what was on their minds. It was very muted, even private, their discussion now—opaque gestures which might have been expressive, but which nobody else, except the people on the stage, understood. We’re here because you asked us to be here but this is all a little embarrassing and everyone knows it’s a little embarrassing, even a little ridiculous, so we’re not going to pretend it isn’t, but on the other hand, we’re not going to give a big wet confession either. The world is as it is.

  Shit happens, was their basic demeanor.

  They’d lost money too, they both said with some large degree of insensitivity.

  This is capitalism, was the subtext. If you can’t take it, get out of the kitchen.

  Better to have made money and lost it than never to have made it at all.

  This was, quite likely, the most sympathetic audience that could attend them, and yet you could feel the steam rising. In the end, nobody was ever going to excuse you for losing them money, and, surely, there was a special place in hell—a leper colony all your own—for people who lost other people’s money while they made money themselves.

  Indeed, the class of people who had escaped the carnage of the boom was not an enviable one.

  For the better part of a generation, money—having money, making money—had involved pretty uncomplicated emotions.

  Money was good.

  We understood money in the Calvinist sense: if you had it, you deserved it; God had given it to you.

  The election of Michael Bloomberg might have been the high point of this pure and uncritical sentiment—even possibly its last gasp.

  You could, here, on this day on Wall Street, if you strained, sense something else. A resistance. A clarity. A rising irritation.

  An air of judgement was in the room.

  The strong desire—and certain pressure—for everyone here to identify with Barksdale and Doerr had passed.

  What was left was a much stronger imperative to find the points of differentiation—of why we here in our seats were not like these two guys, who, while they might be financially independent, were also, as clearly, adrift, separate, without a country.

  People began looking away.

  Also before the Steve Case interview, there was a panel on sports. Jim Dolan, the CEO of Cablevision, was on the panel. In no sense coincidentally, Rattner and Quadrangle had just, that day, announced the acquisition of a minority stake in the cable company.

  This was, in other words, all very keiretsu-like. Or the dream was that it should be all very keiretsu-like. That everyone here should be engaged and cross-collateralized with each other.

  Finally, Steve Case, the day’s main event.

  The issue was not so much what he would say, but how he would present himself. Like Barksdale and Doerr, Case had gotten away with something. But what he had pulled off was larger t
han what even Barksdale and Doerr had pulled off, and more audacious. What’s more, there was yet very little distance between Case and the unfortunates whom he’d screwed. He was the wholly discredited leader still hanging around. He was the despot on the eve of exile. He was a disgraced person appearing in public. The pariah of the moment.

  We were all here as voyeurs.

  It was exciting.

  The choice of the New Yorker’s Ken Auletta as the interlocutor was a good one. Auletta has done as much as anyone to invent the idea of the modern mogul. He was the mogul biographer. He had spent time with each of the moguls. He had long since passed the point of mere journalism and become in status and in demeanor and influence a mogul associate. He was the mogul artist.

  Ken was always very tan and very fit and very well dressed and had a sense of agelessness, but he had been a part of the modern media era as long as anyone. He was an aide to New York’s mayor, John Lindsay, in the 1960s, then part of the launch of New York magazine; and later had gone to the New Yorker, which lent business and moguldom a formal cultural cachet.

  Indeed, a mogul is not just a businessman, not just a rich man, is Auletta’s underlying point, but a seeker, and adventurer, and hero for our time.

  Likewise, by this measure, Steve Case might not be a mogul. Almost from the beginning of Auletta’s interview with Case on the conference stage, it seemed like this was Auletta’s point: to show not just that Case was the agent who brought down a great American company, but that he was not even the real thing. Indeed, his early question, which went largely unanswered, was about what Case did, how he filled his days.

  Auletta, I thought, who had created the new mogul paradigm, was articulating a new analysis of the AOL Time Warner debacle. In a sense this was the view on the street, that the AOL Time Warner guys—Levin, Case, Pittman—were inflated egos. But I sensed the analysis move a bit further here: that there was not just hubris at work, not just vanity, that this was not just a wild gamble that had failed, not even just a moment of profit-taking by some at the expense of others, but that this mess was the product of men who were just not large enough to pull it off. They were less than moguls. That was the AOL Time Warner fatal flaw.

  Case’s baby face seems scrunched from both above and below—the effect is to focus you on his eyes, which seem darting and furtive. He was here, clearly, to save himself. You could imagine what his handlers were saying backstage:

  “You’re going to have to get out there, Steve. Make it clear that you’re not going anywhere. You have to show ownership. You have to occupy the leadership space. They—Wall Street, the press—have to know that you’re in the game.”

  But Auletta’s point was well taken: It was hard to see Case as a player, much less a survivor, much less triumphant.

  Now, it is true, and Case took pains to remind everyone, that he had triumphed continuously against long odds. AOL, which was counted out so many times before, had survived to dominate the industry.

  Well, yes.

  But you couldn’t escape the luckiest-white-boy-in-America look about Case. Nor, if you knew anything—and clearly the point was that the people at AOL Time Warner did not know anything—you would not have failed to see that AOL’s survival was not so much about making it out of the onrushing river, but merely making it to the next rock. And that it had triumphed, such as it had, not by its own strength, but by the benefits of more pervasive weakness. More basically, it was a company built on a certain order of short-term mirages. This is an old-fashioned business strategy, and, in the scheme of things, a necessary and not even all that dishonorable one: It’s the check-is-in-the-mail strategy. You’re trying to create a series of bridges to solvency and safety. Your job is to keep balls in the air. That was the sort of place that AOL was; the greater problem was that Time Warner mistook it for something much more than that, and believed that Case was swimming mightily instead of treading water.

  Case, defending himself now with Nixon-like implacability and negative credibility, had always been a very strange fish.

  He was the Procter & Gamble marketer—an indication of good-old-fashioned white-bread American corporatism, rather than darker, vastly more interesting, Machiavellian mogulism.

  Then he was the front man, the get-along guy, and the whipping boy for a bunch of last-stop money trying to recover cents on the dollar at the early AOL.

  Then, he became, rather by pure happenstance, the clean-cut front man for a modest porn enterprise: AOL, by the early nineties, was accommodating in its chat rooms a growing stream of online dirty-talkers at $6.95 an hour.

  Then, in the mid-nineties, succumbing to the temptation of many an unimaginative executive before him, he fell in love with his company’s PR person, precipitating a personal crisis and transformation. So just when the company began to grow hugely, Case stopped working. As potential moguls go, indeed as perfectly run-of-the-mill CEOs go, Case might have been the most disengaged in America.

  He was in love; indeed, he divorced his wife and married the PR person.

  What’s more, he may have sensed a greater truth: There was no real way to guide the company. The growth and the direction of AOL depended on two things, which it was almost impossible to control.

  There was the technology factor. Could the never-before-accomplished be accomplished? Could you get a million (and more) people online at once? For a long time, this was not really answered. There were a series of stopgaps and kludges and jury-rigs which might have, at any time, collapsed. Indeed, at several times they did. Here were the limits of the company. You just couldn’t know if it was going to make a breakthrough that would allow it to grow, or if, at any moment, it would fall to pieces.

  Then the next unknown and uncontrollable element: Once you had these people online, would they titillate each other?

  Here was the rub—and here was another reason why Case might have absented himself: If you fully engaged in the business you were running, you were engaged in porn. Or you could disengage, and not think about it, and let it do what it did on its own. If people wanted that, if they created it, if they got off on it, so be it.

  If a mogul is defined as some order of preternaturally aggressive, pathologically motivated control freak, Case was the diametrical opposite, a very passive, and apparently quite satisfied, modern executive, wholly accustomed to accepting whatever happened to him.

  This was, in some sense, the theory he was propounding now to Auletta. Sure things were all fucked up now, but it was a long race—all kinds of other things, better things, possibly great things, would happen in the future if everybody just had a little patience.

  He tried to talk about what needed to happen to put AOL back in business. But this was a hard discussion to have because you still could not really talk about what AOL’s business was.

  You would not have Case admitting that AOL had depended upon and continued to depend upon the sex business, and you wouldn’t have a writer from the New Yorker—Auletta was nothing if not gentlemanly—pursuing such a thesis. Nor would the guys at Time Warner ever even understand that this was the game.

  But in a turn of vast social consequence, seeking sex on the Internet had become, in the three years since AOL and Time Warner had agreed to merge, no longer weird or shameful behavior. Across the Internet, dirty talk had become a progressively more developed social form—even a social norm. In fact, it is quite possible that everybody of a certain demographic profile who is dissatisfied with his or her current romantic prospects is experimenting with meeting someone online.

  Even John Podhoretz, the very conservative and highly un-with-it columnist and former editorial-page editor at the New York Post, much interested in family values and opposed to anything that suggests moral relativity, showed up recently with a wedding announcement explaining that he’d met his wife-to-be on matchmaker.com. (The site where a couple meets is becoming an element of respectable wedding and engagement announcements.)

  What’s more, the matchmaking busine
ss was growing in a way, and producing profits of a sort, not seen since the advent of eBay. (Among the largest dating businesses is Barry Diller’s match.com.) Indeed, logically, why wouldn’t every lonely heart try a dating site?

  Given the reach and the efficiency of Web dating, there would be only two things reasonably holding you back: embarrassment and technical difficulties. But if John Podhoretz was doing it, the embarrassment factor was obviously dwindling—it had become a perfectly decent, unremarkable, squaresville thing to do. And with dating sites throwing off lots of cash (the more you want to know about a possible date, the more you pay, seems to be the basic model), the technology for online courtship rituals—searching, profiling, chatting, photo uploading—had become really nifty.

  Meanwhile, in contrast to the new, slick, and easy-to-use hookup sites, AOL had started to look like a bus station.

  In the early nineties, AOL had succeeded in creating a simple, orderly, largely text-based chat client—the first to work effortlessly. Next, AOL developed the Instant Message (IM), through which you could talk directly to anyone else online; then it offered a searchable database of fellow chatters that grew to vast proportions, in which any interest (or kink) was immediately searchable; and it introduced the Buddy List, through which you could monitor the comings and goings of anyone who interested you (or whose kink interested you). This simple technology—nontechnical people really couldn’t chat anywhere else online—was the engine of AOL’s wild growth. And finally, AOL extended its chat range with the AIM applet, which could be used from outside the walls of AOL to chat with other AOLers (and other AIMsters).

  Then AOL rested.

  It could afford to. Not only did AOL have better technology, it had what nobody could reproduce without great luck and limitless money, which was a critical-mass audience—chat doesn’t work unless, at every moment of the day, you have loads of chatters. Across the Internet, there were lonely chat rooms (where the chat function didn’t really work, anyway) and, at AOL, rowdy and randy crowds (“Are you hot?” “Yeah! What are you wearing?”).