“Think of CBS like it was a box of cereal,” the advertising executive was saying, “and figure it was on the store shelf next to the boxes of its two competitors.”
“Then, one day, it has hundreds of new competitors all over the place. How does it respond? Does it simply leave its one box on the shelf, or go out and put some more boxes and cans up? It’s obvious.”
Heads nodded around the Upper East Side luncheon table. The executive, who has lots of consumer-product clients, was skewering Laurence Tisch, chairman of CBS Inc., the day after he struck a tentative deal to sell the company to Westinghouse Electric Co.
Tisch’s selling off of big assets, such as CBS’ records and magazines divisions, and unwillingness to get into cable TV (the “hundreds of new competitors”) was one of many timely topics as what one might term the Media Salon congregated once again.
It’s a varied group, from different parts of the media universe, which gathers in the back room of an Italian restaurant on the first Wednesday of the month.
There’s an investment banker, the founder of a mid-size bank, several ad executives, the boss of a big cable-TV network, the founder of another famous cable network, the sales director for another cable-TV firm, and the media director of a Fortune 500 firm.
Given their hectic professional lives, this is a rare opportunity to confront voices from outside each of their individual spheres, and throw around ideas. It’s loosely inspired by a regular dinner of auto executives that Lee Iacocca used to host in Detroit when he was a Motor City honcho.
On this day, amid the calamari, asparagus, stuffed peppers, grouper, veal, chicken and espressos, there was ample chatter over the CBS deal, the far bigger one announced two days earlier involving Disney Co. and Capital Cities/ABC Inc., trends in media, and impacts on consumers.
At times, the issues seemed daunting and, indeed, there was a certain ultimate relief for a visitor (who agreed not to use the names of the assembled) over what people conceded they did not know.
But there was little equivocation on many matters.
“America Online? Dead. No future,” said an ad executive.
Why?
“One word,” she replied. “Microsoft,” meaning that a competing service developed by the software kingpin will cream the likes of American Online and CompuServe.
Well, what about Michael Eisner, clearly conventional wisdom’s hotshot media executive of the moment after pulling off the Disney-ABC deal?
“Michael Eisner has been an absolute Luddite about new media,” said an ad executive, raining on the parade of the Disney boss universally hailed for the $19 billion amalgam of seemingly complementary companies.
“As far as interactive media, I’ve heard him say, `It’s b.s. and I don’t really care,’ ” said an ad executive.
“He’s like the new guy at Times-Mirror,” former General Mills executive Mark Willes, just hired to run, and cut costs at, the Los Angeles media concern that owns the Los Angeles Times and other properties.
“Willes says, `We’re in newspapers and are going to get out of online.’ Clearly, the Chandler family has told him to come in and cut costs as a quick fix to get their stock price up.”
“You’re right,” replied the investment banker. “That guy is bad news. Imagine–he wants to get out of electronic!”
For sure, said the Fortune 500 official, who decides on ad placement strategy for the firm, the Disney-ABC combo could “be exciting and bring us new opportunities.”
But she was briefly interrupted by the national cable channel founder, who wondered, “If Eisner is so smart, why is there a Nickelodeon?”
By that he meant how could a firm that prides itself as the prime producer of quality family fare allow a competitor, Viacom, to kick its butt with a channel seen by many millions more than watch Disney’s premium kids channel?
“Nickelodeon took a couple of old shows and completely outflanked Disney,” said the cable official, referring to such Nickelodeon fare as reruns of “Mork and Mindy.”
Still, the Fortune 500 media buyer argued that the Disney-ABC amalgam would probably mean new children’s programming on which she could advertise, a nice possibility because most existing network time periods for kid shows are sold out.
But she would also be worried if the combined clout of Disney and ABC means a certain corporate extortion on the sales end. Would two previously separate entities be coming hard at her together and offering costly, take-it-or-leave it prices for her ads?
“About five media conglomerates will control things globally,” she continued, alluding to Disney-ABC, Viacom, Rupert Murdoch’s News Corp., Germany’s Bertelsmann and Time Warner. “And that’s frightening.”
“It’s interesting,” said one of the ad executives, “how this basically creatively minded business wants to be big, big, big. It all seems a bit antithetical to creativity.”
“Hey, how many of these mergers have actually resulted in real synergy?” somebody else asked. It was greeted with silence.
“Everybody is cheering vertical integration,” said an ad executive who specializes in what is loosely termed new media. Alluding to the free-market impulse of the reigning Republican majority in Congress, she declared, “You have a trend toward re-monopolization. Politically, it seems acceptable.”
And yet, the media director of a major ad agency understood the economic thinking driving some of the period’s bigger deals, especially when it comes to looking internationally for revenue.
“The audience in the U.S. for the TV networks is getting smaller and smaller, though it remains a profitable business. You need some of these international revenues to help support your programming investments back here. Otherwise, you have to cut what you spend on programming.”
“Eisner and Disney are banking on those international revenues,” said the banker. “And the international market is dynamic. It doesn’t mean these guys are visionaries, just that that’s where the money is.”
A constant refrain at the luncheon was the near impossibility of discerning what beckons on the horizon.
The pace of change is so quick, complained the new-media specialist at the big ad firm, that a speech she gave on the future just 18 months ago is now useless.
For example, who would have thought the Internet would become so big? And what about Netscape, a piece of software that lets you look at pictures, watch movies and listen to audio while connected to another computer by modem? It lets you browse the very hot World Wide Web, a part of the Internet that features graphics, sound and video files, rather than just plain text.
Who would have imagined just 18 months ago, she continued, that an upcoming Michael Jackson special on HBO would feature a tie-in with an America Online chat session with Jackson, which will crawl across the bottom of viewers’ TV screens as his concert is airing?
“Michael Eisner is smart, but he doesn’t really have a vision about how all this media consumption will play out,” she continued.
“There’s not a single person on the planet who could tell you about what we’ll have five years out,” she said as the Media Salon came to a close and the group exited the restaurant.
“Nobody can tell you about the technology coming up and, clearly, it is technology which is driving the whole media now.”
“It’s why we all have to talk to one another more about our futures,” said the Fortune 500 executive.
They will, on the first Wednesday of next month.
The fine print
Reps. Henry Hyde (R-Ill.) and Richard Durbin (D-Ill.) filed campaign finance disclosure statements at week’s end. They included these tidbits:
– With his firm under federal criminal investigation for possible price fixing, Archer-Daniels-Midland boss Dwayne Andreas continues his tradition of funding both sides of the aisle. He personally gave Hyde $1,000, while ADM’s political-action committee gave Hyde $500 and Durbin $1,000.
– Durbin’s campaign lists $10.70 for meals at Buck and Jo’s Too on Highway 36 in Winchester, Ill., and a $25 parking ticket paid at Chicago City Hall.
