Blow Up the Box

Photo: Jason Nocito

High in the Frank Gehry–designed IAC building on the West Side Highway, floor-to-ceiling windows flood the offices with blinding sunlight in the afternoon, which is when Barry Diller takes a seat to answer some questions. Wearing a light-gray sweater and black driving loafers without socks, his blue eyes alert behind delicate gold-rimmed glasses, Diller looks younger than his 70 years, probably a product of a life lived equally in the professional realm and aboard the Eos, his 305-foot yacht named for the Greek goddess of the dawn. This curvaceous concrete-and-glass building resembles a ship, when you think of it, sails to the wind, and in the hallway a large replica of a sailing yacht rises from a carpet—a ­reminder, in case you forgot, that you’re about to meet the guy with the enormous yacht.

Intimidation has long been one of the primary tools at Diller’s disposal, helping him become one of the greatest media and entertainment deal-makers of the last half-century. A second-generation Austrian Jewish kid brought up in Beverly Hills, Diller never bothered to graduate from college, heading instead to the William Morris Agency mailroom, where he arrived shortly before David Geffen in the early sixties. Three networks were set in stone, and he soon left for the weakest, ABC, which he upended as vice-president of programming in the late sixties, masterminding projects that remade TV, like the “Movie of the Week” (he chose Aaron Spelling and Steven Spielberg, both in career infancy at the time, as producer and director) and the mini-­series, like Alex Haley’s slave drama Roots, which broke ratings records. From there, he headed up Paramount Pictures and did a stint at 20th Century Fox before collaborating with Rupert Murdoch in 1986 to once again overturn the television order by building the country’s fourth network, Fox.

In the nineties, chafing under Murdoch’s thumb, Diller shocked Hollywood by leaving for the far less glamorous pastures of QVC. Since then, he’s been his own boss at IAC, buying and selling web-based companies from Ticketmaster to Expedia,, and CollegeHumor (Diller stepped down from the CEO role two years ago but remains as involved as ever). IAC resembles a Berkshire Hathaway of Internet companies, a cheap acquirer but stable and growing. Diller spends most of his time focused on the media and entertainment business: a mobile-technology incubator, Hatch Labs; the free-content service Vimeo; Electus, a TV-production company run by Ben Silverman, which has had success with Mob Wives and Fashion Star; and CollegeHumor, co-founded by Josh Abramson and Ricky Van Veen, with whom Diller just made a feature film, for the first time in years, and for a very different sum than in his heyday—it’s estimated to be a few million dollars.

Like so many venture capitalists and web companies involved in the race to transform TV, Diller has long been interested in an online TV alternative, and it’s not a surprise that the one he chose to invest in is so much craftier than anyone else’s. Aereo manufactures and stores dime-size antennas that receive anything you can get over the air without paying extra (e.g., NBC, CBS, ABC, PBS) and sends it to a device of your choosing (iPad, iPhone, computer, TV) to watch or record for later. (Aereo operates in the New York market, and the antennas are stored in a Brooklyn warehouse.) It’s live TV, whenever and wherever you want it—more nuanced than watching network TV through a digital antenna on your mantel, and way less expensive than basic cable, which offers the networks alongside a dog’s breakfast of channels most of us never watch.

If this sounds straightforward to you, you’re wrong—the networks, which receive fees from cable companies for their content, are currently suing Aereo, claiming that it hijacks the broadcast signal. Aereo says its subscribers, who pay $12 a month, have a right to this content, because each subscriber rents an individual antenna. The networks say the antennas are a phony pretext, and it makes more sense to think of the service as many individual streams, not antennas. “This isn’t technical innovation—this is business by loophole,” says a network executive in a brusque and angry tone. “It’s a scheme, jerry-rigged, baloney. Dime-size antennas sitting in a warehouse in Brooklyn—can you even say that with a straight face?” They’re wary that there might be a bigger play at work: Diller might eventually take this content, hire directors, producers, and actors to make some new offerings, and create a new digital network of his own. “Barry says this is just about viewers having choices,” says another executive. “I’d like to rent a couple rooms on his yacht, because people have choices.”

Steven Spielberg’s Duel (1971) was one of the films in Barry Diller’s pioneering “Movie of the Week” franchise on ABC.Photo: Mary Evans/Ronald Grant/Everett Collection

Diller claims he’s not spoiling for a fight. Nevertheless, as he sits in this elegant room today, in front of a tin of pencils with points like daggers, so freshly shaved that the smell of wood lingers in the room, the atmosphere is not calm. He takes a plain wedding band off his finger and plays with it on a desk, spinning it between his thumb and forefinger like a dreidel. The sun isn’t in his eyes, but mine start to water. I think about what a friend once told me about talking to Diller in this room. “You’re sitting there looking at Barry, and you’re melting, man,” he said. “You’re melting.”

Diller: All right, what are we doing here?

We’re doing an interview for our TV issue, and the theme is “experimentation.” So you’d be the one to talk to about that.

I don’t know. I guess we’ll find out.

We want to talk about the evolution of TV. At every stage, somebody seems to come in and bust up the paradigm, and you’ve been at the forefront many times. What is this moment?

That’s a question?

The question is, “What is this moment compared to—”

Okay. Well, this moment is about how, for the very first time, there’s an alternative distribution method for TV. And it just happens that that distribution method is the most radical transformation of everything we see, we hear, and we know. Certainly in the last 100 years. Maybe the invention of the telegraph compares.

We are just getting broadband deployed in this country in a way that you can move rich pictures and video through the Internet and have the ability to slap it up to either a big screen or an iPad. And yet, although there’s so many Internet-ready TVs now being manufactured, relatively few people actually receive video over the Internet on big-screen televisions.

I guess what my first question was about—

I didn’t answer? What have I been doing here?

Well, I was trying to also ask you to put this moment in historical context with other radical moments, like when you created the fourth network.

The fourth network expanded choices, but we went from three to four, right? And now we clock in the hundreds of viewing choices. So going from three to four back then was better than not, and maybe you wouldn’t have gone to fifth, though I’m not sure that’s true. Getting Fox launched was a big, crazy, great effort.

What were you fighting against?

All the other major studios were against us, all the producers were against us, all the networks were against us, the advertisers didn’t have very much interest in us, because why would they? So it was like anything. In establishing something that wasn’t, it’s a bitch. But it’s a good bitch.

Who were your allies?

We had people who began to bring us programming that we thought was interesting, and that’s all we needed, that and an awful lot of willfulness, which is what it takes to do anything.

It’s been said that the TV business is like a medieval guild system. Was it like that from the time you started, or has it gotten more and more entrenched?

What do you mean? Who has said this? I’ve never heard that, a medieval guild system?

It’s a line from Public Knowledge’s Tomorrowvision policy paper, which has been passed around among V.C.’s and web entrepreneurs a lot recently.

Yes, you’re right, it actually was. I thought that was a good piece. I don’t quite know what they meant, but it was nice flowery words.

There’s no sense to it, though?

Well, if you go back, not to the very beginning of broadcasting, as Tim Wu has written, when there were thousands of programmers with little radio stations, but soon after, it’s true that the forces, medieval or not, did coalesce. Broadcasting began, essentially, in the hands of very, very few players—actually two—and when television came along, there were two networks, then three. Rules began to get formulated that essentially protected that concentrated group.

Ricky Van Veen of CollegeHumor once told me that you’re only focused on the future, on new ways of doing things. Do you feel any guilt for being part of that old system?

Why would I? Since I was in my early twenties, at ABC, I was always only interested in things that were not already being done. That’s why we invented the mini­series. We thought that books didn’t always need to be movies. We said, “Television allows you to do something completely different. Let’s take Shogun, and you can make 25 of them, or Herman Wouk’s Winds of War and make 40 hours.” Everybody said, “Hopeless,” “will fail,” et cetera. And it was success from the first hour. My curiosity is only about things that don’t have a record.

With future wife Diane Von Furstenberg at Studio 54 in 1978. Years later, Von Furstenberg sold her wares on Diller’s QVC.Photo: Robin Platzer/Twin Images/Time Life Pictures/Getty Image

What was the landscape when you started the “Movie of the Week”? Why was that so radical at that time?

Making a 90-minute movie every week—for 26 weeks, actually, and repeating them—hadn’t been done. People said not only couldn’t you actually produce it, but you couldn’t produce it at any rational cost, and worse than that, no one would watch it, because people don’t watch movies on television, they watch series with people and ­characters that they get to know and like. They said trying to sell a new movie every week was impossible, which is why they allowed, essentially, a child—24, 25—to do it.

Who else started creating that content?

Twenty years ago, there were dozens and dozens of independent television producers. There are a couple now, at the most. Mark Burnett, Endemol. It’s gone. Everybody works for the Man now. And it’s natural law, how that happened: Nobody prescribed it, but it’s how things worked out and how it has been for decades, period. Now along comes the potential creative destruction brought by a different distribution methodology, the Internet. And we’ll see what happens.

It seems that the entrenched TV system is on its last legs.

You can’t say that! It’s very profitable. Where are these last legs? What is true, I think, is that just like this revolution of the Internet changed retailing, which it did, changed the music business, which it did, it is likely that now there will be an effect on the television media business.

But isn’t that the point of things like Aereo, to shift that model?

Aereo’s a great idea. When I first heard of it, I said, “There has to be something wrong with this,” and we spent a lot of time and a good amount of money trying to find, legally and technically, what was wrong with it. In the end, we not only found there was nothing wrong with it, but that it had the possibility of being disruptive.

Did you expect the fight with the networks?

My instinct was that it was a flawless argument relative to, essentially, the Communications Act of 1934, which said that a broadcaster receives a free license, and the quid pro quo is that the broadcaster agrees to operate in the public convenience and interest. That’s the foundation of broadcasting. Every person has a right to receive a broadcast signal without any intermediary between that broadcasting of the signal and the receipt of it by a person.

Meaning the wires on tops of houses, antennas?

Right. It’s an antiquated law, but Congress, only in the last five years, invested $650 million to make certain that the digital signal would be transmitted and could be received by a consumer, by a person. So it’s a pure law. I’m very sure—of course, I’m not the judge here, so my being very sure could be very worthless—but I’m very sure that [Aereo’s legality] will be upheld.

But did you think of Aereo as the beginning of the destruction of the current TV system?

No, no. It’s not the beginning of the destruction of anybody. TV wasn’t the destruction of the movie business. Television wasn’t the destruction of radio. Cable wasn’t the destruction of broadcast networks. What happens is new alternatives come, and they live alongside whatever existed.

Isn’t the idea to take Aereo and maybe bundle it with Netflix and some YouTube offerings, various webisodes, put it together, and say, “This is $33,” versus,“This Time Warner Cable package is $133”?

Wait, wait, let’s take it slow … Aereo is a platform, and yes, once that platform is established, you can offer other things alongside that platform, as you suggest. I’ve believed for a long time that à la carte program offerings are better for some people than 400 channels in a system of you take any, you take all. And technology, for the first time, allows or kind of predicts to me that there will be more à la carte offerings.

Right, like my household gets a thousand channels even though all we want is Comedy Central, HBO, and ESPN. Do you watch ESPN?

No. And I think, like many people who don’t watch ESPN, that we are, in fact, subsidizing the people who watch ESPN, because there’s a lot more that don’t than do. The people who watch ESPN will pay its fair-market price. But I don’t know why I have to pay anything toward ESPN, since it doesn’t interest me.

What will this look like, then, in ten years, in terms of—

Some other idiot will have to tell you what happens in ten years. Look, the question, to me, at the core, is why the set-top box has had no innovation—sorry, extraordinarily little innovation. Why is it that the remote control attached to the set-top box and the navigation systems are so lame? Cable has not needed to innovate. When the first innovation came along, TiVo, they killed it. I’m not saying they’re bad folks by any stretch, but the natural forces of technology are forcing a level playing field— now, people will come up with new ideas and compete. I think this will force cable to say, “You know what, we have a lousy customer experience. Let’s improve or they’re fleeing, because there are alternatives.”

With Joan Rivers and Jamie Kellner, left, in 1986, announcing the debut of Fox.Photo: Bettmann/Corbis

So why are the networks trying to kill things like Aereo?

It’s the nature of man: protect what you have, and annihilate anyone who comes sloping up the castle wall. But competition helps everything. I argued that the fourth television network 25 years ago would benefit the three television networks, I argued to the motion-picture studios that they should program for this fourth television network instead of trying to kill it. The result was that it was good in the end for all broadcasters, all producers, all these big, diversified companies.

How do all these changes in TV shift the content business?

I have to answer this with a bit of a bromide. The miracle of the Internet is that you, the creator, create whatever you create, and then you push a send button, and you publish to the world. There’s nobody between you and that send, and anyone, except in China or other countries that block the Internet, can receive it. That’s a miracle. Just the idea that that system wasn’t co-opted or controlled by interests is a miracle. It’s very much worth preserving.

Do you think content will continue to be profitable?

If it’s successful, of course. And will it be successful? At varying degrees. If you’ve got a good idea and you can publish to the world, and the way it goes through the Internet, by definition, means if one person likes it, the next person will know about it, that offers tremendous hope.

But what about Friday Night Lights, a fantastic show—why did that have such a small audience?

I’m an enormous fan. They made five years of it, thank God, because I watched every one. And I never watched it on broadcast television, or when it was in its last year on DirecTV. I watched it once it was over, and in four months, I’d seen 76 episodes. That’s à la carte. I wanted it, I paid for it, I’m happy. I consider that a great story, Friday Night Lights.

Having been the creator in some ways of the form that’s on HBO now, what do you think the future of HBO is?

Again, I don’t think it will get destroyed by definition, but once there’s competition, if they don’t innovate, they are potentially dead ducks.

What would you do if you were the head of Netflix right now?

No, no, I don’t do that.

Is TV good now because there’s so much competition, so many forces bumping up against a closed system?

No, because the forces haven’t really begun yet—they’re too embryonic, it’s too much at the beginning. I just think the bread and butter of good television has for so long been better than any other ­media. Maybe the most consistent—well, I shouldn’t say most, but I’d say most, so screw it—the most consistently great ­program in history is The Simpsons. When you think it is more than 500 episodes, and you look at the quality over twenty years, and it is that good every year, that’s a ­miracle. It’s another kind of miracle. It’s a ­wonderment.

Blow Up the Box