Apocalypse Now

Oh, c’mon. Let’s all just imagine the worst. Predict the most extreme outcome for the media business. Pretend it’s a contest: What’s the most outlandish plot development you can come up with? The most unexpected, jaw-dropping turn of events?

Granted, many comically exaggerated scenarios have already taken place. A year ago, who – except me – would have predicted the ignominious end, in rapid-fire succession, of three of the world’s most prominent media executives: Messier, Middelhoff, and Pittman?

But not even I could have imagined what now seems like a fair bet: a felony conviction for Martha Stewart. (I love this Rosie thing, too – the revolt of the brands.)

Obviously it’s not going to end here – if only because too many people are enjoying this. So tell me your fantasies. Confess. What’s your most satisfying darkness-at-noon vision? Who do you want fired and humiliated? Who do you want convicted?

Or is this too morbid for you? Possibly, you think your fantasies are too vengeful and malevolent (after all, if you’re a Time Inc.–er, you’ve had your life savings wiped out). And in the end, does anything really ever change? Even with revolution in the air, it always turns out to be more of the same.

Certainly, there continues to be a weird disconnect between all this management violence and share-price mayhem and the still-measured tones of professional analysis. When you listen to the journalists and analysts covering the media business, you can actually think it’s an orderly, self-correcting world we work in. Reporters might spend a day ripping Messier or Pittman or Middelhoff to shreds, but then, shortly, return to defending Vivendi or AOL Time Warner or Bertelsmann.

“In fact,” says the Times, “once all the broken promises about being a new breed of company for a new millennium are discounted, AOL Time Warner does not seem to be in such bad shape, considering the economy.”

Media frenzy can be vicious, but it’s almost always short-lived. Reporters resist following to the end the cold logic of breakdown and collapse – even for the fun of it. They can’t seem to help themselves from thinking that invariably, rationality will emerge out of the current mess. If Martha goes to jail, the world will have been righted. It’s all ultimately part of a healthy process. After this period of resignations, terminations, investigations, and reorganizations, normalcy will return.

AOL Time Warner “is a company that has a strong balance sheet, a portfolio of businesses that are No. 1 or No. 2 in their fields, and high levels of free cash flow,” Christopher Dixon, the almost-always-quoted, carefully coiffed media-stocks analyst, recently told the Times. “No company can fire on all eight cylinders at once. Here they are firing on seven of eight.”

This is, I would argue, a serious failure not just of analysis but of imagination – that, at this moment, instead of professional optimism, we need, more helpfully, some determined fatalism. We really ought to be preparing for the worst to happen.

But the rules of reporting and analysis are that even if you have good reason to suspect that the end is near, that events are largely out of control, that very bad things will invariably happen to very bad companies, you’re not allowed to say it. There’s no formula or model for applying any sort of chaos theory, or gut sense, to business reporting or corporate analysis.

For instance, it’s impossible to report what would, at this point, seem pretty obvious: that nobody knows how to run the superaggregated and radically transformed companies of the past decade. And this is not necessarily because these are bad men who are trying to run them (although, of course, they may be bad) but because the companies they’ve built, or which they’ve had handed to them, defy control – they’re too vast and far-flung and composed of too many recalcitrant people and inimical functions. This, together with the fact that the guys who run these companies often have no idea what they’re doing. Don Logan, for instance, who has just taken over responsibility for AOL, may not ever have sent an e-mail.

And yet, to be a respectable business reporter, you have to pretend the world is a coherent, rational, by-the-numbers place. What you can’t do is report that the sky is falling, that everything is up for grabs, that the greatest likelihood is that we’re deep into a process that will cause the reordering of most of the basic structures of the media business.

To wit: Of the six largest media companies, three, almost in tandem, have dismissed their CEOs and top managers. When any big company throws out its management, you know something pretty extreme is going on – it’s akin to a coup in a mostly stable nation. But when half (to date) of the leading companies of one of the nation’s leading industries all at once begin firing their leaders, you have to stand back in awe. It’s destabilization on a continental scale.

Is there another industry ever to have arrived, all at once, as the media business has, at such a crisis of faith and leadership?

Now, each of the management coups at AOL Time Warner, Vivendi, and Bertelsmann has been reported as a function of internal travails, and that is obviously the case – each enterprise has reported its own variation on a looming cash crisis (which, in business terms, is the mother of all crises). But three is a trend. Three trumps any unique situation. Three indicates a mass movement, a systems issue, a rapidly spreading condition. It is not just a function of bad management but of larger, converging forces. History is turning against you – and is probably out to get you. And there’s no way to manage yourself out of the mess.

What this reasonably means is that these companies won’t exist in remotely their present form in the foreseeable future (i.e., they won’t make it through the year).

But responsible reporters can’t say that.

I can, however.

As a columnist, I’m supposed to be provocative. I’m allowed to exaggerate. Engage in hyperbole. And should not, therefore, be taken seriously – not too seriously, anyway.

And yet, surprising no one more than me, my hyperbole over the past few years has come much closer to predicting the shambles that this industry is in than the reasonableness of other commentators.

This is partly because, following the example of so many modern CEOs, I don’t treat business like business. Like Bernie Ebbers, I don’t get bogged down in the details. Rather, I see the natural unfolding of the business narrative just as the most self-absorbed and megalomanic CEO sees it: It’s an existential drama that, by the sheer force of bravura narcissism, can be bent to one’s will – or not, and then you lose control of it. That’s the game. All or nothing. Play it well or blow it.

What we have learned over the past many months is that all of these companies (that is, all of these companies that have seen themselves as part of some new, freer, liberating economic condition) are emotional creations – they are psychological as much as management case studies. And to understand them, to be able to analyze them, you have to have some appreciation of the unique dysfunction of their top managers – the nuances of their hyperacquisitiveness and unsettling mood elevations. But even now, business reporters can’t break the habit of assuming that even the most imperial CEO is a tempered and rational being. And if he isn’t, he’s a crook – an anomaly, a terrible and unfortunate exception.

You’d be hard-pressed to get anyone to accept my theory (to accept it as an analytic model, at any rate) that the larger and higher-profile the company, the bigger the nutcase who runs it.

But let me push this theory.

Many of my colleagues, an earnest and respectful lot, seem to be of the mind that what has happened at the various media companies that have recently replaced top executives is a generally healthy move from personality-oriented management to – in the figures of Richard Parsons at AOL, Jean-René Fourtou at Vivendi, and Gunter Thielen at Bertelsmann – less charismatic, more nuts-and-bolts, more rational-style leadership. Well, yes, possibly – perhaps everything works out nicely in the end. “AOL Time Warner’s biggest problem – the one that its new management team is bound to tackle first – is its credibility with investors and customers, not the soundness of its various divisions,” writes Saul Hansell in the Times, giving the adults-are-back-in-charge analysis.

I, on the other hand, would theorize that what has happened at these companies is merely a reverse psychosis – the flip side of the same condition. We have just moved from the manic phase into clinical depression.

At Vivendi, the company is now run, in effect, by the French government, depressed for half a century.

At Bertelsmann, the company is now run by the guy who, until a few weeks ago, pressed the CDs.

And at AOL Time Warner, you have in Richard Parsons a canny imitation of the walking dead.

For argument’s sake, and in the interest of developing a method by which we might accurately, or at least usefully, predict the coming apocalypse of the media business, let’s assume that these men will not logically and deliberately disassemble what has so irrationally been assembled. Let’s assume, too, that the hubris that created these companies does not naturally convert to reason – rather, it converts from mania to helplessness. In my model, then, these companies are now being run by men much less temperamentally suited to run them than even the overblown figures they’ve replaced. The situation has not gotten better; it has gotten worse (and less fun too). More chaos.

So predict.

Go beyond cash crises, steadily lowered debt ratings, falling stock prices, mounting bad press, ever deeper and more persistent (and vengeful) investigations.

Come on, get into it.

The worst case always gets worse.


Big bangs.

Tectonic shifts.

Companies spinning off wildly and colliding in vast, new, undoubtedly ridiculous combinations.

Oh, and don’t forget Disney … another god-awful mess. Two years ago, I predicted that Michael Eisner was toast. Well, surely, any minute now he will be.

Even a stopped clock is right twice a day.

E-mail: michael@burnrate.com

Apocalypse Now