New York, New York: Deals, Deals, Deals...
That's what the media industry is really all about, churning businesses, consolidating one day, downsizing the next. The geniuses who run the big media companies, the men once labeled "masters of the Universe," are today's real flip-floppers. They buy into one bit of the conventional wisdom or "buzz" one week and then abandon it the next. Their compensation goes up even when their revenues plummet.
In short, in the world of Big Media, failure IS an option.
Viacom merges; Viacom purges. Time Warner arranges to be bought by AOL and then dumps AOL. This week they sold tTed Turner's earlier acquisition, the Atlanta Braves, while MTV fired 250 employees because the Viacomese now think the digital platforms of the future are more important than the TV platforms of today.
More time is spent on deal making than program making. Serving the shareholders and giving perks to media execs comes well before serving the public. A culture of buying and selling dominates the world of information and even entertainment. Market logic long ago invaded and twisted media logic.
In the background are the kingpins of private equity with more than three times as much capital at their command today as ever before, at least according to a magazine which tracks deals and is "branded," appropriately enough, THE DEAL.
"The industry's big guns," it reports, "have trained their signs on America's corporate elite while talking up stratospherically-sized deals that were once out of reach. To hear buyout kingpins tell it, the move to supersize was a product of logic, not raging hormones."
Suddenly, "Supersize Me" is not just a film about excessive hamburger consumption. It is a strategic objective in the real world game of Monopoly where buying up and then breaking up companies has become a lucrative blood sport. No wonder the financiers who excel at this kind of buy and burn approach are called predators. They don't really care about the companies or their communities or their employees or even their executives. They think in terms of ratios of earnings to profits. To them, the bottom line is the only line.
In the shadows are the investment bankers and the hedge funds, stimulating competitive "plays" which, as in the fever at most auctions ends up jacking up the prices when asset are sent into overdrive by the big egos and arrogance of the mandarins of money. They are the ones benefiting those obscenely huge Christmas bonuses we read about.
We think in terms of movie of the year, as in the upcoming Academy Awards. They think in terms of "Deal of The Year." Who can make the most and spend the least? They "deploy" military-like strategies as in selecting "acquisition targets" to dominate or destroy.
Their computer scenarios make consumer video games look pathetic.
The specialists at The DEAL magazine are not just cheerleaders for what's called M & A (Mergers and Acquisitions) They take a critical look at some high profile deals that initially wowed the business pages and made a few people very rich.
Take Google's $1.6 Billion dollar takeover of YouTube. They must know what they are doing, right?
Wrong, says The DEAL, noting "Already the post-deal euphoria is wearing off amid questions about Google's ability to monetize You Tube which has net to make a profit....Google's margin for error, give the attention span of YouTube's Young Audience is thin."
Next, there's Disney's purchase of Pixar, the animation studio for $7.4 billion, or "more than one billion a feature." So far the company is doing better on paper, with stock trades higher, even as ABC News descents into a swamp of John Stossel screeds and undistinguished but glitzy reporting.
Finally here's Rupert Murdoch buying DIRECT TV from John Malone's Liberty media. The Deal was characterized is as an "exchange of gifts befitting of moguls" and ending an "often silly saga in mogul one-upmanship. In the end, Murdoch generated about $3.5 billion in stock gains for his News Corpse. Who lost?
We the taxpayers, of course! While we pay ours, they avoid theirs.
Explains The Deal, "And it was all accomplished, of course, in the tax-free manner both moguls prefer." Of course! And don't think that the Bush Administration's favorite media owner was not getting a wink and a nod from the IRS and the interests he shills for. Many of the businesses he promotes can't wait for the new Fox Business Channel which has already promised to be more corporate friendly than those commies over at CNBC.
Most of our business journalists don't do enough to scrutinize and expose mafia-like machinations at the top. They tend to beatify the Captains of Capitalism. Media companies rarely expose their own ways of doing business. Often the last place to look for the corporate crimes of media is in the media.
The Deal lashes out at Business Week noting that one week it reads like muckrakers with a cover story on "Gluttons on the Gate:" which "all but declared private equity a criminal enterprise that laid too much debt on its companies, raped them for big dividends and charged dubious fees to investors."
Four months later, it offered what they call an "Ode" to the nefarious Carlyle Group praising its operations "Wierdly enough," commentsYvette Kantrow, executive editor of The Deal., "the story which is partly set up as an antidote to the drubbing Carlyle Took in Michael Moore's Fahrenheit 911, and had must have members of the Carlyle PR Team high fiving each other in the hallways..." They, of course, reserve the right to criticize othersbut when they are criticized...
It's good to see one business publication challenging another, a practice often missing in most media where cloning and conformity seem the to be the preferred style of mutual backslapping.
The point here is that we the public have to pay more attention to the way Wall Street and our media companies operate. We need to challenge their corporate behavior as well as their journalistic lapses.
And that, "Nation," as Stephen Colbert might say, is the real Deal.