CBS

"Customers responded positively, encouraging Netflix to fuel the fire. The company negotiated in turn with each hardware vendor to achieve device ubiquity; they upped their commitment on content, eventually reaching deals with CBS, Disney, Starz and MTV in 2008–2009, and they constantly refined the backend technology needed to make streaming a seamless customer experience."

"By one tally, we had spent $3 billion by 1987 for more than 150 cable companies, giving TCI reach into nearly 20 percent of U.S. homes. We had a sufficient lead—nearly twice as large as the number two player, Time Inc.’s ATC. A year later, we had no earnings but posted cash flow of $850 million—more than the cash flow of ABC, CBS, and NBC combined."

"Federal law forbids any noncitizen from owning TV stations, so Rupert Murdoch became a naturalized U.S. citizen in 1985 and quickly set about assembling a formidable media empire. He brazenly bought up some of the crown jewels of American media, such as the 20th Century-Fox movie studio. And amid the sneers of skeptics, Rupert launched a fourth U.S. broadcast network, the Fox Broadcasting Company, challenging the dominance of ABC, CBS, and NBC. After buying Metromedia’s TV stations, securing a foothold in key markets, he enlisted as CEO Hollywood heavyweight Barry Diller, who crafted a strategy around younger audiences and unconventional shows like *The Simpsons* and *Married… with Children.* Fox defied the odds and reshaped the American television market in the process. I learned from Rupert’s approach—aggressive and direct, the kind of competitor who was deadly because he was so quick to draw and fire. He tackled challenges head-on—whether from regulators, competitors, or his own team—and always found ways to navigate around obstacles. And he’s never, ever been afraid to buck the system. I respected that."

"As word got out I was looking, I got a call from Steve Ross at Warner. He was an impeccably dressed and roguishly charming media visionary charging against the Big Three television networks (ABC, CBS, and NBC) that dominated broadcasting with unprecedented news and entertainment choices. Ross had parleyed his early start in the funeral parlor business into what would one day become one of the largest entertainment companies in the world, Time Warner."

"JC and I had an early meeting at the convention center, and we walked the show floor before. What we saw opened our sleepy eyes—workers setting up booth after booth for new channels, including HBO, Showtime, ESPN, Nickelodeon, and MTV—more than we had ever seen before and nothing like we had expected. No longer would cable TV be a community antenna service merely bringing in the Big Three broadcast networks (ABC, CBS, and NBC). These companies were coalescing into a completely different business, an unprecedented platform for networks of all kinds: movies, music, news, history, education, food, and so much more. Millions of TV homes in America would want more choice in the channels they watched."

"Brian broke the silence: “We know this is going to make you very angry. But we’re going to stop the CBS merger. We came here to personally tell you that we’re going to buy all of QVC at a twenty-five percent premium to today’s stock price.” Wowser. All I could think to say was “You can’t do that. You gave your word. And besides, we have the two-out-of-three rule, and Malone and I have agreed to proceed.” They coolly said that, nevertheless, they had a separate right to make any offer they wanted for QVC, and the shareholders could decide to buy into this merger or just sell out now for a high price. They handed me a formal letter with the proposal, repeatedly saying they were “really sorry.” Not sorry enough to have held off making the letter public. They had released a copy of it five minutes before my plane landed. I don’t believe they did it maliciously—they needed to put CBS on notice before they formally voted on the merger."

"Just as I had with the *Movie of the Week* at ABC, I was again starting all alone to try to establish a new television network. There I was with my big idea, my theory that there ought to be an alternative to CBS/NBC/ABC. I knew instinctively that there should be more options than three look-alike networks and wasn’t daunted by how many tries before had failed. I just knew it was time to try this. But how to turn that blue-sky idea into an actual plan? We now had this backbone of Metromedia stations, but how would we find enough other stations to be viable, to cover the rest of the country? What kind of programming would work? It wasn’t as if anyone was clamoring for a fourth network. Even though the three networks had basically morphed into one bland blob, there wasn’t any factual evidence to support starting one. But I was sure it could be done."

"This was percolating in the background as I was busy getting to know the CBS executives, and while Larry Tisch, in his fashion, began nibbling away at the edges of our deal. First he said it would be better for him to stay as chairman for the first year or so since he’d still own 20 percent of the company. I’d be president and CEO. Then he told Marty Lipton that his translation of my stock award at QVC into CBS stock would mean I’d get vastly fewer shares in the combined company, cutting me from 5 million to 800,000."

"During that first year, there were endless stories about our folly. Larry Tisch, the venerated industrialist who owned CBS, said he wouldn’t give “a plugged nickel” for Fox."

"If I had succeeded in buying Paramount or CBS, I know two things for certain. One is that I would never have been able to control either—I’d have still been an employee and most likely been thrown out at some point. And I’d never have become an internet entrepreneur. Big word, “entrepreneur.” I wasn’t a natural one. I was a tried-and-true corporatist with more than a master’s degree in managing large enterprises. It had been decades since I’d started anything from scratch and my first moves were pretty mundane. We had these two dreary assets, HSN and Silver King, and while turning around HSN wasn’t going to excite anyone, it did give us cash and some credibility to think about expansion. I wish I could say I saw the possibilities of the internet in some full-blown prophetic way. I didn’t. But inside the humdrum reason I wanted to buy Ticketmaster was the seed of what would consume me for the next twenty years."

"The elegant and suave William S. Paley, CBS’s chairman, would never have introduced himself to a new employee in the public elevator, because Paley had his own private elevator. Also, he was a time-honored snob and would have looked at my unruly suit and bad shoes and wondered what the hell I was doing in his classic Eero Saarinen building. At NBC, I would never have been greeted by Robert Sarnoff, its leader at the time and son of the founder, David Sarnoff. I would have quivered in the ornate lobby of the grand RCA Building, wondering which of the fifteen elevators I was supposed to take."

"I wobbled back into the dinner. At the first table I saw Larry Tisch, the billionaire head of CBS. I whispered in his ear, “He overbid us.” Tisch came back with “You paid too-too much, and now he’s paid *over* too-too much. Let it go.” We had three weeks before the next bid deadline, and I was struggling mightily with whether to go up one more time."

"Over time, the distinct images of the three networks had blended together. Initially, CBS had been Tiffany, NBC was live “specials” and color, and ABC was the shoot-from-the-hip network that would try anything. ABC had become number one, and as the other two tried to compete, the programming for all three networks had grown very similar. I’d always been a contrarian counterprogrammer and believed this opened the opportunity to start a brand-new independent network and began to scope out how to get it launched."

"He did this, in part, through a network of carefully cultivated connections in business and government. His was an international circle that included President Lyndon Johnson of the United States; Jean Monnet, the father of the European Common Market; Gianni Agnelli, chairman of Fiat; Eugene Black, president of the World Bank; David Rockefeller, chairman of the Chase Manhattan Bank; General Lucius Clay, the mastermind of the Berlin airlift; David Sarnoff, the head of RCA; and Bill Paley, president of CBS."

"To Tisch, the purpose of every business was to generate decent profits for its owners. That article of faith went without saying, and it applied to the mom-and-pop candy store on the corner as well as to his own sprawling conglomerate. This nugget of common sense had served him well in all his business ventures. But from the time Tisch first emerged CBS"

"of investments. Larry Tisch started his business career by buying up hotels and plowing the profits into a seemingly unrelated collection of businesses: movie theaters (Loew’s), insurance (CNA), cigarettes (Kent), watches (Bulova), ships, oil rigs, and finally broadcasting when he became head of CBS. The common thread that Tisch de- tected was an untapped potential to generate tons of cash. He had no all-encompassing corporate profile in mind as he built his holdings. For Larry Tisch, the game was business and the cash at the end of the day was how you kept score."

"“There’s nobody in this business at ABC, NBC, or CBS who doesn’t know one thing,’’ Tisch said. “The show is the thing. But by the same token, if you carry that to extremes, it’s like the guy who drowned in an average of 12 inches of water. Sure the show is the thing. Everybody knows that; but do you sit around having the money pour out in waste while you go around saying the show is the thing?”"

"The Tisch investment strategy was to acquire bargain-priced stock of publicly traded companies that held assets far more valuable than the average investor perceived. Some companies’ stock was cheap de- spite potentially valuable assets, because management hadn’t figured out how to transform those assets into ever-rising profits. In those sit- uations, the Tisches weren’t shy. They became activists. CBS was no"

"In Tisch’s view, however, CBS no longer could afford a spare-no- expense approach to the network’s quality. “Survival was the issue,” Tisch said, “not the comfort of management.” CBS was throwing money into a pit where it had no chance to grow and return a reward to the all-important owners. There was no greater corporate sin."

"In a good year, CBS might earn $150 million. “It’s nothing,” Tisch said. “If you don’t run it as a business, our fixed costs in a down year could destroy us, because when we start the season, say September 10, if our programs don’t work, there’s no cost to cut. I can lay off six peo- pie or eight people, but it’s not like a manufacturing plant where you have a cost of goods. Our costs are all preordained. It’s fascinating. It’s a very interesting business for that reason. There’s no leeway once you make the mistake.”"

"After the Tisches’ first year in the Traymore, Gravatt agreed to sell them the hotel for $4,350,000. The deal called for a total down pay- ment of $700,000, including the $500,000 he’d already received. The $200,000 balance was a fraction of the first year’s expected profit. Adding to the transaction’s appeal was the tax benefit of a $420,000 annual depreciation allowance the buyers could take over 12 years. Identifying potential tax benefits in such deals would become a hall- mark of Tisch’s approach to minimizing investment risk. Such bene- fits would become even more useful in later years as he diversified his holdings (the most stunning example of this was CBS, where Tisch essentially recouped his entire initial investment and still held more than 18 percent of the company). A favorable tax treatment often could convert what might seem a gamble—buying a distressed busi- ness—into an investment in which the worst-case scenario was break- ing even."

"As part of his continuing education on the business, Larry Tisch traveled to Hollywood to meet the industry’s most successful enter' tainment executives—Michael Eisner of Walt Disney Co., Barry Diller, then CEO and chairman of Fox Inc., and Robert Daly, then chairman and chief executive of Warner Brothers Inc. These were the people who packaged and produced the programs that formed a network’s lifeblood. CBS, he recognized, needed the equivalent of a Grant Tinker and a Brandon Tartikoff. Tartikoff had developed the idea of “The Cosby Show,” which at that point was a major reason for NBC’s passing CBS in the ratings. Tisch wanted to know how they did it. He asked everyone who ought to know, unconcerned about the possibility of sounding ignorant."

"A few days after Derow was fired, Tri-Star Pictures, the film ven- ture CBS had recently abandoned, bought Loew’s Theatre Manage- ment Corp. from Jerrold Perenchio for nearly twice what he had paid Loews a year earlier. Tisch’s critics later pointed to the deal as evi- dence that he frequently sold assets too cheaply. But whether selling stocks or corporate assets, it wasn’t Tisch’s aim necessarily to make a killing—he just wanted at least a return that made the investment suf- ficiently profitable. Better to sell something that turns out to be even more valuable than to have a buyer who ends up feeling cheated."

"A Loews source at the time said that Larry Tisch would be “an in- terested director at CBS but “is not going to tell CBS how to run its business. ^ It was true that Tisch preferred to have the right people running his business, rather than run them himself. Tisch said he liked being far enough removed from daily operations to have an overall view that comes in handy in the decision process.” He was happier managing money than managing people. Now the question was: Was Wyman the best person to run CBS? In the past, Bob Tisch would take the hands-on approach in answering such management questions, but so far, CBS’s board had made it clear they didn’t want more than one Tisch involved at CBS. At the first hoard meeting he attended, in November, Tisch posed tough ques- tions that tended to focus on Wyman’s management skills."

"Tisch was still maintaining the demeanor of an observer: asking questions, expressing puzzlement, and challenging old assumptions, but not telling anyone what to do. He made it clear, however, that CBS’s"

"Whatever the directors feared, Tisch wasn’t interested in running CBS or any other company all by himself, nor was he a short-term in- vestor. He wanted to establish a culture of frugality and the best pos- sible team of managers to strengthen the company in a hostile economic environment. Tisch wanted to be free of the day-to-day."

"In fact, Tisch was running a network, but he was doing it by find- ing the right people and letting them do their jobs without second- guessing. That he was able to do so should come as no surprise. Throughout their careers, the Tisches let capable managers manage without hovering over them. They hovered only when things ap- peared to be going wrong, and they richly rewarded successful man- agers—not themselves. Sagansky, for example, was paid a total of $6.1 million in 1992, nearly four times Tisch’s compensation from CBS."

"Some directors failed to see any strategy in Tisch’s decisions, but he was doing what the Tisches had always done: he was strengthening CBS’s finances so the company could survive in any kind of weather, and he was building a war chest that could be cracked open when as- sets that made sense for CBS could be had for bargain prices. In the meantime, the cash was invested for a safe, respectable yield. Tisch knew that, ultimately, as in any other business, CBS s appeal to the smartest investors would be an asset valuation that exceeded the com' pany’s stock-market value. CBS"

"Everybody in this building would like to have 20 diversions, all meaningless, so we could say we have a strategy,” said Tisch in an in- terview in his CBS office suite. “It reminds me of the hotel we owned, where the service and food were poor, and the manager’s solution was always the same—redecorate! I don’t believe in that. We have to con- centrate on our core business.” —"