Paramount

"At ABC, Paramount, and Fox, I had known what could be done with video screens: we told stories on them. But when I went to QVC in that eventful year of 1992, I watched a screen do something I’d never realized it could do. It wasn’t just a passive one-way delivery system of content. At QVC I witnessed the primitive convergence of telephones and televisions and computers all working together. They were interactive. There was a little video monitor on the set that showed the number of calls coming in when a product was offered for sale. The vertical lines representing the calls rose during the period of the sales pitch, and then, when it ended, they subsided. I was thunderstruck. To me, those calls were like watching waves coming to shore. I thought, *Screens don’t have to be just for narrative, for telling stories. Screens can interact with consumers—*that was the epiphany. It was clunky and rudimentary and I had no clear idea how to turn that revelation into action, but it sat there for a while warming up on the back plate of my brain."

"*Flashdance* opened in the spring of 1983. There never was such a thing as “flashdancing.” The whole idea was made up, a complete piece of Don Simpson blather. Don was a complex character. He had been our very successful head of production, and we knew that he played as hard as he worked. But one day, at lunch in the Paramount commissary, he was so whacked on drugs that he literally—and I do mean literally!—fell face-first in his soup. That scared us, for the danger both to himself and to the company. Our solution was to take the pressure off him and promote Jeffrey Katzenberg into that position, and have Simpson recuperate as a house producer. Over the next years Simpson went on to be one of the great producers—*Top Gun, Beverly Hills Cop*—interrupted by many drug rehabilitations, and a final overdose that ended in his early death."

"I much prefer hiring people who are relatively blank slates, but who have sparks of energy and smarts. And some edge. If you do that consistently enough, which we did at Paramount and at Fox, you end up with a very strong group once they’ve had a few years to marinate. Maybe it’s a simplistic formula, but it works: Give them responsibilities before they are considered ready. Drop them in the deep end and see who struggles and who survives. Keep promoting those who survive."

"Kerkorian had very few words for anyone about anything, and what words he used were monosyllabic. He was always direct and clear, and could be counted on to live up to his word. While he was extremely charitable, his contributions were always anonymous. He was an economic adventurer, the true essence of a high-wire industrial gambler. At that time, he had recently opened the biggest hotel in the history of Las Vegas, the MGM Grand, which had gone violently over budget. Everything was going wrong for him when he walked into Bob Evans’s house to meet with Charlie Bluhdorn and Lew Wasserman and… um… me. Kerkorian’s hope of making a deal with Paramount and Universal was his last gasp at averting bankruptcy. MGM owned lots of assets outside the United States and had a first-rate worldwide distribution company, but like Paramount it didn’t have enough pictures to support it. Some years earlier, Charlie had persuaded Wasserman to combine the separate international distribution operations of Paramount and Universal into one company serving both. The idea pitched to Kerkorian was to join the distribution venture and sell some of the theaters MGM owned to raise cash for his hotel."

"In I walked, not only having never been in Mr. Goldenson’s office, but never having spoken to him again after our meeting in the elevator on my first day at the company. Bluhdorn had the energy of an electric grid and could hardly keep his seat as Goldenson told me they’d agreed ABC would buy a group of Paramount movies. Goldenson handed me the list and instructed me simply, “Follow up.”"

"There was a long pause, and he said, “Stay where you are. I’m coming over right now to straighten this out.” Charles Bluhdorn coming to my office. Couldn’t be. But, half an hour later, he strode into my office, almost violently threw off his jacket, sat down, and began to tell me in ever-increasing volume how he had bought “that stinker company Paramount” with borrowed money and that it was secured by the contemplated sale of these films to television. So he had no room to change the deal by a nickel; or, he said with a devil’s smile, not a nickel more than 10 percent."

"After our tumultuous first meeting at ABC, when Charlie tried to sell me all those bogus Paramount movies, we continued for years to haggle over those rights. He liked me because I was probably the only person in the entertainment business, probably in any business at this time in his ginormous career, who didn’t tell him exactly what he wanted to hear. Charlie started to call me frequently, usually just to rant about some transgression by his executives, sometimes simply to ask my opinion about this or that nefarious project he was being pitched. Charlie loved confrontation and argument, and from some devilish osmosis I learned never to give an inch when arguing with him."

"Paramount’s New York home office was in the mighty Gulf + Western Building, which had a perfect position at the southwest corner of Central Park. Years later, when Charlie was suffering from one of the many vicious attacks on his character in *The New York Times,* I wrote him a note saying, “The sun will never set on you or the Gulf + Western Building.” Charlie burst into tears reading it. Years after, that building was reclad and gussied up into the Trump International Hotel—and I can’t help but wish the sun had never risen on that."

"None of that mattered to Marty Davis, who went after him through me. I had a revealing discussion a couple of months after that first talk about Eisner. Marty said to me, “You’re going to have to remove him.” I said, “Well, you’ll have to remove me to remove him, because I’m not removing him.” Davis responded, “I feel very strongly about it.” “You can feel as strongly as you like, but you’re wrong, and I’m not doing it.” He said coldly, “Well, at some point I’ll have to confront that.” My tart response: “You do whatever you like.” That ended up ameliorating things, because Davis didn’t want to have a confrontation with me. At least not then. Paramount was just too successful, and I was still in a very strong position."

"My eyes zeroed in on the last call—it was from another Davis, Marvin Davis, no relation to Martin. This Davis was the Denver oil tycoon who had recently bought 20th Century Fox. Marvin Davis had never before called me. But I knew, just intuitively knew, when I saw that name that this was going to be the key to my getting out of Paramount with more than my tail intact. I’m not conflating the timing of events here. It happened just this way: deciding once and for all that I had to leave and getting that phone call five minutes later. Somehow the gods must have decreed that I deserved a savior from *Martin* Davis, and he would be named *Marvin* Davis. In a lifetime filled with inexplicably serendipitous moments, this one topped them all."

"I had told the outgoing CEO, Alan Hirschfield, that he could stay in his office, that he didn’t have to leave right away. I hadn’t emotionally let go of Paramount and found it hard to get up much enthusiasm for Fox. Another day, another studio to run. I was still officially at Paramount for the three-week interregnum before I was to begin the new job, but I regularly went over to Fox to meet some of the executives. All their offices were in this three-story art deco–style building that Darryl Zanuck had erected. Huge wide hallways from one end to the other, with even more cavernous offices on the first floor for the top four executives. Each one had a private staircase going down to the basement, where there were two private projection rooms, a gym, a cold pool, a sauna, and a massage room. Zanuck, who reigned from the 1930s to the 1950s, would have a daily massage, a jump into the cold pool, and then a further jump onto the starlet of the day. Zanuck’s office had a trophy room with a bed next to the fifty-foot-long main office."

"By this point both sides were stretched to the max. Sumner was quoted as saying that I was his great friend who’d betrayed him and that little “crummy” QVC was no match for the great Viacom. I responded, “This is about the future of Paramount—which I led for seven straight years when it was number one in the industry. So do you want this fifty-year-old person or this seventy-year-old? I’m young, I’m vigorous, and he’s old.” Oh, do I now rue trashing a seventy-year-old for his age."

"I went off to a Christmas cruise in the Caribbean with about ten pounds of Paramount internal data to study. The bidding process had given each side the ability to top the other with a three-week pause between bids, and I was prepared for Viacom to raise the stakes. Which they did. Over the next months the bids went from $62 a share to $95, and the transaction now approached $9 billion. We both had to raise more equity. Redstone got Blockbuster to inject $500 million into Viacom, and we got Advance, the parent company of Condé Nast, as well as BellSouth, to come in with us. It was a grueling process, and the media followed each bid as if it were the longest horse race in history. At one stage, when Viacom had the leading bid, *New York* magazine put me on the cover with the headline MOGUL IN A MESS."

"*People* magazine began publishing around the same time I started at Paramount, and it put me directly in its early sights. Over the ensuing decades, *People* has become a cheerleading celebrity book, but at the time of its launch it wanted to be snappy and snarky about people in entertainment. And they were homing in on me as a juicy target. The gossip columnist Liz Smith, whom I didn’t know at the time, was a junior editor there. She called me up cold and said, “I want you to know they’re doing a story on you. And it’s mean and homophobic.” At the time, executives were not really written about very much in general-interest publications. You might see stories in the trades, or in rags that wrote about gossip in the movie business, but those had little circulation. *People* ended up publishing a story, but instead of what I feared, it was titled “Failing Upwards”—how this hapless “kid” from network TV with not a single hit show to his name became the head of Paramount for all the wrong reasons. As negative as it was, I was relieved: it was 1974, and it was better to be called a failure than a fairy. By the way, I now own *People* magazine."

"It was early evening after the court victory when I got a call from our lawyers; they were finalizing the agreement and wanted me to come down to their offices to sign it. I walked down Second Avenue, shaking my head in amazement that it was almost ten years earlier when I’d left Paramount for Fox, then left Fox to go off on my little own. Now here I was returning to the movies, but this time as a principal, actually *owning* Paramount. When I arrived, all the lawyers were scrambling about, papers flying between different floors of the building. I was put in an office to wait for Martin Davis to arrive, because we had to cosign the agreement."

"It was a dramatic story: me and my Paramount history and upstart QVC buying that fabled old studio. I was twenty-four years old when Charlie Bluhdorn barged into my office to save his recent acquisition of Paramount from going bust, and here I was twenty-five years later bidding to buy the whole company. The afternoon we made the offer, I called Martin Davis to tell him an official letter would soon arrive on his desk."

"Turning down *Moment by Moment* was an obvious example; we were dubbed insane for not making it. But our narrow approach—that the material was all—gave us a blueprint for how Paramount should function."

"Michael was now a senior executive at ABC, a big part of making it the top network. But he was still a mid-level vice president and didn’t have much of a chance to get promoted. I asked him to become the president of Paramount; that got his attention and he agreed to join me. He was just so smart—ideas simply bounced out of him. He was capable of saying things that were so ridiculous, and then, in the same breath, out would come something absolutely brilliant. Individually, we were complete opposites; together we were an indomitable combination. He was brash and somewhat reckless with his ideas and enthusiasm. I was measured and endlessly logical and always wanted to be sure any risk was covered. And yet, while he would reference relatively obscure literary properties to emphasize the distinction between an educated, cultured person (him) and an uneducated barbarian (me), he actually was much more basely commercial than I was. He was also funny and we could laugh together, which is almost mandatory for me in any working relationship—even in the most dire discussions or ones of the highest frenzy, something much worse is wrong if you can’t find a laugh somewhere."

"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."

"It was only a few months after I’d bought into QVC that Enrique Senior, an investment banker at Allen & Company, called to say he had a big idea for me, one that needed total secrecy. He wouldn’t say anything more over the phone and wanted me to come over to his office. Intrigued, I canceled my next meeting and went over there. He took me through a slide presentation about the growing value of QVC and its possibilities—the most exciting of which was that we should… wait for it… buy Paramount."

"There was no such thing as process at Paramount or anywhere else I could see in movieland. For the life of me I couldn’t figure what rigor was employed to choose making this or that picture. It was all about what worked before, who was hot, and what the package was (meaning agents would put together all the elements and then put that “package” up for auction). It didn’t make any sense to me. Everyone was hustling to get their picture made with whatever movie studio would say yes. It all seemed catch-as-catch-can: agents pitching, producers pitching, all of them selling against whatever you were doing in order to replace it with their own project."

"Looking back on those golden years at Paramount, when practically everything we touched succeeded, I wasn’t able to enjoy it as a whole, to live in it rather than just plow through it. Living in the moment, whether high or low, has always been hard for me. I didn’t comprehend how we’d changed the entire movie business, or our effect on the culture of the mid-1970s through the mid-1980s. In each of those seven years where we were number one in both movies and television, I was constantly worrying, never fully appreciating just how remarkable an organization we’d become. Robert Woodruff, who controlled Coca-Cola during its great post–World War II growth, said “the world belongs to the discontented.” To me that’s the greatest single explanation for those who succeed greatly, but it isn’t exactly the definition of a happily contented human."

"By the time I started, it was clear I wasn’t going to bring Michael Eisner with me, and because Disney was so alluring, Michael was able to get most of the Paramount executives over with him. I wasted weeks trying to convince them that Fox would be better for them, but by then Michael was able to show them that Disney had these extraordinary hidden assets that hadn’t been tapped since Walt Disney died."

"At the time, there was no such thing as “media.” Movie studios dominated entertainment, and the five majors (Paramount/Warners/Columbia/Fox/Universal) had worldwide importance. If you ran one of these film companies, you were a prominent figure wherever you went. In those early years, though, I wasn’t swanning anywhere; I was just trying to figure out this weird and dysfunctional studio I was now in charge of. Because I’d offed Yablans in such a public and brutal way, everyone was now afraid of me. And I was petrified that they would find out just how unqualified I actually was. Only if I slowed everything down could I begin to understand all the parts and then try to rearrange them into something coherent. I tend to make things worse in the beginning as I fumble around trying to get to base truths. Instinct, which I prize almost above all else, doesn’t work very well for me in abstruse matters. I have to get to the core DNA on any matter, its logical essence, before I can add anything of value. For me this takes a lot of time, often to the irritation of faster thinkers. But when it does crystallize, I can’t be deterred."

"Meanwhile, the news had indeed upended the town. Not since the 1930s had anyone skipped so seamlessly from heading one studio to heading another, and no one had ever been given $3 million in salary (that figure also leaked out). The entire creative core of Paramount was now at risk of leaving, and while the studio had a decent backlog of movies, there was real concern that this mighty hitmaking machine would cease to function. It had been taken for granted that Paramount was the most stable and best-run studio; no one outside a very few knew how unstable the relationship had been between me and the head of Gulf + Western after Charles Bluhdorn died."

"Out of total frustration, I got a copy of the Yablans contract and read it word for word. Several times. Usually in employment contracts at senior levels, there’s a detailed description of the duties. I discovered that there was no description of actual duties for the president: no definition of his authority, and no defined responsibilities. *I had found my way to kick Yablans out of his cool.* I composed a simple one-sentence memo to *all* the staff of Paramount worldwide. It said FROM THIS DAY FORWARD, ALL EXECUTIVES WHO PREVIOUSLY REPORTED TO MR. YABLANS NOW REPORT DIRECTLY TO ME. And I signed my name. Literally ten minutes after I’d had it hand-delivered to Yablans, my office door swung open so hard on the hinges that it actually cracked, and a fuming Yablans came roaring in. “What the fuck do you think you’re doing with that idiot memo?” I responded calmly and quietly. “Frank, I have every legal right to do exactly that, and it’s done. You have an employment agreement that I’m fully respecting. So go back to your office and figure out what you’re going to do for the rest of the day, since I don’t need anything from you right now,” and swiveled my chair to the window."

"Outside the three networks, Metromedia had the best station group in the United States, covering 25 percent of the U.S. population. I was astonished that it might be for sale. I told Murdoch that when I was at Paramount, we had tried to launch a fourth network and that, aside from the economics, our biggest hurdle was not having a big broadcast group to be the backbone of a network service. I told Rupert that if we could ever buy these stations, they could be the catalyst in my longtime dream to compete with the big-three broadcasters. There is no dog with hearing as sharp as Rupert Murdoch’s when opportunity calls. It took him less than a second to say, “Ha! Let’s go after this!”"

"One can imagine Davis, hearing that it was me in the hunt for Paramount, clutching fiercely at whatever pearls he owned, as he realized how humiliating it would be for him if I became his boss. Seeking the only safe harbor he could find, he quickly made a Faustian bargain to sell the studio to Viacom, controlled by the voracious Sumner Redstone. In this deal, at least he’d survive and keep what little dignity was now on offer. Even though he’d have to work for Redstone, the roughest of the roughest, he’d still remain Paramount’s CEO."

"I still had a driver in New York named Mario. Sweet Mario was kind and gracious; everyone loved him for good reason—and, it turned out, for other reasons, too. While driving me from the front seat of the car, he had his own business going on in the trunk. It was only after I left Paramount and gave him up as my driver that a friend told me what had been going on behind my dim back. Apparently, Mario had been one of the prime cocaine dealers in New York, particularly to all my friends. I always wondered why they insisted that Mario drop me off first after our nights out. Once I left, Mario would open his trunk and deal out the drugs."

"When I got to the Waldorf, I called Marty Starger, the person to whom I reported, and told him I’d just been offered the chairmanship of Paramount. There was a long pause; he was astounded that his underling had been offered such a job—a Houdini-like escape from his poor performance running series television. I ended the silence by saying, “I don’t think I’m going to accept it.” At that point, I still hadn’t been able to think coherently. I just wanted it to go away. It was way too much, way too soon. Like Charlie, Starger thought my response was inane. I had to tell Marty right away about the offer, because Charlie had said he was going to call Leonard Goldenson first thing the next morning to ask permission to make me a formal offer. I had told Charlie not to do so until I decided what I wanted, but I knew that Charlie Bluhdorn had a will not governed by what anyone else wanted. The next morning I was summoned to Mr. Goldenson’s office. For Goldenson, the idea that I had been offered the chairmanship of Paramount was equally astounding. In his kindly old crocodile way, he told me gently, “You can’t turn this down.” He probably would have fired me as an acknowledged dolt if I had stayed."

"In the middle of dinner, I decided to call the office and see if there was any news. I found a pay phone and was told that Redstone’s primary adviser at Bear Stearns had come up with the idea of adding a CVR, a contingent value right, to the pot. The CVR was a new Wall Street invention. It meant that if Viacom stock didn’t rise within a year after purchasing Paramount to a certain price, then the shareholders would get a stock dividend to make up the difference. This was valued at $2 a share higher than our offer. It was a gimmick, but theoretically had dangerous consequences I didn’t want to risk. What we didn’t know was that Ace Greenberg, head of Bear Stearns, had guaranteed to Sumner that he could manipulate the stock during that one-year period so that there would never be a loss—it would never go below a certain level, so there would be no risk. And eventually that is what happened. It wasn’t entirely legal, but I was too Rebecca of Sunnybrook Farm to even know about, much less consider, such a manipulation."

"On a strict economic basis I shouldn’t have listened to that voice because on a purely economic basis we *absolutely* should have bought Paramount. The assets would have far exceeded the cost. But… I choked. I stopped bidding. In retrospect, thank god I did as I’m sure our group would have eventually fallen apart because there was no real alignment of interests. Most important, it would have put me squarely back in “old media,” when I was the only one in media aggressively pushing interactivity and technology as the path forward. Despite the starry allure of going back to Paramount in such a dramatic way, it would have been a distraction from the gutsy course I’d been on in e-commerce. Nevertheless, this had become a game, and the momentum of the chase was pushing me forward, maybe brainlessly."

"From the beginning of my time at ABC, everything for me had been “What’s it about?” or “What’s the story?” or “What’s the material?” not “Who’s the hot person of the day?” or “What was the last hit?” My focus had always been the idea, the story, the concept. I strongly believed that at Paramount we had to concentrate on developing scripts from the beginning rather than going backward and being dazzled by all the promoters with stars and packages, which was the way movie studios were then run."

"Bluhdorn insisted: “You’ve got to take all of them.” The kernel of an idea forming, I asked if he planned to make new movies at Paramount or if he was just going to strip-mine the assets. That got him all frothy again and he bellowed, “Do you think I’m some small-time player? I’m going to revive Paramount and make it the biggest studio in town!” (And, he did.) I pounced on this and said, “Great. We’ll agree to contract all those films if we have the right to swap the new movies for the old turkeys. In other words, I’ll guarantee the dollars, betting you’ll make better movies we can successfully run, which will partially offset the costs of making them, since these old movies are basically worthless.” While I didn’t fully understand it at the time, this was exactly the concept Bluhdorn had used to build up Gulf + Western: trading the made-up paper value of his stock and using it to buy better assets than the crummy ones he’d been able to buy at the beginning."

"It’s a lot harder to come in on top of an organization than at the bottom if you want to know how a company actually works. And I’m no good unless I understand everything down to the smallest molecule. No one really wants to tell the chairman anything other than good news and no one at Paramount was volunteering anything given how I was dropped onto the top of the Paramount mountain."

"“Everyone at this pathetic company I just bought is an idiot, so just call me,” Bluhdorn said. I couldn’t believe this giant industrialist wanted to handle this by himself. What I didn’t know was that Paramount was a vanity buy for him, opposed by his board. Until now all the other bread-and-nickel businesses he’d acquired had always been bought below book value. The only way he could justify buying the studio was to sell the television rights to its library of movies at a price close to what he’d paid for the whole company, a conniver’s connivance."

"The reason for the conflict was the way the original agreement had been written, with one critically important paragraph. It stated that all future cable channels owned by either Universal or Paramount were to be equally shared, so when Viacom bought Paramount, Universal took the position that it was entitled to own half of Viacom’s cable networks, which included MTV and Nickelodeon. Sumner Redstone, who controlled Viacom, went bonkers when he heard this extreme claim and countersued Universal, saying *he* ought to own the USA Network. As lawsuits tend to, this one dragged on for some time, and the final settlement gave Universal sole ownership of USA."

"For the umpteenth time I was so in over my head—I had zero experience in big-game dealmaking and was only months into running a publicly held company. I was also embarrassingly naive about what drove investors. I had lunch with a group of twenty or so institutional shareholders of Paramount. I was doing my passionate sell about why we were the better buyer—why I’d do a better job running the company than old Sumner. I was going on and on and could tell I was losing my audience as they dolefully picked at their food. Leon Cooperman, a legendary stock picker who had a big position in Paramount, interrupted my monologue. “I don’t care about how you’re going to run this better than him—just pay me a dollar more so I can go home.”"

"I couldn’t understand why opening a picture nationally, using television, wasn’t a better idea than what they’d been doing. I had learned long ago that ad making was mostly about saying no to the ad makers. As in, “No, it’s just not good enough,” and “No, you can’t go home until you make it better.” The standard process at Paramount was to review three or four concepts that the ad department corralled from outside vendors, toss them around for a few minutes, and pick one."