Media Curmudgeon

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March 8, 2004

Monday, March 8, 2004.

Monday, March 8, 2004. Bill Grimes Responds
Charlie - Three points:
1. Your fundamental argument that senior corporate management has not been diligent in its oversight of AOL is undebatable. Any one of your examples is enough to create change at the Logan/Miller level. That three ethical/"taste" indescetions and failures have occurred is inexcusable. Further, the incompetence of management in the advertising campaign's wrong-headed targeting of prospective AOL customers and their failure to promote AOL's new broadband capabiity are simply not tolerable to a coprorate CEO and his Board. Major management changes are needed. This is particularly so because despite AOL's swoon it still has significant value and likely contribute 15-20% of the value of Time Warner's sdhare price. Therefore the mismanagement you alluded to has been felt by shareholders. The other side of that coin is that any improvement in AOL's operating performance will have a positive impact on the share price. Thus management oversight and involvement is critically important.

2. You weaken the above key argument a bit by bringing Pittman in to your commentary. Logan's alleged dislike for Bob is immaterial to his recent performance as the company's senior executive overseeing AOL. Additionally, your longtime close relationship to Pittman should be revealed herein as journalistic fairness would dictate. Also, your lament suggests a yearning for past management at AOL and I doubt many knowledgeable observers would agree that that is what AOL needs to arrest its decline and begin to progress again. Whether the latter is possible I do not know but bringing back past leaders (which you did not explicitly suggest) is a dubious strategy.

3. The question not asked in your blog is why has this oversight occurred and why have there been all these examples of AOL managemnt transgressions? My answer begins with the name change at the company when Parsons and the Board decided to remove AOL from the AOL/Time Warner corporate name. Think about the (not-so-subtle) psychological message this sends to all the company's employees but most clearly and depressingly to all AOL people. "The company is expunging our existence. Our history is being re-written. AOL doesn't matter that much anymore," has to be their reaction.

This name change event and its message which as the days passed became even more debilitating for those people at AOL created an environment that spoke loudly two things: (1) no here is really accountable anymore (Logan with his very successful career in publishingprobably was less than enthusiastic when Parson asked him to take the AOL responsibility) and,(2) since no one is accountable and because the Board and Parsons don't care enough about AOL to even retain its name, we aren't really expected to perform with excellence and strive for greatness as a company. And, maybe even, let's personally grab all we can. The thinking from the two executives that stole from the company was likely that no one cares and no one is watching. A perfect environment for mischief and failed business goals.

Where is the Board? Where is Parsons? Is there anybody out there?

Charlie responds: You're absolutely right, Bill, the Pittman references was irrelevant and I should have revealed my long association and friendship with Bob. Also, I'm envious because your response was a lot better than my blog. Thanks for sharing your wisdom.

Posted by Charles Warner at 12:03 PM | Comments (0) | Print |

Sunday, March 7, 2004.

Sunday, March 7, 2004. Wake Up, Dick
It's time for Dick Parsons, the CEO of Time Warner, to wake up and do something about AOL.

AOL is under the command of Don Logan, one of two honchos under Parsons who are responsible for running the day-to-day operations of the many Time Warner divisions (Jeff Bewkes is the other honcho). But under Logan's watch, AOL has had one disaster after another. AOL's head of HR, who was brought in by AOL CEO Jonathan Miller, was fired for, in essence, embezzling (he had an undisclosed interest in a search firm he hired to do job searches for AOL). AOL's head of Interactive Marketing (AOL's sales unit, since renamed), who was brought in by Jonathan Miller, was fired, ostensibly for expense account excesses (another form of embezzelment), but in reality she should have been fired a lot earlier for systematically pissing off every AOL employee and client she ever met. She was dispised and villivied by her employeesa--another example of someone who was mean and nasty getting her just deserts. Len Short, AOL's executive vice president for brand marketing was fired a little over a week ago after embarrassingly dreadful Super Bowl advertising.

AOL sponsored the awful, crotch-grabbing, boob-exposing Super Bowl half-time show that was the catalyst for the FCC and Congressional indecency crack-down. Not only did AOL show poor judgment in sponsoring the raunchy half-time show, but also its commercials were an embarrassingly stupid waste of money. I 've heard several smart media industry insiders voice opinions that someone had to be on the take in doing or approving those commercials, because that's the only excuse for such moronic, insulting advertising. The spokesgroup for the AOL commercials were a group of long-haired, tattooed motorcycle bikers who did dumb tricks to show that their bikes were super fast. No one got the point that AOL 9.0 supports broadband, which is up to 50 times faster than dial-up. The only target audience the spots could appeal to were low-income, low-education men 12-24, hardly the family audience AOL has traditionally wooed (and won). Men and boys that age who know anything about the Internet (and virtually all of them do) universally hate AOL. It's totally uncool and clunky to this demo.

Didn't Logan see rehearsals of the half-time show? Didn't he watch the commercials before they went on the air? If not, why? How could a Time, Inc. person who had been with the prestigious, dignified magazine division for over 15 years and had run it for several years not be interested enough in what was going on the air for AOL during the highest-rated program of the year? Logan simply dropped the ball and let AOL embarrass itself and Time Warner. And this is the same guy who, according to many insiders, was the source of leaks to the NY Times and Wall Street Journal trashing Bob Pittman. He is also proported to be a main source for Nina Monks' wildly inaccurate book on the AOL Time Warner merger, titiled Fools Rush In, that also makes Pittman look bad.

Don Logan, who was an expert at the nasty infighting in the highly political pre-merger Time, Inc. and Time Warner, politicked fiercely to discredit and unseat Pittman and then to take over AOL. Some people have said he hates AOL so much becasue of his rage about the merger that he is doing everything he can to destroy AOL. That dog hunts for me because why else would he let AOL make such obvious personnel and advertising mistakes?

So when is Dick Parsons going to wake up and realize that he's not going to get good marks from his board of directors or from stockholders if he allows Logan to destroy AOL? If AOL keeps declining and making stupid mistakes, and doesn't begin innovating again, its value will decline even more and no one will buy it. Or if Time Warner keeps it, AOL will drag down the stock price. I think if Parsons doesn't take some action soon in the face of all of disasters at AOL, his job could be in jeapordy. But, come to think of it, if past behavior is any indicator, maybe that's what Logan is hoping for--that Parsons will get fired and he'll get the CEO job.

Posted by Charles Warner at 2:31 AM | Comments (0) | Print |

Saturday, March 6, 2004. Nasty

Saturday, March 6, 2004. Nasty People
This was a week for people who dislike nasty, mean, and egomaniacal people to celebrate--in addition to people with merely good taste celebrating. Howard Stern's syndicated radio program was thrown off six Clear Channel radio stations, Michael Eisner got a huge vote of no confidence by stockholders (an unheard of 43 percent), and a jury convicted Martha Stewart of lying.

I suppose it could be considered mean spirited to gloat over another person's misfortune, so call me irresponsible, but I am pleased that these three got their comeuppance. Not because they broke and laws or rules or regulations, but because I think they are all nasty, mean people.

Howard Stern is not only not funny, he's a mean, nasty egomaniac who is sexist, racist, and indecent. He's even indecent to look at. He deserved to be thrown off the air years ago. But boosted by his greedy mentor, Mel Karmazin, who championed Stern at Infinty Radio before he (Karmazin) became head of CBS and the of Viacom, Stern billed himself as the "King of All Media." He has no humility, no modesty, and less decency. He really has deluded himself into thinking he's important because his potty humor appeals to immature young men (12-34).

Something awful seems to happen to insecure, ambitious (ambitious of being noticed) people who are seen on TV and who are recognized on the street. When ordinary people recognize celebrities and start pointing at them, something terrible happens--the celebrities begin to think they are important. They confuse celebrity with importance; they confuse popularity with respect. And, suddenly a foul-mouthed racist and sexist thinks he's important. As soon as he's thrown off television and, eventually thrown off all radio stations except one in New York, no one will recognize him after a while and he'll be as forgotten as last night's wet dream.

Can you conceive ten years after Stern's off the air of fan clubs springing up around the country and people going to clubs and imitating him, similar to the huge cult of impersonators and fans of Elvis? No. And why? Because Elvis, with all of his eating and doping problems in his later years, had gargantuan talents and, perhaps more important to the legend of Elvis, was remembered as a generous, nice man of the people. He was nice to his fans. He was famously generous to his friends and even to his imitators. He could take a good joke on himself; he was human, if a flawed. Stern will rot in the hell of being forgotten because no one cares about him as a person; as a person he's a joke.

There have been other CEOs who have made ever-increasing (and scandalous) millions while the stock price of their companies declined, but someone stayed out of trouble and didn't get no-confidence votes from shareholders. Why did it happen to Eisner? It happened because he's a nasty, meddling, nick-picking prick. He drove good, competent executives away from Disney and then gave his good friend, and similar monster Michael Ovitz (the most hated and feared man in Hollywood at the time), the job as president of Disney and then fired 18 months later, but gave his pal a $138 million separation package ($31 million in case and $100 million in stock, according to the New York Times). Eisner should have been fired then for that travesty alone. But the board and stockholders backed Eisner. But when he made an enemy of Steve Jobs at Pixar, it was obvious to everyone, including stockholders, that Eisner had let his own sense of self-importance get out of hand. He was more important than Jobs, Pixar, or the stockholders, a selfish, greedy, imperious, self-important, nasty person who stockholders and his employees didn't like because he was mean to people (among other incompetencies).

Which brings us to Martha Stewart. Why do you think the Feds went after Martha for a relatively minor offense (minor in comparison to Enron, WoldCom, and Arhtur Anderson)? Becasue she was a popular figure around New York? According to a brilliant corporate lawyer I know, the Feds had a weak case against Martha, but they wanted a marquee name to show in a perp walk, so they railroaded Martha. Yes, I think she was railroaded and will probably go to jail unfairly. But do I care? No. I don't care because she had an image of being a mean, nasty bitch who cared more about herself and a couple of hundred thousand dollars than her company that employs around 500 people and has $175 million in cash in the bank. She didn't need the money; she was greedy and cared only about herself. My lawyer friend thinks the reason Martha did not testify on the stand is because she didn't want to. She couldn't stand the thought of seeing herself being made to look bad in the witness chair. It was her decision not to testify. She micro-managed her court case the way she micro-managed her company and treated her lawyer like she treated her employees--imperiously, mean, and nasty.

You'd think these all of these people had seen "Death of a Salesman" and thought that because Willie Lohman said the secret of selling was "to be well liked," and because Willie was not successful that they then surmised the secret of success was the opposite--to be despised.

The best selling management book of all time was In Search of Excellence. It may soon be surpassed by Good to Great by Jim Collins. In In Search... Peters and Waterman made famous the concept that the excellent companies they studied were all close to the customer, and a major component of being close to the customer was nicemanship. In Good to Great Collins writes that the one of the things that the 11 companies he studied had on common were CEOs that were humble. The concept of nicemanship and humility, let alone decency, never occurred to Stern, Eisner, or Martha Stewart. If they had read a few popular management books and leaned about nicemanship and humility, they might not be in so much trouble today.

They all probably don't care and are saying to themselves. "Who cares about being liked, being nice, or being remembered fondly? I'm rich as Croesus, and I deserve being rich." They can all count their money along with Mel Karmazin and Croesus in you know where. However, to their everlasting horror, they won't be remembered or mourned. But years after they are gone there will still be thousands of Elvis impersonators lovingly putting on dark glasses, sequined white, high-collared jump suits and singing to adoring, applauding, appreciative crowds.

Posted by Charles Warner at 12:42 AM | Comments (0) | Print |

March 5, 2004

Friday, March 5, 2004. Tom

Friday, March 5, 2004. Tom Weir Responds
I enjoy reading the Blog from time to time! It's been nutty around here, but I check it when I can.
I appreciate your impression of the network meltdown that we are seeing (actually have been seeing for quite some time now). Frequently when I see a story about the new lows reached in primetime network audience, I think of Jacobs' book Short Term America (which you once assigned me to read). It is incomprehensible to me how such large and once powerful organizations could stand by and watch while they literally drive themselves to extinction. I don't think there is any doubt that there is a market for quality network programming (perhaps even a huge market) that has been completely abandoned by an overwhelming obsession with overnights (i.e., short term thinking). Cable was made for selectivity and I'm unconvinced that it will ever reach the point where an advertiser can count on any cable program to reach anything like a mass audience. I understand that network viewership is being drained by cable, but I don't believe that is the real cause of the network collapse. I believe it is largely a self-inflicted wound.

Perhaps this is all cyclical. You're right about the ideal solution being exclusive program sponsorships, but that won't be efficient until the networks have been beaten down to the point of affordability. This might very well be the way they will be reconstructed in the future. That is, of course, when someone upstairs decides that reality shows just don't cut it anymore.

Keep up the good work. My best to the wife. I think you should have learned by now that the dresser is out of bounds as a discussion point, much like the shoes.

Posted by Charles Warner at 4:43 PM | Comments (0) | Print |

March 2, 2004

Tuesday, March 2, 2004. My

Tuesday, March 2, 2004. My Wife Responds
Charlie, people in glass houses should not throw stones. Before you comment on the tchotchkes on my dresser, you had better check out your own! Biting the hand that feeds you both literally and figuratively puts you at risk being perceived by your blog's admirers perhaps as a great writer but a poor speller and proof reader. By the way, have you forgotten who told you how to spell tchotchke in the first place.

Posted by Charles Warner at 11:03 PM | Comments (0) | Print |

March 1, 2004

Monday, March 1, 2004. ExclusivityThe

Monday, March 1, 2004. Exclusivity
The Wall Street Journal had a story in today's paper with the headline, "Ameritrade Sets Ad 'Roadblock' In Deal to Break Free of Clutter" in the "Advertising" section. Suzanne Vranica's story told of a deal the online brokerage company, Ameritrade, made to be the exclusive financial-services company to advertise between 3:30 and 4:00 p.m. on news programs on CNBC, Bloomberg, and Direct TV.

The story went on to read, "As media outlets continue to shoehorn more ads into each commercial break, marketers are eager to find ways to stand out...(Ameritrade's) advertising 'roadblock' begins tomorrow and will be place for four to six weeks."

Further in the story: "Ameritrade joins a long list of marketers, including American Express, Coca-Cola and Time Warner's America Online that have indicated they no longer are satisfied with simply buying TV time. Instead, they are demanding more creative uses of their media dollars."

And a paragaph: "Ameritrade didn't pay a premium for the exclusive ad time: instead the opportunity came about because of its aggressive marketing stance. Ameritrade's ad spending for 2004 is expected to surpass $100 million, the majority of which will be spent on news programming and news-focused Web sites."

The story's last paragraph read, " Still, some media buyers say these types of alliances can be risky. 'These networks run the risk of upsetting other financial advertisers,' says BillMcOwen...(of) Havas' MPG."

The story reminded me of several current issues in the media. First, the increasing clutter in television and cable advertising. It's getting ridiculous. As breaks have gotten longer and commericals shorter (often 15s instead of 30s) and as the networks have gotten greedier, television is more cluttered than the top of my wife's dresser, which has exactly 7,321 tchotchkes on it, leaving only three square inches of clear space on an eight-foot square area. So, I don't blame advertisers for trying to cut deals that make their commercials stand out in the over-cluttered TV environment. And, I don't blame television and cable networks for giving them exclusive deals for short periods of time--give advertisers anything to get their money.

But I don't think having exclusivity for a half hour or hour will make any difference. Networks are still formatted for too many commericals--and average of 14 minutes of commerical time in a prime time hour, and more in daytime. This means that instead of seeing seven minutes of commericals on CNBC in a half hour for a lot of different products, viewers will be seeing seven minutes of Ameritrade commericals. Forget it. Viewers will be even more incensed by the repitition than by the clutter.

For exclusivity to work, the networks will have to reformat their time slots so that and exclusive advertiser can run fewer and longer commercials. Maybe one two-minute, intelligent commercial would have some impact.

Another issue the story brought up was that major advertisers, such as Amercian Express, Coca-Cola, and AOL are dissatisfied with "simply buying TV time." Well, Coca-Cola has cut way back on TV advertising, but AOL...?

If AOL is so dissatisfied, why did it sponsor the dreadful, tasteless Super Bowl half-time show and run stupid commericals during the Super Bowl? If AOL is "no longer satisfied with simply buying TV time," why did it waste all that money on the Super Bowl?

I think the bosses at Time Warner watched the Super Bowl and said, "What the f____ is AOL doing sponsoring that tasteless half-time show and running those stupid commercials?" A month later they fired Len Short, the head of AOL marketing. He deserved to get fired for throwing away good money.

The AOL commericals showing a bunch of tattooed motorcycle thugs doing stupid stuff on bikes to make the point that AOL was fast, were not only dumb, they were totally counterproductive. Viewers didn't know what the point was, and if by some wild stretch of the imagination anyone did get the point and switch from a dial-up connection to broadband, AOL would lose $13.90 a month in subscription fees for a service it costs them more to deliver. No wonder Short was fired.

The last issue is that of exclusivity. It's sort of retro--back to the days when television shows were sponsored: "Schlitz Playhouse," "Texaco Theater," the "Colgate Comedy Hour," and, the best of them all, "Hallmark Hall of Fame." Remember the few, warm, fuzzy Hallmark commercials in the "Hallmark Hall of Fame?" They were memorable, not interruptive, and certainly not cluttered. You were glad to watch them in appreciation for Hallmark bringing you free, intelligent drama.

Now we get seven or eight minutes of commercials in a half hour of "The Littlest Groom." Maybe we'll start seeing exclusive program sponsorhsips again soon. How about Sony minicams in "The Littlest Groom," or a divorce law firm in "Joe Bachelor," or a singing-instruction firm in "American Idol?" Make the entire progam an exclusive product placement opportunity. I think that's what advertisers would like.

Then we'll revert back to when Jack Benny used to open his show with, "Jello again everybody."

Posted by Charles Warner at 9:56 PM | Comments (0) | Print |