Warning: The individuals and companies discussed in this story are highly controversial. No industry has had more books and articles written about it than the media industry. These writings are often very opinionated: every industry analyst has a different take on the future of these companies and their leaders. In our story, we aim to add a bit of historical perspective, because the first step in understanding the future is to grasp the past, to know how we got where we are today.
No industry has had a greater impact on our lives than the media and entertainment industry. Movies and television in particular shape and reflect society and draw controversy and regulation. Around the world, watching videos of all types consumes a tremendous share of our attention and sharing.
The industry is very complex, full of odd partnerships, huge transactions, and an ever-changing industry structure and dynamics. The companies and their leaders have witnessed wave after wave of disruptive technologies: movies with sound, AM radio, television, FM radio, color television, VHS and DVD, cable TV, satellite TV, satellite radio, Blu-ray and HD, and now pervasive broadband and streaming services. Change is perpetual.
New upstarts come along, prestigious old names die, organizations are bought and sold at a rate that’s hard to keep up with. Many companies disappear as a result of this turbulence. Yet others figure out a way to survive and even prosper in this dynamic, at times unpredictable, environment. In this and our next newsletter, we take a closer look at some of the industry’s leaders and their companies.
Media – even going back to the newspapers and magazines of the 19th century – has also spawned some of the most remarkable “moguls” in business history. We’ve previously told the stories of some of them (Zukor, Luce, and Paley). That tradition of powerful individuals continues today, as illustrated in the following paragraphs.
In this story, we start with the present, touching on some of the key media moguls at the top of our biggest media companies. These men and one woman have been entrusted with guiding giant organizations through the choppy seas of early 21st century film and television. Their strategies and decisions will determine whether the enterprises they lead will be among the survivors or among the buried. Their leadership or lack thereof will affect the lives of millions of employees, suppliers, customers, and stockholders.
Our definition of a media mogul is an individual with almost absolute power over their enterprise. Many of them, like Joseph Pulitzer and William Randolph Hearst, kept control by keeping their companies private, never letting the public buy stock, never publishing their financial statements for all to see. Other moguls took their companies public, but retained control, either by owning most of the stock or by having a special class of shares that had more votes than public investors. Media companies from Dow Jones to the Washington Post used such stock structures decades ago; their use has broadened in the intervening years.
By defining media moguls as controlling leaders, we exempt “hired hands,” the highly-paid executives who run most public companies, but whose jobs are vulnerable to corporate raiders, unhappy Boards of Directors, or poor decisions and performance. Thus, while Disney CEO Bob Iger and Netflix founder and former CEO Reed Hastings might be better known and perhaps temporarily more powerful than the moguls below, they don’t have the level of control for us to call them a true mogul.
Three Media Moguls at the Center of the Storm
Do you recognize the three people shown in the picture above? Most Americans would not. Let’s take a look at each of them.
The First Great Female Media Mogul
The most powerful woman in media is Shari Redstone. While the late Katharine Graham of the Washington Post and Oprah Winfrey achieved great success running media organizations, neither reached the size of Shari’s empire. Her tumultuous life story and battles with her late, combative father have been documented in books and TV shows, with more certain to come. Let’s start from the beginning.
Shari’s grandfather, Michael “Mickey” Redstone, born Max Rothstein, operated night clubs in the Boston area. In the 1930s he opened the third drive-in movie theater in America. By 1954, when his son Sumner joined the company, the family owned 12 New England drive-ins.
Sumner Redstone was brilliant, winning all the academic prizes at Boston Latin School, entering Harvard at 17, and graduating in two and a half years. He was fluent in Japanese and could speak Latin, French, and German. After Harvard, at the height of World War II, he joined the US Army Intelligence team working on breaking Japanese codes. Then he went to Harvard Law School and after graduation served three years as a special assistant to the US Attorney General. By 1951, at the age of 28, he was a name partner in a major Washington, DC, law firm.
After Sumner joined his father in 1954, he built more theaters, moving into indoor theaters as well as the 12 drive-ins he inherited. By 1964, the company had 59 screens; in 1974, 129. The tough, ambitious Redstone chafed at the power the movie studios held over the theaters, and over time came to believe that “content is king.” He made over $50 million in profits by investing in movie studios in the 1970s and early 1980s. He was in his fifties and very wealthy, but still not satisfied.
This all changed with his 1987 acquisition of a company called Viacom. Here we need a little background.
In the early 1970s, federal regulators (primarily the Federal Communications Commission or FCC) decided that the three big television networks (ABC, CBS, NBC) had too much power. The networks created hit shows like CBS’s I Love Lucy, profited from their first run on TV and big ad money, then “syndicated” the re-runs to local TV stations for more profits. The regulators created the financial interest and syndication rule, which said that the networks could not own their own shows and could not share in syndication profits. This opened the door for outside, independent producers to pitch and sell programs to the networks. The Hollywood studios used their studio facilities and talent pools to quickly fill the gap, with Warner Brothers and Universal studios among the early leaders.
As a result of the financial syndication rules, CBS had to part with its valuable program rights, and spun that business off as Viacom, an independent public company, with the rights to I Love Lucy and much else. (CBS dominated American television for much of the second half of the 20th century and early 21st, making its “library” especially valuable).
Adding fuel to the same fire, in 1971 the FCC cut the number of hours that the networks could program during prime time. Previously, prime time started at 7:30 Eastern time and ran until 11, but with the new rule, the networks were cut back to an 8 PM start each evening. The intent of this ruling was to encourage more local, community-oriented content. The regulators were convinced this would increase the amount of educational and cultural content going out over the airwaves.
But the result was quite the opposite. The local stations filled the new half hour gap with game shows. That gave rise to the idea of “first-run syndication.” Jeopardy and Wheel of Fortune were not re-runs of old network programs, they were created by independent producer Merv Griffin and sold directly to the local stations. And of course the networks could not own any part of these companies, per the financial syndication rules.
In addition to those rules, the FCC limited ownership of local TV stations to 5 VHF stations and 7 total stations including UHF stations per owner. (Most TV sets originally only received VHF – station numbers 2 to 13 – until the late 1960s when UHF sets became more common.) Thus the “affiliates” of the networks – the local TV stations – were owned by hundreds of independent entities. While these stations could be very profitable, often earning profits that were 40-50% of revenues, there were no opportunities to grow by adding more stations. The networks owned their own 5-7 stations in the largest cities, reaping substantial profits. But 98% of their affiliates were owned by others.
By the mid-1990s, these rules were unwound or dramatically changed. But for twenty years, the above limitations were placed on the networks and on TV station ownership.
In that context, in 1987 Sumner Redstone’s movie theater chain, the family-owned National Amusements, bought control of Viacom for $3.4 billion, marking his first big move into “content.” In addition to the historic CBS content, Viacom owned such then-powerful cable networks as MTV and Nickelodeon.
In 1994, he picked up the legendary Paramount Studios for $10 billion and Blockbuster video stores for $8 billion. (Paramount turned out to be a better deal than Blockbuster!) And in 2000, he bought the equally legendary Columbia Broadcasting System (CBS) for $37 billion.
(Under the revised regulations of the 1990s, CBS could now own its own shows. The combination of Viacom with its founding parent CBS put I Love Lucy et. al. back in their original hands. CBS also acquired King World Productions, the owners of Jeopardy and Wheel of Fortune.)
Despite two renowned “brands,” Paramount and CBS, Sumner Redstone kept the relatively unknown name of Viacom as his key company. Until recently, Viacom and Paramount were one public company while CBS was a separate company. Yet all were tightly controlled, through special classes of voting stock (77%!), by National Amusements, the Redstone family business.
Sumner Redstone could only be described as “a piece of work.” He was in continual legal battles with his attorney daughter Shari, his son, his mistresses, and others. In 1990 he convinced Shari, a lawyer and homemaker, to join his companies, yet he later publicly derided her and tried to get her out of the company. Redstone was kicked out of fine restaurants for his behavior. Suffice it to say he was not widely beloved.
On August 11, 2020, Sumner Redstone died at the age of 97. (Media moguls tend to have long lives – Paramount icon Adolph Zukor made it to 103.) Despite all their battles and legal struggles, Shari Redstone ended up in total control of the Paramount, Viacom, and CBS empires, which she consolidated into one company, intelligently rebranded Paramount Global.
So we have an industry giant, built upon historically important media companies, built and run by two lawyers, father and daughter. While she has lived with the media businesses her entire life and represents the third generation of media ownership in her family, 68-year-old Shari Redstone is “the new kid on the block” among the three moguls in this article. No woman has ever had this much power in the American media industry. Not Oprah. Not Katharine Graham. Shari Redstone sits on one of the most valuable media libraries (movies and TV shows) in the world, though others have equally valuable assets.
Shari Redstone has taken over the business in the midst of the greatest headwinds these industries have ever seen.
Let’s move on to our other two leaders, men who compete with Shari Redstone.
Lachlan Murdoch, at 51, is the youngest of our trio. Like Shari Redstone, he is the third generation of the Murdoch family to be in the media business, starting with Australian newspapers. Like Shari, he has spent his life under his father, Rupert Murdoch. But Rupert is still alive and apparently going strong as he turns 92 next month. Nevertheless, Lachlan is the heir-apparent and now the CEO of the two family-controlled (about 40% ownership) companies, Fox Corporation and News Corporation. Thus, he is the leader we need to study in considering Fox’s role in the new world of media.
Unlike Shari, Lachlan has spent most of his life working in media, beginning with a job at the Sydney Daily Mirror at the age of 18. He’s been in and out of the family businesses, as his father seemed uncertain as to which of his two sons would rule. Now he is in the driver’s seat.
Rupert Murdoch stands high as one of the greatest media entrepreneurs of the last forty years. His creativity and ability to see opportunities where no one else was looking are unsurpassed. He successfully created a fourth TV network, the Fox Network, after several others had failed to overcome the tremendous obstacles posed by the “big three” legacy networks: ABC, CBS, and NBC. He did it by starting slow, only offering programs a few days a week. His network became a contender by offering edgy content, from Married with Children to The Simpsons (at a time when a prime time cartoon was unthinkable).
Historically, the networks paid their local affiliated stations to carry the network programs. Murdoch was among the first to change this system, requiring stations to pay the network. (In each case, the locals and the networks share in the massive advertising revenue.)
Ever controversial, but never afraid of bold moves, Rupert Murdoch moved his company into the movie business with Fox Studios (a.k.a. Twentieth Century Fox and 21st Century Fox). He made big bets on sports….the Fox Network made $600 million in ad revenue in a few hours by broadcasting this year’s Super Bowl. The studio produced Avatar, one of the biggest recent hit movies.
Murdoch’s News Corporation bought the Wall Street Journal. Most industry observers and critics thought he would ruin it, but revenues and profits remain strong at one of the few American newspapers to survive the internet in good health. And he created Fox News when he saw a gap in the market as the former news leaders seemed to creep leftward in their outlook. No modern media mogul can compare with Rupert Murdoch when it comes to innovations, even the amazing but now-retired Ted Turner.
In 2019, the family sold 21st Century Fox to Disney for $71.3 billion, outbidding arch-rival Comcast (see below). Disney got The Simpsons, Avatar, controlling interest in the first streaming service Hulu, controlling interest in the National Geographic Network and magazine, the very valuable Star TV of India, the FX cable network, and much else for this record-setting price. According to reports, Lachlan, who had run this part of the business, was opposed to the sale. But Rupert has never been afraid to wheel and deal, to buy and sell (compared with Sumner Redstone, who rarely sold anything).
This leaves Lachlan in charge of a much-reduced empire, but still with the Fox Network, top basic cable network Fox News, streaming service Tubi, and a series of sports networks. Lachlan also controls the family’s other company, News Corp., with the Wall Street Journal and other assets (the most profitable of which is Australia’s leading real estate website). He’s doing okay, as he and his wife in 2019 purchased the mansion shown at the opening of the Beverly Hillbillies for an estimated $150 million.
It’s been said of Rupert that “ink runs in his veins.” Coming from the locally oriented newspaper business, both father and son place a high value on news and sports, two types “real time” media (along with weather) that consume many of our video viewing hours. The company continues to own 29 local TV stations, which normally derive up to half of their revenue from advertising on local news programs.
The bottom line is that Shari Redstone and Lachlan Murdoch come from two very different traditions. The Redstones made big headline-inducing acquisitions while the Murdochs, overall, built new ideas from scratch. Shari comes from the theater (“exhibition”) business while the Murdochs are at heart “newsmen.”
Our third character, probably the least known of the three by the general public, comes from a dramatically different background, and runs the biggest (in revenues) company of them all.
The Cable Guy
Brian Roberts, 63, is the head of Comcast, which was built by his late father Ralph Roberts.
In 1963, 43-year-old Ralph Roberts ran the Pioneer Suspender company in his hometown of Philadelphia. He worried that his industry might disappear due to the creation of beltless, “Sansabelt” pants.
Looking for alternative businesses and investments, he and two friends bought a small local cable TV company with 1,200 customers in Tupelo, Mississippi, for $500,000. Trailing behind industry giants like Time Warner Cable, Cablevision, and “Cable Cowboy” John Malone’s Tele-Communications, Inc. (TCI), Ralph Roberts over time bought more and more local cable providers. He renamed the company Comcast.
By the turn of the 21st century, the two giant cable companies were Time Warner and TCI. In 1999, AT&T bought TCI for about $60 billion including assumption of debt. Two years later, AT&T sold the enterprise, renamed AT&T Broadband, to Comcast for about $45 billion. (AT&T later bought Time Warner and has now sold off both the Warner Brothers studio operation and the huge Time Warner cable operations, rebranded as Spectrum by owner Charter Communications). The acquisition from AT&T propelled Comcast to being (by far) the largest cable provider in the nation, marketed under the Xfinity brand.
But Ralph Roberts also understood the power of content, and had made several smaller investments in production media. His big move came in 2004, when he tried to buy the Walt Disney Company for $54 billion but the Disney company rebuked the offer. In 2011, after a convoluted purchase process, Roberts purchased NBCUniversal, the combination of the Universal movie studio and the NBC television system, finally achieving his goal of being a key producer of content.
In 2015, Ralph Roberts died at the age of 95. The empire was taken over by his son Brian. Brian has spent his entire career with the company, starting at the bottom by climbing poles and fixing cable wires. His father made him President of Comcast in 1990, when Brian was only 31.
So, unlike Shari and Lachlan who are newer to leadership, Brian Roberts has been in the driver’s seat, shared or solo, for 32 years. Ralph and Brian reportedly had a remarkable chemistry, working well together as a team, the young man learning at the feet of the father. Rare in the industry, both men only had or have one spouse! No family in-fighting here.
Like the Murdochs, the Roberts family has effective control (about 30%) of Comcast through two classes of stock. But neither has the absolute control of their empires to the degree Shari Redstone has – 77% of the voting power of Paramount Global.
In our next newsletter, we will dive more deeply into the three empires these individuals will be leading in coming years, their competitors, and the industry environment. But it’s worth mentioning here that the cable companies, despite the rise of “cord-cutters” who only stream video and the rise of Netflix and the like, are still the big profit producers in the television and movie industries. They’ve made huge investments in fiber optic cables and other technologies, which are still paying off – traditional “cash cows.” As a result, Comcast in total is far bigger in revenues and profits than the other companies we’ve discussed so far.
Of the many other players in the industry, the one that stands out is the Walt Disney Company, which owns the ABC Network and ESPN, and now 21st Century Fox. Disney chief Bob Iger has yet another background – he spent his career in network television, rising with ABC prior to its purchase by Disney. He therefore comes from the part of the industry that many think will soon be history. But he is the only one of our four network chiefs who came from the traditional network-driven industry (Shari now has CBS, Lachlan has Fox, Brian has NBC). And, unlike the other three, the 72-year-old Iger, in his second stint as Disney CEO, only owns one ten-thousandth of the company (with options he can own at least ten times that much, still tiny compared with the others).
These four individuals and their teams, along with a handful of others, will determine what we watch, where we watch it, and who makes the money in coming years. They come from different backgrounds and thus have different perspectives, which will undoubtedly affect how they see the world. Our histories are the foundations of our futures.
To really get inside the heads of these leaders, we urge our readers to watch these telling interviews with Shari, Lachlan, Brian, and Bob. (Note the dates of the interviews; given the dynamic nature of the industry, by now they may have changed their minds on some key issues.) This industry is as complex as any. Almost every one of these companies has deals with the others, buying and selling rights to movies and TV shows, and producing studio content for their competitors. Additional deals, more mergers and spinoffs, and new partnerships can be expected. Below is a table with a quick comparison of where the companies stand today, based on their most recent full year results.
Stay tuned … in our next newsletter, we’ll take a deeper look at where these companies and their competitors stand today.
American Business History Center