Esquire - September 1991
Larry Tisch, Who Mistook His Network for a Spreadsheet
In five years as CEO, he has had one passion: saving money. He’s never understood why his employees hate him so much. Or why he may end up destroying CBS.
LARRY TISCH ARRIVED EARLY—7:00 A.M.—for his first day of work as acting CEO of CBS on September 11, 1986, and even before he reached his desk he was asking questions. Entering Eero Saarinen’s black granite slab, known as Black Rock, between West Fifty-second and Fifty-third streets on Sixth Avenue, Tisch made a mental note—Why does the lobby need six Wells Fargo guards? Then he stepped into the elevator that one of those guards converted to an express by pressing a button at the reception desk. When the elevator glided to a halt on the thirty-fifth floor and Tisch walked onto the thick taupe carpet, the only CBS employee on hand to welcome his new boss was steward Patrick Callahan. “I was standing there with a big smile on my face because I knew his son Tom,” recalls Callahan, fifty-one, who was born in Tipperary. “I took him on a tour to see every office.”
They wandered down corridors draped with sound-smothering ivory fabric. They raced past walls covered with French walnut, and some of the nine private dining rooms where Tisch paused to peek in. They passed CBS’s collection of Chagalls, Calders, Rouaults, Hockneys, and Miros, which Tisch did not pause to admire. He was for the most part quiet as he walked, but Callahan could tell he was drunk with anger. “Look at all this empty space!” Tisch cried out as he glanced at the unoccupied suites.
Office space was not uppermost in Tisch’s mind that first morning, though the empty rooms were a reflection, he thought, of the waste at CBS. One of the first things Tisch said to chief financial officer Fred Meyer was that CBS was “50 percent overstaffed.” Since Tisch felt there was little he could do in the short term to boost network revenues, he was determined to cut costs. And among the costs he would address first was debt. Larry Tisch was an old-fashioned businessman who believed that debt was a burden, not an opportunity for expansion. When the recession came, as he expected it surely would, a tide of bills would drown the company. With CBS’s earnings down and working capital below $300 million in 1985 and with long-term debt at about $1 billion, Tisch felt that the company was overleveraged. The debt pushed Tisch toward a conservative position he was most comfortable with anyway, which was that CBS should not be “a so-called conglomerate,” but instead, as he told Broadcasting magazine that fall, “a media company with an emphasis on broadcasting.” People assumed Tisch meant that CBS shouldn’t be in the toy business but should remain a communications company involved in broadcasting, magazines, books, records, videocassettes, and some cable programming.
In Which Larry Tisch Promises He Won’t Sell Parts of CBS
THERE WERE OTHER QUESTIONS on Tisch’s mind that first morning. Only the day before, he and his new ally, the semiretired CBS founder, William Paley, had managed to oust Thomas Wyman as chairman and CEO. Tisch, whose Loews Corporation owned 25 percent of CBS, was made acting CEO, and Paley returned as acting chairman. Still, scars remained from the yearlong battle. Tisch understandably wondered: Could he share the throne with Paley, who had had a fractious relationship with Wyman and three previous CEOs? What executive changes should he make? How would his pessimistic disposition mesh with that of the ever-optimistic Gene Jankowski, president of the Broadcast Group? How would he relate to a board so intent on resisting him that it had been prepared to sell CBS?
Tisch understood better than most old CBS hands that the business of TV had irrevocably changed, that viewers now enjoyed more choices—CNN, MTV, A&E, Fox, the Disney Channel, the VCR, among others—and were no longer reliant on the Big Three. Like the heads of Capital Cities Communications, which acquired ABC in March 1985, or General Electric, which purchased NBC at the end of 1985, Tisch believed, correctly, that the networks required a jolt of reality. Among the first jolts Tisch administered on day one was to fire News president Van Gordon Sauter, who had become a polarizing figure. With Sauter gone, Tisch turned to another matter: reassuring the three group presidents—Jankowski, Peter Derow of the Publishing Group, and Walter Yetnikoff of the Records Group. Late this first morning, he summoned them to his office and declared that there would be no more executive beheadings. Nor would they have to attend twice-monthly management committee meetings with the company’s top forty executives. He was abolishing the committee. “It’s all nonsense,” said Tisch. “It doesn’t do anything.” He hustled to a meeting with all of Jankowski’s top managers, but he wasn’t satisfied with what the managers told him. ‘The company was sort of being run as if it were IBM,” he said. “It had the kind of overhead IBM had…. There was no leadership from the top.”
Now Tisch alone would supply that leadership, for he felt there was no one at CBS who instinctively acted like an owner, who shared his outrage at the waste of shareholder money. As he told Broadcasting magazine, he alone had “an objective point of view on the business, the industry, the company.” In Tisch’s view, CBS was overstaffed and arrogant. Almost immediately, Tisch got his arms around the 1,350-person corporate staff and dismissals were accelerated. One third would be fired, and with other reductions this would save CBS $40 million to $60 million annually.
David Fuchs, who had served as de facto chief of staff to Jankowski, tried to warn Tisch that he was now in a fishbowl: “From this moment on, people will be looking at you and measuring your words.” Tisch nodded, but he didn’t grasp at first what his sudden visibility would mean. After all, he had made billion-dollar investment decisions before and the press barely noticed.
Tisch told reporters that cost cutting was merely a sideline and programming was the heart of his mission, but this is not the way he acted at CBS. He was determined to keep CBS focused on expenditures. Reporters, aware that Tisch often sold assets, asked if he planned to sell any parts of CBS, as Ted Turner said he would have done had he bought CBS in 1985. Tisch told The The New York Times, “Nothing is going to be sold for the sake of selling. It is not my nature to make blanket statements about anything. But as far as I am concerned, it [a sale] is ridiculous!”
Programming commanded some of Tisch’s thoughts this first week. He rarely watched entertainment programs on television, but he had enough friends in the business who warned him that CBS’s schedule needed intensive care. Hit shows such as Dallas were aging. CBS had no 8:00 P.M. comedy hits, which meant it had no hook to attract viewers to tune in to the remainder of network prime time. Its shows appealed more to rural audiences, not the younger urban and suburban viewers whom advertisers craved. And it had little luster—no St. Elsewhere, no L.A. Law, no Cheers—the kind of gleaming series that made NBC the “quality” network and attracted the best writers and producers. Tisch wanted to do something. But what?
Wherein Larry Tisch Unceremoniously Gives the Boot to the Head of CBS Publishing
AT CBS, TISCH faced other constraints. The board had made his CEO appointment temporary in the hope of keeping him on a leash. Paley hawked his every move. To function in such a circumscribed way was unusual for Tisch, who ran Loews with a free hand and dominated its board meetings. At Loews he made instant decisions about investments, about executives, about deals. At CBS he suddenly had to learn to operate in a different environment. The News division was generally grateful to Tisch for ridding the company of Wyman and Sauter, and Tisch basked in Dan Rather’s florid praise. “I like the look in his eye, the warmth of his handshake, and I like what he says about News,” Rather said at a Los Angeles press conference. “In a rough-and-tumble business, the first thing anyone says about Larry Tisch is that he’s trustworthy.”
News was prominent in Tisch’s mind, and not just because he enjoyed Rather’s praise. News was what he watched most on CBS. He was a fan not just of stars like Rather and Diane Sawyer and Charles Kuralt, but of such correspondents as Lesley Stahl and Bruce Morton. He believed News was the jewel of CBS. To reassert that belief, Tisch boarded a Metroliner to Washington on September 19 with acting News president Howard Stringer, who had been Sauter’s deputy. Together they toured the D.C. bureau, on M Street, sat in the control room and watched Rather do the evening newscast from Washington, and then with much of the bureau in tow, retired around the corner to Il Giardino restaurant. In the discussion over dinner, Tisch stressed his belief that CBS News had to remain the best and that he was prepared to do all in his power to advance the Murrow tradition. “I am cutting bureaucrats who don’t contribute,” he said. “I am not cutting News. I am a friend of News.” Eager for reassurance, the journalists lobbed softballs. The subject of paring the News budget, recalled Tisch, “never came up. No one ever said to me, ‘Are you going to let anyone go?’” Perhaps only because he had to rush to catch the 9:00 shuttle to New York was Tisch saved from being kissed.
Still, Tisch was Tisch, a man with an almost religious fervor for cost cutting. He remembered talking to Barry Diller, of 20th Century Fox, who boasted of managing the new Fox network with just fifty people. This piece of information stuck like a bone in Tisch’s throat. Tisch was committed to a frontal assault on CBS’s overhead; what held him back was a lack of confidence that the people at CBS could make the necessary cuts. So in October he recruited the management-consulting arm of the Coopers & Lybrand (C&L) accounting firm to get the job done. The C&L team was to be housed in unmarked offices on the twentieth floor of Black Rock and would be led by Thomas C. Flanagan, a partner. With his preference for keeping things simple, Tisch instructed Flanagan that he wanted no written reports and wanted him to “tell me once a week where and how many people can be reduced.”
Flanagan saw things simply as well. “Entertainment is just another business,” he said. Nothing special. His task was no different from what it was at any other company. Within weeks, 70 employees were cut from the personnel department, 170 from research and broadcast standards, 8 of 28 from public relations, 8 of 8 from corporate stockholder relations; all outside consultants were severed, limousine and messenger services were curtailed; 2 of the 5 CBS kitchens serving the 9 private dining rooms were closed, as were 2 of the dining rooms. Eliminated as well were the CBS store, which sold products to employees at bargain prices, the CBS medical center, and the once-pathbreaking CBS Technology Center. In the wake of these moves, many CBS employees felt that Tisch didn’t care about their welfare. Proof to them that Tisch cared more about head counts than the future came when he cut all 26 CBS pages in New York. The blue-jacketed pages, who earned six dollars an hour and received no benefits, were a trivial cost item. What they represented were entry-level jobs for those wanting careers in broadcasting.
Flanagan and Tisch were doing it by the numbers, complained Records Group president Walter Yetnikoff, who had welcomed Tisch’s victory in September because he thought Tisch would bring stability and because “I thought I would relate to him better—in an ethnic sense.” By October the bearded, hot-tempered Records chief, who wears gold chains and talks with the speed of a stand-up comic, was no longer so sure. ‘They didn’t look beyond the budget box,” he said. Yetnikoff resisted cuts, which prompted a call from Larry Tisch.
‘This bullshit record company has too many people,” Tisch snapped.
“I don’t like you making these statements,” Yetnikoff said. Tisch reminded him that he, not Yetnikoff, ran the company.
“I report to you, but I don’t work for you,” replied Yetnikoff, whose Records Group earned $87.2 million in 1985. Soon tempers cooled, and they made a lunch date, which turned out to be just as tempestuous. “We’re getting rid of dining rooms!” Tisch insisted. “You have to get rid of yours. We’ll set one aside for you on the thirty-fifth floor.”
“No way!” exploded Yetnikoff. ‘The dining room is an extension of my office.” Yetnikoff was incensed. He ran the world’s largest record company, one with eleven thousand employees, many of them concentrated in the manufacturing arm. And yet Larry Tisch was worrying not about a new contract for Bruce Springsteen but about his dining room! In the end, Yetnikoff won. He kept his dining room and agreed to cut only forty employees. More than any other CBS division head, Yetnikoff frustrated Tisch’s body-count goals. Nevertheless, Yetnikoff was left uneasy by his encounter.
He was not alone. Executives brooded that despite Tisch’s September 11 stability pledge, he would eliminate vice-presidents at any moment. “I’ll do it—if I’m here next week!” became a refrain among executives. In October, when Tisch was on the sales floor, one executive bolted from a meeting to call his secretary and tell her to shut his door. ‘This way Tisch won’t see the nice furniture and be shocked,” he explained.
Peter Derow, the crew-cut president of the Publishing Group, was convinced that Tisch was offended by the stylishness of his nineteenth-floor corner office, with its thick beige carpet, private bath and shower, and array of bright paintings. On October 16, 1986, the day he was fired, Derow wrote a memorandum to the file describing how Tisch performed the deed. They were to meet in Tisch’s office to review publishing matters, including budgets. “After reviewing the progress on the two division budgets and the 1987 budget for the Publishing Group staff,” Derow wrote, “Mr. Tisch said that I wouldn’t have to worry about that anymore because we’re eliminating the entire nineteenth-floor operation.’ I asked him if he meant the entire Publishing Group staff, and he answered that he did, including my position, but that he knew that I had a contract with two years remaining and that he’d ‘try to find something for you to do here.’
“Mr. Tisch [said] that... I should ‘get the nineteenth-floor thing done by tomorrow….’ Given the nature and timing of the change, I asked Mr. Tisch if he planned any announcement to the employees and/or the press. He answered that none would be necessary, that it was Thursday and ‘the news will die over the weekend.’ I suggested that given the potential for anxiety both in the publishing divisions and in other parts of the company it might be useful to issue a statement to the employees explaining the action. Mr. Tisch said, ‘That’s nonsense.’
“Finally, I told Mr. Tisch that I was personally disappointed regarding the decision to eliminate the Publishing Group staff and that I was concerned about the timing and style of the change. Nonetheless, I said that I would do my best to assure that the change was executed as effectively as possible. Mr. Tisch stood, neither thanked me nor offered me any personal words, and I left his office….”
Asked to explain the firing of Derow, particularly after he had granted him a vote of confidence, Tisch responded: “What is a vote of confidence? I don’t want to hurt the man, but did you ever listen to his line of taffy? We had a whole floor of people without a job.”
Concerning Derow, Tisch was not without supporters. But as one CBS executive observed, “We began to worry: Are we dealing with a man who says one thing and does another? What it did was signal to a number of us that we have to question everything Tisch says.”
The angst within CBS was compounded by an incident in which Dan Rather was mysteriously beaten by two men while he walked alone along Park Avenue one Saturday night early in October. The attackers were never found, the case never solved. In the meantime, the episode ticked away within CBS, for colleagues feared that some horrible disclosure would surface, shredding Rather’s credibility. Coupled with the cuts and the resignation of commentator Bill Moyers, the insecurity drove the network to the brink of a corporate nervous breakdown.
In some ways, the angst did not really reach Larry Tisch. He was a trader who kept his distance, focusing on hard numbers, not personalities, never dwelling on mistakes. In his business career, Tisch had never fired anyone personally until Peter Derow. He’d always left this to others. At CBS, Tisch was making his decisions by looking at the numbers produced by Flanagan, not by encountering the real people involved. In fact, he didn’t want to encounter them, convinced that it would lessen his resolve to do what had to be done. Tisch believed he was sending an important signal to his employees. He said of the CBS store: ‘The store was costing CBS one million dollars a year, and it did no business. The more important signal is that people understand this has to be a vital company. People don’t like working for a company that is not doing well, that is not well managed.” Besides, Tisch believed his actions were compassionate. “We take good care of the people let go,” he said. ‘The job market is very good. And if we have to let people go, now is a good time. There is no recession.” This attitude, expressed publicly, enraged people in the business, none more so than former NBC chairman Grant Tinker. Tinker, who had recently signed a deal to produce a series for CBS, declared: “Never once did I hear him say, ‘Gosh, this is agonizing.’”
In Which Larry Tisch Denies Records Chief Walter Yetnikoff His Breakfast Bagel
TISCH WAS AN OWNER, treating the company’s money as if it were his own, as in fact one quarter of it was. In December Tisch and Yetnikoff were in California to visit Barry Diller at Fox, and Tisch invited Yetnikoff to breakfast at his Beverly Hills Hotel suite. Yetnikoff was hungry. As Yetnikoff studied the menu, Tisch said, “You can have half a grapefruit or orange juice.”
“I’m hungry,” answered Yetnikoff. “I want a bagel!”
“You know how much a bagel costs in this hotel?” exclaimed Tisch.
Sulking, Yetnikoff decided not to eat. His attention shifted to transportation. “Let me call Diller and have him send a car for us,” he said.
“No,” snapped Tisch. “I’ll drive.”
They hurried downstairs, where a doorman ushered them to a two-year-old Mercury from the CBS motor pool. Tisch had no cash and, whispering, asked Yetnikoff to leave a tip.
“How much?” asked Yetnikoff.
“Five dollars,” Tisch said.
“What? It’s too little!”
They fought over the tip. And they fought over who should drive. Yetnikoff lost both times. The only satisfaction for Yetnikoff was that Tisch got lost on the way to Fox. And to make a point against a man he came to detest, Yetnikoff always brought along a bagel to CBS’s subsequent monthly board meetings.
“Larry is terrible at articulating things,” observed a member of the Tisch family. “He just went around the world and I asked him how it was. He said, ‘Fine.’” Perhaps communication skills would have mattered less if Tisch had had beside him his brother Bob, who always served as the more human face of the two. When Loews decided to fire eight hundred employees at CNA, the Chicago-based insurance conglomerate Loews took over in the early Seventies, it was Bob who smoothly handled the dirty work. Without brother Bob, Larry had no trusted adviser. He was performing executive functions that were new to him. He was surrounded by people he didn’t know and who more often than not were so eager to get to the point, for fear he would snap off their heads, that they volunteered little information.
Tisch was flying solo. Typically, he would spend his day breakfasting and lunching in his private dining room with outside people, often asking them what they thought of various CBS executives, which also served to arouse insecurity at CBS. Tisch would conduct meetings around his nearly empty desk top, one eye cocked to a TV monitor, which, with the sound off, was set to the Financial News Network. Meetings were brief. During his first months at CBS, Tisch rarely visited the Loews offices a block away. Nor was it necessary, since his son Jimmy filled his father’s financial role and they talked on the phone incessantly. But by December 1986, Tisch was wandering over to Loews more often and had resumed his customary afternoon departures to attend his daily bridge game at the Regency Whist Club.
Tisch paid no attention to office furnishings; the only changes he made in the office he inherited from Wyman were the family pictures surrounding the plain oak table he used as a desk and the single TV set, which substituted for the now-unused wall unit containing three TV sets, one for each network. Tisch could be equally unpretentious in his dealings with people, far less remote than people at CBS thought. In December 1986, for example, Jim Jensen, the anchor at New York’s WCBS-TV, wrote Tisch protesting the decision to cut free newspapers delivered to the newsroom and the local anchors. “In order for the anchor correspondents to have the necessary background for the stories we report,” Jensen wrote, “it is absolutely essential for them to daily read four and five newspapers.... I once in my lifetime worked in an auto plant assembling transmissions. I don’t recall the company asking us to bring to work with us nuts and bolts from home. For journalists, having a daily supply of newspapers translates into our form of nuts and bolts. I ask you to reconsider this decision….” Within days, Tisch’s secretary called to announce that Tisch had rescinded the order.
Tisch loved the challenge of CBS. At lunch that fall with ABC founder Leonard Goldenson, his old friend asked, “What do you think of the business?”
“Leonard,” Tisch responded, “the business is getting so bad it’s getting interesting.”
Tisch saw himself as the taskmaster, and his task, as he saw it, was to alter CBS’s culture, to get employees to focus on problems in a different way. The way, Tisch thought, he had done at CNA, a go-go company that had branched out into nursing homes, dental and medical supplies, cable TV, and real estate, among other businesses. Get rid of them! Tisch ordered. Get rid of the huge overhead staffs! Get back to basics—to the insurance business. That is what he planned to do at CBS: get back to the basics of broadcasting.
Wherein a Fuming Larry Tisch Calls Andy Rooney an Old $400,000-a-Year Blowhard
THERE WERE fresh flowers on Larry Tisch’s private dining-room table at CBS, the bacon was crisp, the English muffins toasted just the way he liked them. His expensive navy-blue pinstripe suit and red-and-white polka-dot tie reflected Tisch’s elevated status and power; in fact, he had recently been made the permanent CEO of CBS. And yet, as he chatted with a reporter the morning of March 10, 1987, he was feeling both powerless and hurt. The CBS board had recently ruined his efforts to sell CBS Records and had pressured him on other fronts. It was seven days after he had backed down and told CBS affiliates he would not reduce the yearly compensation fee he paid them to run CBS’s programming; eight days after the Writers Guild of America had struck CBS and ABC news over proposals to give management more flexibility in hiring and firing; four days after CBS News announced that it was firing 215 people and slashing its budget by $36 million, or 12 percent; one day after he narrowly averted the resignation of Howard Stringer, the recently appointed News president, by insisting that the Times got it wrong when it quoted Tisch as saying that these cuts were Stringer’s idea, not his. And now this!
Tisch was sullen as he glanced at the morning papers. Once again the man recently hailed as CBS’s savior was being reviled. Dan Rather, who was paid $67,507 a week of shareholders’ money!—$3.5 million annually—was pictured on the picket line, proclaiming that to avoid layoffs he and others at CBS News had volunteered to reduce their pay. Andy Rooney, the outspoken 60 Minutes commentator, was calling Tisch a heartless cost cutter. In The Washington Post, TV critic Tom Shales, who is read along Network Row like an ayatollah, said that “morale [at CBS] is, if possible, lower than rock bottom” and blamed Tisch. With impunity, CBS News correspondents—his employees!—told Shales that Tisch was a liar and an ogre. Then when Tisch turned to the editorial page of The The New York Times, his bible, the one paper his family and friends all read, there at the top of the opposite page was an op-ed piece by his most famous employee, Dan Rather. Titled “From Murrow to Mediocrity?” under Rather’s by-line were these words:
Our new chief executive officer, Laurence Tisch, told us when he arrived that he wanted us to be the best. We want nothing more than to fulfill that mandate. Ironically, he has now made the task seem something between difficult and impossible. I have said before that I have no intention of participating in the demise of CBS. But do the owners and officers of the new CBS see News as a trust … or only as a business venture?
If Rather or any of these other critics had worked for Loews, Tisch would undoubtedly have fired them. And no one would have noticed. But at CBS nothing was private. Every day, the media reviewed the TV shows on his network, displayed a daily Nielsen-ratings scorecard of how miserably the shows were performing, published accounts of internal battles, including interviews with the losers. For the first time in a distinguished career as an investor, Tisch was being mocked by the media. He couldn’t even control his own employees without inviting more bad publicity.
“I feel hurt because it’s a lot of nonsense,” Tisch exclaimed, leaving untouched his English muffin and bacon while he read and reread the morning’s insults.
Was it true that Rather and others had offered to cut their salaries?
‘These are the biggest bunch of liars I’ve ever seen in my life!” Tisch sputtered. He noticed that in The Washington Post, CBS’s ace congressional correspondent, Phil Jones, accused him of betraying a September pledge made over dinner with the Washington bureau that “there wouldn’t be any cuts, no cuts in people involved in news gathering.”
“Who is Phil Jones?” Tisch asked.
At one moment Tisch’s bald head could not be seen as it sunk beneath the newspaper he held in front of his face, and the next moment, his nostrils flared as he released the paper onto the flowers and wailed about the awful things CBS employees said about him. He read aloud the words of CBS correspondent Lem Tucker, who said that at the September dinner in Washington Tisch “looked us all in the eye and obviously lied when he said this wasn’t going to happen.”
“He’s a son of a bitch, Lem Tucker!” cried Tisch. “Wait till I tell him what I think of him.”
Tisch was incensed and became more so when he read that News president Stringer wanted to stretch the cuts out over a longer period but that Tisch refused. “Unbelievable!” Tisch moaned, again tossing the newspaper against the flowers. In fact, said Tisch, he had left the reductions to Stringer. “If anything, I reduced the size of the cuts. I took six correspondents off the list to be fired!” One of them, he said, was Lem Tucker. Yet Larry Tisch was wounded that he got no credit for rescuing them and saving Tucker, who was a network rarity—a black correspondent. He dismissed Andy Rooney as “an old blowhard who makes $400,000 a year for two minutes a week!”
Tisch was still boiling when Jimmy, the third of his four sons, entered the dining room and commiserated with him. Jimmy urged Tisch to write his own op-ed piece to attack those who called him a liar. Tisch liked the idea, and after pondering who could draft it decided to ask Jay L. Kriegel, the public relations consultant who had worked on and off with the Tisches for a dozen years. But before calling Kriegel, Tisch first wanted to talk to Howard Stringer about Dan Rather.
Trailed by his son, Tisch marched into his office, placed his feet up on a nearly bare desk, and pressed the Stringer button on his phone. Without bothering to say hello, he asked Stringer: Is it true Rather proposed to cut his salary?
Not exactly, said Stringer.
‘They never approached you on anything? They never approached me!” said Tisch.
Yes, but Rather’s agent, Richard Leibner, and several well-paid members of the News division had raised the issue vaguely, said Stringer.
“So even though they didn’t give you a proposal, you shot it down,” Tisch said into the phone. “So there is some truth to it. But they didn’t present it to me!”
I thought they presented it to you! said Stringer. Maybe they presented it to Gene Jankowski?
Tisch’s laugh sounded like a cry. “This is great! Sickening!” Then he asked another question: “Should I answer in an op-ed piece?”
Not yet, said Stringer. Unless you can make a commitment that there will be no more layoffs!
“I won’t give them any promises on layoffs!” Tisch snapped.
“Calm down, Dad,” said Jimmy.
“I just won’t do that!” exclaimed Tisch. He felt passionately about not making binding pledges, and not just because he privately hoped to cut more. “You have to do what’s right for the company.” The issue for him was “waste.” How else to explain, he asked, why News’s budget had tripled—to about $280 million, since 1978—“with no additional news?”
The powerful Tisch was learning that there were limits to his power over his own people. If not for these tantrums by his News employees, Tisch thought, he could “take half the people out of News.” Instead, he was cutting a mere $36 million, 215 jobs, including a paltry 14 correspondents. CBS News would still be left, at the end of the year, with 1,105 full-time and 245 part-time employees. What a bunch of babies! Tisch thought. Half of all American steelworkers lost their jobs over the past decade without half the fuss.
When Tisch gave examples of fat and waste to people like Rather, he said, they privately did not challenge him. ‘They just don’t want to say it publicly. Journalism is a fraternity.” He had invited Rather to lunch three weeks earlier. “He understood everything,” Tisch said. “I thought we had an understanding—he didn’t agree with everything, but he understood.” For his part, Rather said of his boss: “I’m finding it dangerous to deal with Larry Tisch. He takes things literally. And he takes things too far ... he doesn’t allow for light and shade. If you say, ‘Yes, there is fat,’ that gets turned around to ‘Dan agrees with me there is waste.’ And the next thing is you have $30 million in budget cuts.”
Why, if Rather agreed there was fat, were he and others resisting cuts? Why so much emotion? “Nobody here ever calls CBS a company,” Rather explained. “One speaks either of CBS News or the Organization or the Institution. No one calls it the Company. They don’t because there is a sense here of being in a religious order. It’s more what might be called a calling than a craft.”
Tisch was hurt that Rather wasn’t “the team player” that Broadcast president Gene Jankowski assured him he was, and flabbergasted that Rather went public with his opposition while over at ABC his friend Chairman Tom Murphy made cuts without a public peep from News. Tisch was chagrined that Rather “never talked to me” before writing the op-ed piece. He simply announced to Stringer what he was doing. Tisch knew that Rather hadn’t even written the piece himself; it had been drafted by senior political producer Richard Cohen, and this made him even angrier.
As angry as he was, Tisch was intimidated by Rather’s power to portray him as a cost-cutting ogre. This might not have mattered to Tisch’s Wall Street friends, who kept score by the numbers. But among his newer friends on the boards of the Metropolitan Museum or the New York Public Library, it did count. On Wall Street, money mattered. Uptown, respectability mattered. By “saving” CBS in September 1986, Tisch had achieved social respectability. Now his own employees were scandalizing him.
Tisch also knew that the controversy would undermine public confidence in CBS News, the jewel in the network’s crown. He knew he was making the new owners of ABC and NBC look good. Tisch was so shaken as to concede that perhaps he had mishandled it. “Maybe I am [guilty],” he said. In the end, Tisch would not write his own op-ed reply for fear it would prolong the controversy.
But he was ambivalent about his actions. On this March day, Tisch drew strength from the conviction that he had done the right thing by his shareholders. Anyway, he said unconvincingly, “time heals most of these things.”
In Which the CBS Board Comes to Believe It Must Protect CBS from Larry Tisch
THROUGHOUT HIS business career, Larry Tisch made money doing the unexpected. When other investors bought stocks, he bought bonds; when they sold, he waited. When others shed insurance companies or oil tankers, he acquired them. Now NBC’s Bob Wright stalked deals to diversify his network, ABC’s Tom Murphy presided over a publishing, cable, broadcasting, and Broadway powerhouse, and such companies as Rupert Murdoch’s News Corporation, Michael Eisner’s Disney, Steve Ross’s Warner Communications, Japan’s Sony, Germany’s Bertelsmann, and France’s Hachette, among others, jostled to become vertically integrated. Larry Tisch’s CBS went in another direction. Tisch was shedding companies. Since becoming CEO, Tisch had sold CBS’s book publishing operations, its musical publishing unit, its Latin American and Spanish publishing company, and had withdrawn from a joint venture with IBM and Sears.
Then, in June 1987, while Wright was trying to acquire cable programming, Tisch sold CBS’s final cable holding, its one-third interest in SportsChannel, which consisted of four regional sports networks CBS had acquired jointly with The Washington Post Company and cable pioneer Charles F. Dolan’s Cablevision Inc. in 1984. Despite the common wisdom that said sports would increasingly migrate from the networks to cable, despite the proliferation of more than two dozen regional sports cable channels, despite evidence that these were natural homes for local teams, Tisch sold. He believed, incorrectly it turned out, that cable prices were at their peak—nearly two years later NBC paid more to become a partner with Dolan in SportsChannel. Tisch also turned out to be wrong in his belief that regional sports channels would contract, for by 1990 they reached thirty million homes and their ad revenues had jumped by 50 percent each year since 1985.
Larry Tisch unloaded one other asset that summer: In July he sold for $650 million the twenty-one publications of the CBS Magazines division, including Woman’s Day with its nearly six million circulation. At the time the price seemed generous. Within a year, however, the same magazines would be sold by their new owners for $1 billion. A year later, as the magazine business faced ad losses and cost increases, it became clear that the new owners, Hachette, had grossly overpaid.
By the summer of 1987, his first anniversary as CEO, Tisch had narrowed the CBS communications empire to the Records Group and Broadcasting—including the CBS network, four CBS-owned TV stations, eighteen AM and FM radio stations, and a joint venture with Fox producing movies and CBS shows for videocassette release. As a businessman, Larry Tisch believed in “sticking to his knitting,” which he defined as the broadcasting rather than the communications business.
Tisch liked to keep things simple. He was devoted to family, Israel, and shareholder value. In business he always stripped things to their essence. He believed that America would one day plunge into a recession, enabling those with ready cash to acquire properties at bargain prices. Because he always worried first about the downside, he avoided debt and disparaged the junk-bond financing peddled by Michael Milken of Drexel Burnham Lambert. When the recession came, he warned, many companies would not be able to meet their interest payments or sell assets. With his divestitures, Larry Tisch now sat on a $1.5 billion pile of cash.
Although Tisch had shed debt and saved shareholders money, as he had promised to, he had not overcome the suspicions of the CBS board members, who had reluctantly agreed to make him CEO only after receiving assurances that he would not dismember CBS. Nine months later, Tisch had done exactly that, and many CBS directors felt duped.
The board came to believe it had a responsibility to protect CBS from Larry Tisch. Wanting CBS to remain a communications company, the directors had united to block the sale of CBS Records. Three directors—investment banker and Carnegie Hall chairman James Wolfensohn, former secretary of defense Harold Brown, and Walter Cronkite—voted against the sale of CBS Magazines. At the July board meeting, Wolfensohn and Brown in particular asked: What do you plan to do with all this cash? What is your strategy down the road for CBS?
To Larry Tisch, these were just the questions nonbusinessmen like Brown would ask. Tisch didn’t believe in strategic planning departments, task forces, memorandums. Nor did he believe in committees of the board and groupthink. Tisch was accustomed to steering his businesses alone, and he believed his investment record justified directors ceding him a free hand. Larry Tisch was proud of what he and his brother had accomplished in the hotel business. Loews was among the first hoteliers to recruit entertainers and offer a smorgasbord of activities, which transformed hotels into resorts. Larry Tisch was proud of his vision in spotting the hidden value of insurance companies. Or oil tankers. Larry Tisch was now a billionaire; he didn’t fancy lectures on vision from his board or anyone else.
He was, however, going to get lectured. The board had too many reasons to be uneasy about the future. The CBS board worried that internally no one would stand up to Tisch. Neither Broadcast president Jankowski nor Tisch had a strong bedside manner—one shied from sticky situations, the other had no patience for them. Would there be more layoffs? More cuts? More reorganization? Many in the News division, for example, were already bemoaning the toll Tisch’s cuts had taken. In September 1987, Evening News senior producer Andrew Heyward complained that employees in many bureaus “haven’t had a day off since May.” Some CBS executives contemplated early retirement. Records president Walter Yetnikoff and Tisch were now estranged, the more so after the straitlaced Tisch kept hearing that Yetnikoff drank and behaved weirdly. (A few years later Yetnikoff would enter treatment for alcohol abuse.) The volatile Yetnikoff groused that Tisch didn’t consult him and was preoccupied with the price of a bagel at the Beverly Hills Hotel. Tisch was stingy with praise. “I don’t have the foggiest idea what Larry thinks of me as a manager,” sighed one executive.
Even fans of Tisch’s were concerned about his impact on morale. “He has made effective business changes,” said Phil Jones, of KCTV, in Kansas City, head of the CBS affiliate board. “But he’s done it in such a way that he has lost a sense of family.” Family is “important in his personal life, but he doesn’t seem to recognize it in his business life.” While the heads of many affiliates, including Jones, respected Tisch the businessman, they were uneasy that he wouldn’t spend the money necessary to propel CBS upward. They worried that he would treat affiliate compensation—the $164 million a year the network paid its local stations—as a cost rather than an investment, would fail to see that compensation was what bound stations to the network. “We’re in an emotional entertainment business,” said Phil Jones. “Larry’s such a practical businessman. He doesn’t want to pay attention to the emotional side.”
Larry Tisch seemed oblivious to the unhappiness at the network. Rarely did he venture from his corner office. He had no extra set of eyes, no hands-on manager, as he did at Loews with brother Bob. There were no staff meetings. His managers were compartmentalized; they did not sit around and kick about ideas.
Tisch was watching more television but still didn’t know the players. One night that fall, he went to dinner at Primavera, a favorite Manhattan restaurant, and spotted Barbra Streisand at a table with Saturday Night Live producer Lorne Michaels, among others. “Barbra!” Tisch exclaimed, coming over to their table. He held her hand and recalled how they were both at a dinner to raise funds for Israel. At one point Michaels politely introduced Tisch to the table: “This is [agent] Sue Mengers. This is my date, Miranda Guinness. This is Brandon Tartikoff.”
Tisch immediately turned his back on Streisand and proceeded to discuss the networks with Tartikoff, president of NBC Entertainment. “He’s the only man in America who would turn his back on Barbra Streisand!” declared one guest, who found him rude. What surprised Lorne Michaels, who did not think Tisch rude, “was that Tisch didn’t know Brandon.”
“I’m interested in prodding our people to do new things,” Tisch said at that time. “But I don’t think I have the ability to say, ‘This program should be done’ or ‘This program shouldn’t be done.’ I want to set certain standards. I don’t want junk.”
“Larry’s focus has changed,” said Jay Kriegel, who, though he was named a senior vice-president in 1987, was known around CBS as Larry Tisch’s consigliere. “The first year his focus and obsession was on finances and the economics of the company. Sometime in August his obsession switched to programming.” The nudge was “what happened in the News division.”
News head Stringer and Kriegel, who were both in their mid-forties and had equally quick tongues, became buddies. With Kriegel’s quiet support and Tisch’s public backing, CBS Entertainment had reluctantly placed News’s West 57th on CBS’s prime-time schedule. Now Stringer hatched other program ideas, which Tisch welcomed. Stringer had a concept for a weekly one-hour documentary—48 Hours—to offer a fly-on-the-wall view of the workings of a hospital, a campaign headquarters, and so on—all in a forty-eight-hour period. Stringer hoped to put 48 Hours on the CBS midseason schedule in early 1988.
Tisch identified with News and drew close to his News president in a cozy relationship that made other CBS divisions uneasy. At a time when CBS hovered near third place, Hollywood insisted it was a serious error to overload the twenty-two-hour-a-week prime-time schedule with one to two more hours of low-rated news programs. “CBS is making all kinds of mistakes,” said Jeffrey Sagansky, a former deputy of Brandon Tartikoff at NBC Entertainment who would one day join CBS. “I can’t believe that CBS with all its troubles would put on another news hour.”
Wherein the Directors Wonder if Larry Tisch Has a Secret Plan to Sell CBS
AS 1987 WAS nearing its end, Larry Tisch sometimes felt unappreciated, and not just by his fellow directors. He got much worse press notices than either Tom Murphy or Bob Wright. The press said he had a credibility gap. They said he was in over his head in the entertainment business. “I never read anything about me,” Tisch declared, before reciting from memory some of the unkind things that had been written. He said he was convinced journalistic standards had declined; now the media regularly printed gossip as news and did not check facts. The best retort to critics, he insisted, was the facts.
The facts, Tisch believed, demonstrated that he had accomplished much in his first sixteen months. Costs had been cut; he had finally sold CBS Records for a stunning $2 billion, ridding himself of Walter Yetnikoff in the process. He had slimmed the overall number of CBS employees from about 19,000 to 7,026; he had won new flexibility to hire part-time workers and had saved an estimated $20 million in CBS’s new labor contract. CBS’s profits were also up in 1987, to $136 million after taxes, nearly double the $72.4 million earned in 1986. A large chunk of these earnings came from the $1.5 billion in cash that Tisch had invested and from record earnings at the four CBS-owned stations. While other companies were rocked by the October stock-market collapse, Tisch could boast that his prudent investments had sheltered CBS.
“Financially, no one can ever refer again to CBS as a troubled company,” he said. “At the end of the year, when the Records deal closes, we’ll have over $3 billion in cash.” And CBS’s stock price, which began the year at $127, closed the year at $158, or almost $35 more per share than the average price Tisch had paid.
Tisch could point to nonfinancial accomplishments as well. “We’ve changed the culture,” said Tisch. “We’re less meeting-oriented and more action-oriented.” Tisch now made quick decisions. But for all the changes he had wrought, Tisch was not satisfied. He wanted to cut more. In early 1988 he hired Ed Grebow as senior vice-president. His responsibility, like that of Coopers & Lybrand before, was to “reduce expenses,” Grebow said. If anything, Grebow was more militant than his boss. “People here don’t know anything other than the CBS way,” said Grebow. “Larry has not changed the culture here. He’s made some progress. But this is still a company that likes to spend money.” Take the CBS Tampax machine. Grebow once boasted that he had saved CBS $400 a month on Tampax. What happened, he explained, was that CBS had dispensers in its ladies’ rooms that sold Tampax for five cents each when they cost CBS thirteen cents. The result, said Grebow, was that female employees were ripping off the company, using CBS as their local supermarket. Outraged, Grebow ordered the price jacked to twenty-five cents.
Strategically, Tisch took pride in something else. He had imposed his personality on the company by simplifying CBS. He had always said: Get the core business under control first. Once that’s in order, expand. At the CNA insurance company, Tisch’s son Tom remembered, the herd would clamor: “‘Larry, why don’t you put more business on the books? Why don’t you go out and buy an insurance agency rather than rely on independent agents? Why don’t you become a financial supermarket?’ Larry always said, ‘Let’s focus on the main issues. Today CNA is the strongest company in the insurance business in America.’” At CBS, Tisch resisted advice from those who beseeched him to vault into cable, the way ABC had done and NBC was trying to do. “I don’t understand it,” Larry Tisch said. “Our business is the network. I don’t want our people to take their eye off the ball.... In the long run, the potential profitability is not there in cable. I don’t mean a well-run cable company won’t make $20 million to $30 million a year. But when you compare that to the $300 million NBC makes at the network, you shouldn’t jeopardize that.” A much more fruitful diversion of energies, he felt, would be to get the federal regulations on the networks lifted so CBS could produce unlimited hours of its own programs and then sell reruns to local stations. Unlike Bob Wright at NBC, he believed that time might be on the networks’ side. And while he knew that his friend Tom Murphy and Cap Cities were cautious, ABC was in too many businesses for Tisch’s taste. Tisch would stake his reputation on the network.
There were those who didn’t believe Tisch meant what he said about cable, who believed he was playing the game the way he did bridge, exploiting the cards he was dealt. Until the price of cable companies or stations fell, he wasn’t going to buy; it was not a matter of principle with Tisch, but price. A close Tisch adviser confirmed, “He would love to have a cable outlet at the right price.” In other words, Larry Tisch the trader was probably doing what he had always done: waiting to buy cheap.
Perhaps not. There was confusion because Tisch did not share his thoughts. If there was a strategy, it was “in the head of Larry Tisch,” said Donald D. Weir Jr., then senior vice-president in charge of CBS’s international efforts, who felt Tisch was mistaken to shun cable. It simply was not Tisch’s style to brainstorm. Unlike NBC or ABC, which conducted ongoing dialogues among executives, at CBS top executives could remember no specific discussions about whether to get into cable before Tisch decided they should not. Nor was strategy Tisch’s strong suit. He didn’t play chess, he played bridge, a game more reliant on cunning than strategy. Tisch had the patience to wait for an investment to pay off but not the inclination to puzzle out seven moves ahead.
Because he didn’t tell directors what he was thinking, or sometimes told them things they thought were untrue, the CBS directors wondered whether Tisch might be scheming to merge CBS into Loews, or sell it. Asked if there was “tension” between Tisch and the board, board member Roswell Gilpatric answered carefully, “I think there is a guarded attitude on the part of the outside directors concerning business strategy.” The directors sensed they had voted for Tisch and gotten Ted Turner, minus the vision. “He has done an LBO liquidation of the company, just as any raider would do,” complained one director who was seen by Tisch as an adversary. He had radically transformed CBS from a broad-based communications company to broadcasting. And he had done so at a time when the broadcasting business was declining. Yet because the outside directors owned but 7,567 shares among them, they were defensive, this director admitted. Which is why Paley was so important to them. “If we could get Paley to go along, we’d [oppose Tisch],” explained the director, who knew that the ailing Paley’s ownership position and stature made it difficult for Tisch to bulldoze him. Of one thing this director was certain: “I don’t know what his plan is, but he has one.”
Or did he?
In Which Larry Tisch, Incensed over CBS’s Israel Coverage, Calls Mike Wallace a Self-Hating Jew
LARRY TISCH HAD no evident management philosophy. Within CBS, he was often perceived as a Scrooge-like figure. He was not interested in new business opportunities, did not seem passionate about broadcasting. To his unhappy CBS employees, Tisch seemed passionate only about costs.
Only part of the unhappiness was the result of CBS’s poor ratings. Although CBS had a new programming chief in Kim LeMasters, its prime-time schedule was in a tailspin. The average age of its best-rated series was just over seven years, compared with just over two years for ABC and just over three for NBC; and CBS’s viewers were themselves getting older. Nearly half of them were fifty or older. Spirits might have soared if employees felt confident that LeMasters or Jankowski knew how to fix the schedule. Encouraged by Tisch to be bold, for his first season LeMasters installed a block of four half-hour comedies on Tuesday night and vowed to keep them there until they built an audience. Weeks later the comedies were yanked from the schedule. Publicly CBS executives feigned optimism; privately, said one senior executive in the winter of 1988, “they are batshit about falling into third place.” While each rating point in prime time was worth $80 million to $100 million extra to the network, more than money was involved. “You’re dealing with whose penis is bigger,” said the executive.
CBS News added to the malaise on the night of January 25, 1988, when it aired a live interview conducted by Dan Rather with Vice-President George Bush. The two men, both somewhat stiff TV performers on their best days, traded punches for an extraordinary nine minutes, with Rather pressing Bush on his involvement in the Iran-contra scandal and Bush attacking Rather for an incident four months earlier in which he walked off the set when he thought a tennis match would bump his nightly newscast. In many ways, the interview was a triumph for Rather, who dared ask impertinent questions of a man who had managed to avoid them. But it didn’t matter. Politically, Bush won the encounter. Calls of protest poured in to CBS—from viewers, from affiliates, from Republican politicians—while Bush basked in his new macho image.
After the Bush confrontation, Rather’s newscast fell into second place. This depressed CBS employees, but not as much as the sense within CBS News that the head of the network did not share their values. While Tisch said he “would never interfere with News,” an incident took place on March 12 that received no public notice but undermined this assurance. It reminded some of a warning Tisch's predecessor, Tom Wyman, made in August 1986. Wyman said that if the interests of News clashed with the interests of Israel, Larry Tisch would choose Israel. The incident occurred in an unusual setting—a birthday dinner hosted by Barbara Walters and her since-estranged husband, Merv Adelson, for Federal Reserve Board chairman Alan Greenspan. Hamburgers and hot dogs catered by Glorious Food were served, along with hats and horns for fourteen guests. Larry Tisch and his wife, Billie, came to Walters’s New York apartment, as did Henry Kissinger, Oscar de la Renta and Annette Reed, Felix and Liz Rohatyn, ABC News president Roone Arledge, Children’s Television Workshop president Joan Ganz; Cooney and her husband, financier and former secretary of commerce Pete Peterson, and Greenspan’s steady date, NBC News Capitol Hill correspondent Andrea Mitchell; they were joined after dinner by real estate developer and U.S. News & World Report publisher Mortimer Zuckerman and his date, ABC producer Susan Mercandetti.
During dinner the talk got around to a topic then much in the news: Israel’s treatment of the Arab community on the West Bank and its relations with the press. Since the intifada in the disputed territories had begun in December 1987, the beleaguered Israeli government was using force to quell it, which provoked a raging controversy. Kissinger had some weeks before said he would banish all cameras from the West Bank, arguing that TV cameras incited riots and unnecessarily tarnished Israel’s reputation. Critics replied that the cameras were only recording, not precipitating the riots. Kissinger, they claimed, was asking the democratic government of Israel to pattern itself after the racist government of South Africa, which in 1987 censored all broadcast pictures.
A long and at times heated discussion ensued. According to Arledge, Tisch argued that “television ought to be banned from the occupied territories” because it incited and sensationalized the uprising, transforming an Israeli police action into what appeared to be a denial of civil rights. Arledge countered that Tisch—like Lyndon Johnson, who scapegoated the media during the Vietnam War—was blaming the messenger, not the policy. Tisch, joined by Walters and Zuckerman, denied taking this posture. “I never recommended keeping the press out,” he said. Yet eight other guests insisted that he did. Tisch later admitted: “It’s a dilemma. If I were president of Israel I don’t know what I’d do.”
Guests also pounced on Arledge for Peter Jennings’s coverage of the Middle East. ‘There was a general feeling that Peter Jennings was more sympathetic to the Arab cause,” recalls Walters, who remembers that her husband criticized Arledge for a Jennings newscast comparing the actions of Israel with those of South Africa. Over the years, Tisch had complained to Leonard Goldenson and others that he considered Jennings “anti-Israel” and had once confronted Jennings directly with this assertion. This night Tisch and others, with Zuckerman acknowledging that he was the most vociferous, lashed out at Jennings’s and the media’s Middle East coverage. “I’ve just come back from Israel,” Zuckerman said, according to Arledge, “and I didn’t see a single stone thrown. If anything, we’ve missed the story. Not a single Arab has been killed on TV. The media are unfair. Why doesn’t ABC mention Palestinian atrocities?”
“We do!” responded Arledge.
“A reporter’s pad is different from a camera because it doesn’t invite” crowds and magnify demonstrations, said Tisch, who added that the press should tell viewers or readers when demonstrations were “staged,” that is to say when the press was invited in by the PLO.
The encounter remained private and caused no public repercussions. But Tisch’s posture toward the Middle East would be felt by CBS News. Ranking News executives conceded they were always mindful of Tisch’s passionate interest in the subject, the more so after an incident several months later. On October 23, 1988, 60 Minutes aired a Mike Wallace piece on the American Israel Public Affairs Committee (AIPAC), the pro-Israel lobby. Wallace’s report explored how AIPAC used the large sums of money it raised to punish political candidates portrayed as insufficiently pro-Israel. “The clout of AIPAC here on Capitol Hill is enormous,” Wallace said, standing outside AIPAC’s Washington headquarters. Though Wallace balanced AIPAC’s critics with its defenders, the profile ignited fears that it would provoke the wild claim made by anti-Semites for centuries—The Jews are too powerful!
Several days after the piece ran, Tisch attended a cocktail party at River House, the elegant apartment building on Manhattan’s East Side, hosted by Wall Street Journal publisher Warren H. Phillips in honor of Joan Konner, who had just been named dean of the Columbia School of Journalism. “Hi, boss,” said a smiling Don Hewitt as he approached Tisch.
“Don’t you ‘Hi, boss’ me,” said Tisch to the executive producer of 60 Minutes. “I can barely see straight I’m so angry with you.” And with that, Tisch turned his back on Hewitt. Mike Wallace recalls that when he ran into Tisch at the same party, Tisch ignored him, as he would on subsequent occasions until the Wallaces and the Tisches made peace at a dinner some months later. To friends—and to at least one CBS correspondent and his producer, who are based overseas—Tisch referred to Wallace as a “self-hating Jew.” Tisch acknowledges, ‘There may have been parts of the program I didn’t think were well done.” But he denied raging at Hewitt. “I kidded him about the program,” he said, and he denied calling Wallace a “self-hating Jew.”
The real fear at CBS News was not that Tisch would directly order something censored. The fear was that Tisch’s attitude could lead to self-censorship. Mike Wallace said he did not share this concern. “After the AIPAC piece on 60 Minutes, Harry [Reasoner] did a piece on a lawyer in Israel who defends Palestinians,” said the veteran correspondent. And in December 1990, Wallace came right back with another piece—on the killing of at least seventeen rock-throwing Palestinians by Israelis—that also inflamed many of Tisch’s friends. The AIPAC incident and CBS News’s unwillingness to back off, Wallace said of Tisch, “taught him a fact of life: Larry Tisch should not, and will not, meddle with news coverage on CBS because of his personal leanings, understandings, tendencies.” Whether the next generation at CBS News—who might not enjoy either the same clout or courage as Wallace and Hewitt, or Hewitt’s ten-year contract—would be able to resist was less certain.
Wherein Larry Tisch and Producer Aaron Spelling Bond over Their Bad Press
AN OLD MOB expression—The fish stinks from the head—sums up another major source of unhappiness at CBS. Larry Tisch’s personality, it was said, hampered the network. Even such staunch Tisch allies as CBS vice-president Ed Grebow worried about his communication skills. “Larry is brilliant,” said Grebow. “But Larry doesn’t communicate his vision well. Part of being a manager is getting your managers to agree on a shared vision. We haven’t done that.” Chief financial officer Fred Meyer, who left CBS in March 1988, echoed a larger point, one shared by CBS directors. Whatever success Tisch had at cost cutting, said Meyer, was mitigated by two factors. The first was that the networks were not “a healthy business anymore.... I believe it is quite likely that from now on only one network will be profitable and the other two will be only marginally profitable. There’s a limited amount you can cut out of costs. The game is to regain the number-one slot.” Which brought Meyer to point two: “Part of my thinking was: Is Larry the kind of guy to fly by the seat of the pants and sign up some big producers to make us jump to number one again? When he says, ‘We will not hold back,’ I take him at face value. But he’s so much associated with cost control that whether he says it or not the LeMasterses and Jankowskis still act as if he is looking over their shoulders. Tisch … just may not be the kind of person to run this business.” Nor, lamented Meyer, did Tisch have a strategy for the future.
Surely CBS lacked a strategy to avoid tumbling into third place. In its thirty-six years CBS had never finished last, and Tisch did not want it to happen on his watch. Nevertheless, it did. The prime-time season officially ended April 17, and the results were wretched for CBS. Nielsen showed that CBS had lost 15 percent of its audience, compared with NBC, which lost 10 percent, and ABC, which lost 3 percent. CBS, which had finished first in twenty-six of network television’s thirty-five seasons, had to give back about $65 million worth of free make-good spots.
By the spring of 1988, CBS employees, already fearful of layoffs, were made doubly insecure by rumors in the entertainment press that Larry Tisch may sell CBS. The rumors were so intense that Tisch addressed a three-page memorandum to all employees denying that he planned to sell. The damage caused by the rumors paralleled Larry Tisch’s Hollywood woes. “We have a communication problem in Hollywood,” Jay Kriegel admitted at the time. Much of Hollywood thought Tisch neither watched nor cared about what appeared on the small screen.
Coaxed by Kriegel and aide Steve Warner, Tisch sought to improve his Hollywood persona by holding a series of meetings with writer/producers. High on his list was the legendary producer Aaron Spelling. Spelling, who had confected a string of hits for ABC—Charlie’s Angels, The Love Boat, Fantasy Island, Dynasty—had recently been feted by NBC’s Brandon Tartikoff with a marching band when Spelling visited NBC’s Burbank studios. Spelling had just completed a pilot for CBS and looked forward to meeting Tisch on May 4, 1988, the more so since he was still upset about a CBS encounter the day before. Spelling had screened his one-hour action-adventure pilot, The Pretenders, for LeMasters, who brusquely walked in just as the lights dimmed, said “Hello, hello,” pointedly sat alone in the front row, and when the lights went up offered only a few perfunctory compliments before rushing out. Spelling hoped that Tisch might offer some encouragement for his series.
For the Tisch meeting, Spelling took unusual pains with his wardrobe, wearing business as opposed to Hollywood attire—white shirt, black-and-white polka-dot tie, and a light-gray sport jacket with dark slacks. Entering the lobby of CBS Entertainment’s complex on Beverly Boulevard in Hollywood, Spelling signed in and was directed to an elevator. No one waited to greet him upstairs, so the producer sat in the third-floor reception area for five minutes until a secretary appeared to say, “We’re running a little late.” A few moments later she reappeared to lead Spelling to LeMasters’s corner office, explaining that he was busy screening pilots. Waiting inside were Tisch and Warner.
“You’re a legend in your own lifetime,” said Tisch, warmly extending his hand.
“I’ve heard so much about you,” responded Spelling in a voice just above a whisper. Instead of suggesting that they sit on a comfortable corner couch, Tisch remained true to his no-frills style and beckoned Spelling to sit on an aluminum swivel chair at the small table LeMasters used as a desk. Spelling was offered neither coffee nor a cold drink, nor was he invited to peel off his jacket. Tisch asked Warner not to leave but to join them.
“I know you’re famous for your house,” said Tisch, trying to make a joke but actually raising a sensitive subject.
Spelling closed his eyes, understandably defensive about the ridicule he had received for buying six acres of land and Bing Crosby’s old house in Holmby Hills, demolishing it, and building in its place a 65,000-square-foot castle. “I’ll tell you,” Spelling finally responded, “you start off in a small town in Texas like I did....”
“How do you shut off that thing?” Tisch interrupted, distracted by the live television set. Steve Warner reached over and pressed the remote-control device at Tisch’s fingertips.
“The house is twice as big as I wanted,” Spelling continued, explaining that his two children will love the space, the indoor bowling alley, the three kitchens.
The two men wandered onto the subject of flying, and Tisch was surprised to learn of Spelling’s well-known aversion to airplanes. “Do you ever come to New York?” he asked.
“Four years ago,” said Spelling. “By train.”
“When was the last time you flew?”
“At the end of World War II.” Spelling told Tisch that his mother had heard incorrectly that his plane had crashed, and when he arrived home the family was already in mourning. Seeing Aaron alive, his mother fainted. When she awoke, Spelling promised her he would never again fly.
“That’s a two-hour movie!” joked Tisch.
“That’s the reason for buying the house,” said Spelling.
“If you don’t travel you’ve got to have a big house,” said Tisch, who told of escaping Manhattan on weekends to his home in Rye.
“Everything I’ve read, good or bad, didn’t tell me of your character,” said Spelling, offering a compliment.
“Some of the things you read about yourself I say, ‘Is that me?’” said Tisch.
For the next ten minutes or so they swapped stories about how they had each suffered at the hands of journalists. Tisch spoke about how he was made out to be a heartless cost cutter, about unsubstantiated rumors that he planned to sell CBS. Spelling went on about the terrible insults gossip columnists heaped on his wife and their new home, about TV critics and “the Bel-Air elite” who “don’t hang out at supermarkets” and don’t know how common folk feel.
Tisch said that he and Billie would love to have dinner some night with the Spellings.
“I’d love it,” said the producer. “You’re not disliked in this town.”
“Oh, I didn’t think that,” said Tisch. “I’ve been associated, in a way, for forty years with this business.”
“It’s important that the head of the network be out here a lot,” said Spelling.
“I’m determined to be,” answered Tisch, who reassured Spelling, “I really enjoy what I’m doing. I love going to the office. I think people should work until they’re ninety-five, if they can.”
Spelling concurred, telling how his dad died a year after he retired, and how ABC founder Leonard Goldenson hadn’t been sick a day—until he retired.
“We’ve made leisure a goal,” said Tisch, who at sixty-five was the same age as his guest. Tisch told how pleased he was when he saw an entire family at work in a Chinese laundry or a Korean vegetable market. ‘This isn’t so terrible. They’re working. They’re together. We all make such a fetish making sure people don’t work past nine to five. I spent the first ten years of my life working seven days a week. It’s not so terrible.”
Forty minutes after the meeting began, Tisch rose to thank Spelling for coming. Either because he didn’t want to usurp LeMasters’s role or because he was unaware of Spelling’s pilot, he said nothing about it. Nor did he mention any of the more than 2,500 hours of shows Spelling had produced. They would keep in touch.
Two weeks later, when Tisch, Paley, Jankowski, and other New York executives flew west to decide on the fall 1988 schedule, Spelling’s pilot was dropped. Tisch screened a total of thirty-six pilots during May’s decision week and, as typically happens, network participants emerged after a week all pumped up, their judgment clouded by the exhausting ordeal they had just endured. Weeks later, no one was any longer certain that CBS had found the shows to propel it out of third place.
People outside the network also doubted that CBS’s eight new series would help, an assessment that would prove correct. The 206 affiliated local stations, which agree to air network programs in return for cash compensation and other goodies, were openly rebellious about the schedule and much else. Affiliate Relations vice-president Scott Michaels told his staff: “We need some tangible, visible [proof] that we’re moving ahead.” Privately Michaels would say, “The affiliates … are not going to buy the words till they see some action. They want to see something other than a memo saying ‘CBS is not for sale’ or ‘We want to be number one.’”
CBS needed some good news, and Larry Tisch would buy it. On the morning of May 25, 1988, Michaels took a call from Sports president Neal Pilson. Michaels’s face immediately liquefied into a smile. “We did? We got ’em!” he exclaimed. “Sensational! I love ya!” Michaels slammed the phone down and called his staff: ‘The ’92 Olympics are going to be on our schedule!” Within seconds, whoops filled the corridors.
Larry Tisch, who had passed on a multiseries deal with producer Steven Bochco and the chance to buy a bustling Miami station because he would not pay $270 million, announced that he had agreed to pay $243 million to telecast the 1992 winter games from Albertville, France. It was an astonishing sum, not just because of Tisch’s penny-pinching reputation, but because it was $43 million above the minimum set by the International Olympic Committee. ABC had dropped out of the bidding, saying there was no way to make money even at the minimum price. More astonishing, CBS paid approximately $68 million more than NBC bid. Even Pilson predicted only “modest profits” from the games.
In Which the CBS Affiliates Ask Larry Tisch to Consider Resigning as Chairman
LIKE THE OTHER new owners, Tisch now believed that the bottom line was not all that mattered in the network business. After nearly six months of damaging headlines, he knew the Olympics might pacify the affiliates and get the press off his back. “The Olympics,” said Jay Kriegel, who every six months or so would trumpet a “new” Tisch, “will be a symbolic turning point for Larry Tisch and CBS. It’s been a terrible period here from January through May…. This starts the movement up. The place needs a lift. People need to see a future, and this is a future. This is a signal that Larry is prepared to invest in what gets on the screen.”
CBS’s Affiliate Relations department thought it had something to sell when it met in Los Angeles for the annual convention with its 206 stations. An affiliate convention celebrates the new schedule with a lavish spread of food and drink, with loud music and garish sport jackets and a caravan of Hollywood stars. It is meant to be a gathering of true believers, and there are, Martha Sherrill of The Washington Post once observed, “more slogans than in a new socialist country.” For three full days, five hundred or so adults are bombarded with preachments, platitudes, chants, bromides, ear-splitting music, and snappy MTV-like images flitting across screens.
CBS. Television You Can Feel! was the slogan that accosted delegates when they arrived on Saturday, June 11, for a welcoming reception around the reflecting pools of the Century Plaza Hotel. The opening meeting was scheduled for 9:00 A.M. Sunday, and only the affiliate representatives were invited. Network officials and the daily press were specifically excluded. This private session would be followed later in the morning by a meeting with the network, also off limits to the daily press.
“Third place is on everybody’s mind,” said Ben Tucker as he sipped coffee moments before the morning session was to begin. Tucker wore a bushy moustache and a deep tan, which along with a small case of jitters gave him a friendly mien. Tucker, thirty-eight, was executive vice-president of Retlaw Broadcasting, which owns four stations in western states, and the new chairman of the CBS affiliate advisory board. “Business is soft all over,” he said. “When you’re third and business is not good, you’ve got trouble.”
More trouble than Tucker imagined, for at this session the complaints from CBS’s affiliates were harsh. The affiliate board sat between two enormous ficus trees at a pink-linen-draped table. They were on an elevated platform in the Century Room, facing about five hundred casually dressed station representatives sitting on pink-felt-covered folding chairs. Expecting routine questions, Tucker welcomed colleagues to step up to microphones.
One delegate wailed about Jankowski’s leadership. Another about Tisch’s. Within moments a long line of affiliates snaked behind the microphone stands, eager to release their anger. Twenty years ago, these affiliates might have been awed by the big boys from the network. Or by the Tiffany aura. Or by Paley’s charm. But now station managers were besieged by new competitors and financial pressure from group owners of TV stations. And CBS’s numbers were not good.
A board member complained that he’d never seen Jankowski sweat, but added, “I think under his clothing there was probably some dampness.”
“I think we’ve been hearing lip service for three, four years,” an affiliate shouted from the floor. “We have to ask the tough questions. If we ran our stations and our groups the way they run their network, we’d be in serious trouble.”
“The good news on Tisch’s dealings with us is that I believe he is committed to act,” said former affiliate-board chairman Phil Jones. “The bad news is that, as you know from the marketplace, throwing money at the problem is not the answer. He needs a plan. And we’re not hearing it.”
Another affiliate stepped to the microphone and preceded his question with a complaint: We have five-year plans, why doesn’t CBS? His question, he continued, is simply this: “Are they prepared to put a broadcaster at the head of the network” who can make us win again?
Applause rippled through the ballroom.
Another affiliate asked: “Let’s just not be nice…. Do we need a formal resolution?”
Again, a roar of applause.
“We don’t need a formal resolution,” said Ben Tucker, who was torn between loyalty to the affiliates and the network. “The board recognizes that CBS is as intensely convinced of these problems as we are.” Probably a majority of the affiliates did not believe that, but after a short break they would have an opportunity to hear from the network because Tisch and company were about to enter.
At 10:30 A.M. the network brass—including Gene Jankowski, Affiliate Relations chief Tony Malara, Entertainment president Kim LeMasters, and Howard Stringer, led by Tisch in a beige gabardine suit—filed in, taking seats at the table facing the affiliate body. “It’s really important to convey the concerns of our meeting,” said Ben Tucker, leaning forward at the table and looking directly at Tisch. The best way to do this, he said, would be to turn to the audience and let network officials hear from their partners.
“We had hoped to open with some comments from Gene Jankowski, and then respond to questions,” interjected Tony Malara.
“I don’t want to get away from questions, but Tony is absolutely right,” said Jankowski. Resplendent in a pink button-down shirt and tie with a navy blazer, his hair neatly combed, Jankowski read from scripted notes. “This country is going through a tough period” economically, he began, and there is much “confusion in the media world.” Some say the networks are dinosaurs. Cable and technology threaten. “But it’s important to point out that over the last year and a half this company” has confronted its problems and responded with good programs, with an improved distribution system, and by investing more money in sports and pilots. Admittedly, in promotion and marketing “we have done a lousy job,” conceded Jankowski. But all that will change, he assured them. The “partnership” is what counts: “Without you, we’re nothing…. It’s important that we’re frank with each other.”
Larry Tisch stared inscrutably at the affiliates, his head resting on his fist. When Jankowski finished, the affiliates remained silent. Finally Tony Malara broke the silence by announcing that CBS would unveil its new promos Tuesday morning.
Duane Harm, president of KWTV, in Oklahoma City, stepped to the microphone, determined to provoke the frank dialogue Jankowski perfunctorily invited. “We all want the network to succeed,” said Harm in a voice that commanded attention. “But we would be remiss if we didn’t give you the spirit of the morning meeting…. We are concerned the network doesn’t have a plan, and you are reacting to crisis. We also question whether Tisch should not consider, if the network doesn’t turn around, stepping up to a higher position and letting the network be run by a broadcaster.”
Tisch’s expression remained impenetrable. Except for the tapping of his pencil on the pink tablecloth, he didn’t move. But his face turned bright red.
Jankowski defended Tisch, praising the financial integrity and rigorous management Tisch had restored to CBS. “Larry gave us the muscle I haven’t seen since Paley and Stanton were running the place.”
Tisch cut him off: “I think the network is being run by broadcasters. I am not a broadcaster. But I do take full responsibility for what happens at CBS. We have gone through a disastrous period. I will spare no resources—anything it takes to get back to number one, we will spend. But just keep in mind that the people running the network are professionals. I think we’re on the right track. This is a very difficult period…. Money is no object. I spent the first year getting our house in order. We have the highest earnings in history. But that’s meaningless unless we’re number one.”
The affiliates, for all their anger, nevertheless wanted to be polite and felt they had humbled Tisch enough. They erupted with applause.
At an afternoon press conference after the closed session with affiliates, a reporter asked Tisch how he responded to the alleged assault from affiliates, including the charge that he lacked a strategic plan. “I didn’t hear that at our meeting,” Tisch responded untruthfully. Privately, Tisch flicked aside the criticism because he truly did not comprehend why anyone would be mad at him. He was earning 9 percent on the cash he had invested for CBS. Forget the ratings. With his cost reductions and streamlined management, he believed he had saved the network. He expected CBS to earn $60 million to $100 million from the network in 1988, $40 million from radio, $160 million from its four TV stations, and $275 million from its cash investments. He deserved applause, he thought. Larry Tisch simply didn’t think he was their target. “I think they lost confidence in Jankowski,” he said a week after the conference. Within weeks, Tisch fired Jankowski and elevated Howard Stringer to replace him.
Wherein Larry Tisch Spends $3.6 Billion to Buy His Network Some Good News
DESPERATE TO boost sagging morale, to prevent more affiliate preemptions, and to hush the drone from critics, in December 1988 Larry Tisch did what he had done in May: bought CBS some good news. For $1.06 billion, CBS acquired the rights to televise four years of Major League Baseball, including the All-Star game, all postseason games, and twelve games during the season. CBS’s winning bid topped by $400 million the bids of both ABC and NBC. Tisch actually agreed to pay 25 percent more for four years than NBC and ABC paid to split the previous six-year package; and that package, one top ABC executive said, would leave the two networks with a loss of $250 million. There was “no way anyone could have seduced us into the baseball deal Larry made,” observed Dan Burke, president of ABC/Cap Cities. Baseball was the second of what would become, over the next few years, a $3.6 billion CBS spending spree to lock up major sports franchises.
“Maybe I’m living in a fool’s paradise … but I’m really pleased with what’s happening at CBS,” Larry Tisch said as 1988 came to an end. With sports he had some guaranteed ratings winners and a platform from which to promote CBS series. With the interest on its $3 billion in cash, CBS would have record profits, even though network profits were off for the third straight year and limped in at about $40 million. The CBS board had finally relented and invited brother Bob to join, and relations between Tisch and the board of directors had thawed somewhat. CBS stock, which cost the Tisches about $125 per share and closed 1987 at $158, ended 1988 at $171. With Stringer as president of the Broadcast Group, the network was a more informal place, which suited Tisch.
Strategically, CBS under Larry Tisch had adopted a conservative, defensive game plan. The deals he made were designed to save money—he signed a joint agreement to share news bureaus and news footage with the Tokyo Broadcasting System in 1990. But buying cable properties or launching his own channel was so expensive, said Tisch, that the economics were cockeyed. “That strategy is not going to work for NBC or anyone. Suppose when they are all finished that it makes $20 million a year. So what. By then they will have $500 million invested in it.” No, Tisch’s strategy was always to wait. After selling off assets, he would invest CBS’s $3 billion cash hoard not in overpriced cable or station properties but in treasury bills, waiting for the recession that might allow CBS to acquire properties cheap. Though muted, differences between Tisch and his board persisted into 1990, with Tisch unwilling to invest in the broadcast or cable business and the board anxious to adopt an offensive strategy.
Tisch believed he was more patient than NBC’s Wright and more confident in the network business. Four months before he fired Entertainment president Kim LeMasters in November 1989 and replaced him with Tri-Star president Jeffrey Sagansky, Tisch said he was optimistic that in a year—starting with the prime-time season beginning in September 1990—CBS would enjoy a renaissance. “I think 1989 will be our bottom year, and starting in 1990 we’ll be looking at a real reversal at the network.” Under Sagansky and Stringer, CBS’s prime-time schedule did begin to rebound, as Tisch predicted.
But with Tisch it was sometimes hard to tell when he spoke from the heart. He repeatedly told affiliate stations, which feared that cable would dilute their audiences and profits, that CBS was against making deals with cable companies. But by the end of that year CBS made a joint bid with John Malone’s Tele-Communications Inc., the nation’s largest cable operator, for the 1992 Summer Olympics, and sought a cable partner on all subsequent sports bids. He baffled broadcasters and even some members of his board with his liberal spending to lock up sports events and movies before they could appear on cable.
Tisch, who had been ridiculed as cheap, was now derided as profligate. Naturally, he didn’t like it. His record as an investor was not to be sneezed at. It seemed so unfair to be the target of those who claimed he was too cautious, and of those who said his sports strategy was not cautious enough; of those who asserted that he lacked a strategy, and of those who said he had the wrong strategy. One set of critics had to be wrong—unless they were both right! Unless, that is, Tisch proved too cautious in the station and cable properties he refused to buy, and too incautious in what he would pay for sports and other good news. A common critique among CBS directors throughout 1989 and well into 1990 was that CBS under Tisch at best had a strategy that waited for an event—a recession—over which Larry Tisch had no control. Of course, when a recession finally struck in 1990, Tisch’s decision to squirrel away cash into safe treasury bills seemed vindicated. The cautious strategy made sense—if, that is, he was now prepared to buy broadcast and cable properties at bargain prices.
Apparently he was not. In December 1990, on the same day that he imposed a CBS wage freeze, Tisch announced that CBS would spend $2 billion to buy back up to 44 percent of its stock, including stock owned by Tisch’s own Loews Corporation and by founder William Paley, who had died a few months earlier. For Tisch and Loews the difference between his own purchase price and the stock buyback price meant a tidy profit of about $155 million. But for CBS, said a depressed CBS policymaker, “It means we have no big future in the media world. We can’t buy anything.” What it meant to this executive and others was that Tisch had a hidden offensive plan after all—to sell CBS.
Perhaps. The vulnerability of this argument is its assumption that Tisch would sell CBS simply to make money when his motive in acquiring it had more to do with vanity. By 1991 the questions were: Had Tisch tired of his new vocation and was he now ready to discard it—for a profit? And who would buy it?
In Which the Networks Come to Resemble Nineteenth-century European Nation-States
SINCE 1985, WHEN Tisch first invested in CBS, the three networks have been staggered by an earthquake that struck as if in slow motion, cracking their foundations. By the end of the 1990–1991 season this past April, the damage was unmistakable. In a single season, the networks had lost 5 percent of their viewers, as the three-network share of audience fell to 62 percent. Since 1976, the three networks had lost one out of three viewers.
The big gainer was cable. By 1991, cable had extended its reach another couple of percent, to nearly 60 percent of all homes. Compared with the previous year, the change was incremental. Compared with 1976, when 15 percent of homes had cable, the change registered a 10 on the Richter scale. Cable now topped independent stations as a viewing choice, attracting 23.5 percent of the nightly TV audience; another 14.8 percent tuned to the three-hundred-plus independent stations. The Fox network, which now supplied programming to half these independent stations on five out of seven nights, was another gainer; in 1990–1991, Fox attracted 11 percent of viewers (a 6.4 percent rating), though by the end of the season it had lost some momentum. The VCR, which wasn’t commercially available a dozen years ago, was now in nearly three out of four American homes. The average viewer enjoyed thirty-three channel options, and stores sold TV sets capable of receiving nearly two hundred channels.
The earthquake’s toll was clearer by the end of the 1990–1991 season. After winning five straight prime-time seasons, NBC saw its ratings collapse, falling 13 percent, from a 14.6 rating to 12.7 in 1991. NBC squeaked to a sixth straight first-place finish, just two tenths of a rating point ahead of second-place ABC’s 12.5 rating. Although it finished third for the fourth straight year, with a 12.3 rating, CBS was the only network to not only gain viewers but also to attract new younger ones.
Nevertheless, the good news wasn’t so good. CBS’s audience gains were a modest 2 percent. But these were offset by mammoth Sports losses, prompting Larry Tisch to urge Major League Baseball to renegotiate its contract with CBS. On top of this, a recession began to pound the networks in 1990, and profits sank. At the end of the year, the CBS network would post losses of about $30 million. Larry Tisch confessed early in 1991 that he feared CBS’s network losses could climb above $200 million this year, and perhaps as high as $300 million. Dan Burke, who had succeeded Tom Murphy as CEO of ABC, said it was “easily possible” that the network would lose money in 1991. And NBC’s Bob Wright alerted his boss Jack Welch at GE that NBC would miss its overall $340 million profit target for 1991 by perhaps $120 million.
Falling revenues and rising costs invoked new economies at the networks. In December 1990 Tisch ordered yet another round of cuts, this one totaling $70 million; he also brought in McKinsey & Company to help him streamline and take a closer look at how to spend money more intelligently. By February, long before McKinsey’s report was ready, a gloomy Tisch was impatiently pressing for $200 million in cost savings, including $100 million immediately.
Ahead loomed nothing but uncertainty. When Tisch looked forward he was, in a sense, forced to look back, to think of the network as a nineteenth-century European nation-state. The communications business is made up of five sovereign powers—the networks, cable, the independent and affiliated stations, the Hollywood studios, and the telephone companies. Each wants to dominate. The outcome of the struggle among them is uncertain. And it is made more uncertain because of the deterrent power of the one true superpower—Washington. The federal government has the power to liberate the networks to compete or to merge with the Hollywood studios, to re-regulate cable, to define a high-definition standard all broadcasters must use, to free the phone companies to enter the programming business or the cable companies to enter the telephone business, to impose restrictions on mergers or on American programs sold overseas. What was certain was that the respective owners of NBC and ABC, GE and Cap Cities, wanted to vie with Sony, Matsushita, Murdoch, Time/Warner, Bertelsmann, and others to become a global communications superpower. It appeared unclear whether Larry Tisch had a plan, unless it was to sell CBS.
No one can know which of these powers will join forces to shape the vertically integrated communications colossus of the future, if indeed that is the future. No one yet knows what government will do. Or what programs viewers will select. Will the networks and Hollywood merge, as GE chairman Jack Welch thinks? Will the telephone companies become the distribution arm for Hollywood or network programmers? Will cable replace the networks as Hollywood’s distributor? Will the networks become a cooperative, with affiliates cementing a partnership through common ownership? Will technology and direct-broadcast satellites make all distributors, from stations to networks to cable companies, obsolete? Will “free” TV become extinct? Will Congress tolerate a World Series or Super Bowl available only to pay-cable subscribers? No matter how much Larry Tisch cuts costs, will the earthquake devour one or more of the networks?
Wherein Larry Tisch, as Losses Pile Up, Remains Fiercely True to His Old Convictions
IN HIS SIXTH YEAR as CEO, Tisch still comes to the office alone most mornings, taking an express elevator programmed to stop only on the thirty-fifth floor. Tisch places his briefcase on a plain wooden desk largely clear of piles of papers, glances at his phone message slips, and walks through a vestibule to his private dining room, where he sits at a small polished wood table, surrounded by the valuable art that Bill Paley collected. On most days, Tisch sees only those who visit his corner suite. He now wears Hermès ties and finer wool suits, and continues to enjoy the respectability of his membership on the boards of the Metropolitan Museum and the New York Public Library. But he still follows the hour-to-hour bounces of the market, still talks to his four sons and brother perhaps more than to any CBS executive, and leaves early most days to play bridge.
As he sipped coffee and breakfasted on a croissant in the seclusion of his CBS dining room in early 1991, Tisch held to his simple convictions. Although CBS’s prime-time schedule gathered momentum this season and was poised to challenge for number one in 1991–1992, Tisch still believed that costs, not revenues, were the key to CBS’s future. He dismissed the notion that a relaxation of the “fin-syn” rules—which limit the number of shows the networks can own and sell to stations or overseas—would mean riches for CBS. He still did not believe the networks were a growth business, but he was certain that “if it were run properly, the CBS network could earn $200 million a year.” Tisch was not just referring to more cost cutting. “Do you keep Dallas on the air? That’s a $30 million decision,” he said, noting that CBS paid $30 million more to Lorimar for the series than it received in advertising revenues. “How does the network split the time between half-hour and hour shows?” Does it abandon sports? How many hours of news should it program? “This is not just a question of cost cutting,” said Tisch. “It’s a question of making the right decisions.” Tisch sounded, much as he did in 1986, like a man fiercely determined to defend shareholders. Once again, he was convinced that because he had right on his side, the fallout would be slight.
Larry Tisch in the winter of 1991 sounded like a seller. As he neared his sixty-eighth birthday, Tisch admitted that none of the Tisch offspring were or planned to be involved in CBS. And after he was gone, Tisch said, there was a “big question” whether Loews would remain CBS’s major shareholder. Though he now says, “I have no intention of selling,” this is not what he once proclaimed: CBS is not for sale at any price. Would he sell to one of the major Hollywood studios? Tisch said he wasn’t sure a network and a studio make a good fit. Was Tisch the trader being coy? With only two studios apparently shopping to buy a network—Disney and Paramount—it was possible that Tisch was waiting for the perfect price; but by then the trade would have passed him by. •
This article is excerpted from Three Blind Mice: How the TV Networks Lost Their Way, to be published this month by Random House.