"Synergy Vs. Diversity"

I just have such warm feelings for the General Electric Company I thought I would write something about them and the subject of synergy.

SYNERGY VS. SELF INTEREST? NO CONTEST

According to The New Oxford American Dictionary: synergy-the interaction or cooperation of two or two or more organizations?to produce a combined effect greater then the sum of their separate effects

Self interest (according to me an expert in the matter), is and will always be defined as "what's in it for me?"

I just love how senior corporate staff people who have never been "line executives" throw about, the word "synergy" What a great sounding word, the industrial equivalent of "Democracy" or "Apple Pie"

CBS Inc. decided to enter into the feature and television business in the early sixties. Why do you suppose that they did that? Primarily because the CBS owner, William S. Paley Jr. was not happy to pay what he decided were outrageous license fees to Studios for Feature Films. He decided to enter into the mysterious world of Motion Picture Production. That alone would have been disastrous, but for an extra bonus, they decided to Produce Movies for Television as well. It was a Typical CBS move, with elements of synergy all over the place along with an opportunity of hurting the existent Film Studios. CBS did in fact have a big advantage in owning a Network, and stations.

The network programming people were nuts about what was going on in that they did not want to play movies that were made by another division in the company, which limited their programming and scheduling flexibility. I was at a meeting where the network people were discussing this, and a senior person said, "I hate the features they are making, and I hate the people who are making them. The conflict continued until well after I left, and was never fully resolved.

My CBS division owned an animation Company of some note "Terrytoons" When I asked the head of CBS Children's programs why he wouldn't buy animation from the company owned Terrytoons, he replied, "Norman I hate those guys." Synergy?

In the early seventies, I returned from a sales visit to Japan, with an order from a Network for the Columbia Feature, From Here To Eternity. We negotiated a whopping price of $1.5 Million; huge at the time for an old B&W feature, but for some reason they wanted to have it. I had explained that the theatrical people wanted to withhold it for re-issue, but for this amount of money, I was sure that I would have no problem.

Boy, was I wrong.

I needed to have the picture released to Television by the head of the International Feature company, a charming European, well into his sixties, Marion Jordan and he said no, Why no I asked, his reply "we will re-issue the film in a couple of years', that's why. Now I knew that his re-issue in the past would generate perhaps $10,000 net every 6 or seven years.

Under the circumstances, I called for a meeting with the company President to have him adjudicate the dispute. Little did I know what I was to face. Marion announced to our President that there was a new film system being developed that would allow him to re-issue From Here To Eternity in color theatrically in Japan, and he expected to gross $20 million. It was a no brainier, he won, and I lost. He was only interested in protecting his own bottom line, and not the companies. Long after I left the company, the film was sold to television for $100.000, and of course the process that Marion was speaking about that converted B&W movies to color was NEVER developed. Mark up another one to the failure of synergy.

Fast forward a decade and I am solicited by Lee Rich, the Chairman of MGM/UA to become the new CEO of a wholly owned subsidiary The MGM/UA Telecommunications Company, responsible for all of the Companies Ancillary Divisions including Worldwide Television, Home Video, Pay and Pay per View Television, as well as non network Production for these units. I was pleased and flattered when Lee hired me, and I almost died when he told me he had enlisted me so that he didn't have to listen to all of the divisions fighting about control of our content. What they euphemistically called "windows" for exhibition of content in varying media always resulted in internal conflict. As soon as I started, I was up to my ears in problems. It became necessary to make a deal with Francis Ford Coppola to obtain the rights to Apocalypse Now for television. What did Francis want among other things before he would grant us these rights (we had about $80 Million at stake) was a re-issue of the Movie in theaters. I went to the theatrical people to do this, and told them that I would advance all costs, and they said no. I told them how much I had at stake, and they didn't care. I had to pay my own company a large fee to re-issue the film. Now that was synergy,

I hired almost the entire senior staff of Home Video Company, new international Television and pay people to replace the people who had not moved from New York, and one executive we believed was stealing. My criteria for hiring people was to be as sure as I could be that these people would get along with each other and work in the best interests of the company. It also helped that I combined all non-sales duties to a common staff group, and organized it so that it was not possible for the corporate people to run a P&L on any business sector in my group.

One of the usual conflicts was between the home video guys and the pay per view guys (PPV), was the holdback of the PPV until 60 days after Home Video. The guys were looking for a picture that no one would care about for a simultaneous release in both systems. The picture that they decided to do this with was a Whoopy Goldberg film Fatal Beauty. The film was scheduled on PPV and promotions made when our Video customers found out about it they were going to kill us. My 2 guys came to my office and told me what was going on. I made my decision quickly, and told the guys to blow away the PPV deal. And tell the providers that we were sorry and would make it up to them. We moved quickly, people were upset and we worked it out, and without any internal craziness. There was no P&L effect to either of the Division heads, and we went on to live happily ever after, and for me, that was REAL synergy.

That brings me to the latest manifestation of Synergy in the entertainment business. NBC Chairman Bob Wright has touted the purchase of Vivendi/Universal by General Electric and NBC as being possibly because of synergy. I expect that GE/NBC will impose synergy on their content and content delivery people and I do not believe that this will work in a creative business over the long term. I would think that GE will expect that all or almost all content playing on NBC will come from Universal or other internal production companies, and when NBC is done with it, the content will cycle through Bravo, USA, and Sci Fi, and that will work well 'cause it works well on paper. My unproven theory on this is that you cannot mandate creativity, and when you live inside of your own creative cocoon, you are ultimately doomed. I can see the MBA's sitting around making "synergy" models, but once again, creativity does not exist to be modeled, it never has been, and I trust that it never will be. The notion that somehow that the GE/NBC models will make the Universal Feature Film library more viable for VOD then it otherwise would be for Universal escapes me as well.

If I would have been perceptive enough in 1960 when I started working in Television, I would have wished for an infinite number of publishers (Television outlets) being supplied by an infinite number of content creators, (Writers, producers, directors) etc. What an interesting notion. There is the promise of this with the Internet, and I can only hope that the operators of synergistic media companies do not find a way to control more content and delivery systems then they already do. The gigantic media companies share a dominant amount of the faces in front of devices now, and will encourage the government to allow them to keep it that way. ABC, NBC, CBS and Fox dominated the over the air delivery of content to consumers. Do you think that they will easily go away and say "We had our turn, now let us fade away and give other people a chance" Diversity matters to the individual, synergy matters to Corporations.

I believe that the human experience follows a "self interest" model of what's in it for me, and that the General Electric Companies deal with the synergy of making Jet Engines and Diesel Locomotives, and not Seinfeld or Friends. I wonder if the General Electric Company has a deep understanding of what works and does not work on television? I for one after almost 45 years of participating in that business understand that I don't know what works on television, and neither does anyone else. Diversity of input creates the possibility of innovative and creative output. I have been told that GE drives additional profits out of a given situation. Has Universal in the past been operated efficiently? Probably not, and that does not matter very much as the success or failure of a movie studio does not depend on the cutting overhead "to the bone", but rather by creating an atmosphere where creativity flourishes in an environment that supports the creative process.

Between the FCC and congress supporting new and increasingly restrictive indecency standards, and the government allowing media consolidation, the creative process has suffered and will suffer more. Who will care and notice? Only the public, and the individuals who create the content that we all watch. Let's hear it for bland and controlled. Who cares about the public interest? I am not exactly sure but not General Electric, and it's shareholders. How about a cheer for those guys, and a cheer while we are at it for Viacom, News Corp, and the Walt Disney Company?

Synergy abounds.
Creativity languishes.

Norman Horowitz
Media Gadfly

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