Henry Grunwald discusses media synergy.
READ FULL TRANSCRIPT
GUEST: Henry Grunwald
I’m Richard Heffner, your host on The Open Mind, which I must say often gives me the opportunity for reminiscences that most people simply don’t enjoy.
Last even, for instance, I was reading through transcripts of the eight one-on-one broadcast exchanges that I’ve enjoyed over the past generation with today’s guest. Programs done when he had already moved on from being Managing Editor of Time, the weekly news magazine, which was what I was taught to call Henry Luce’s creature back 50 years ago when very briefly I cooperated with it in producing my weekly “Man of the Year” television series.
Indeed, when he first joined me on The Open Mind in April 1983, Henry Anatole Grunwald had already become Editor-in-Chief of Time, Inc. itself, enjoying a view from the top of undoubtedly the major national presence in communications, certainly in print and increasingly then in electronics, as well.
Later, Time, Inc. would join with Warner Communications and still later Time Warner would join American On-Line and be incorporated into AOL Time Warner. While there were those who insisted that the so-called synergies generated by thus joining together cable, the computer, magazines, books, movies, music and whatever else entertains and sometimes informs Americans might yet rule the world of American communications.
Well, it hasn’t quite happened that way. But a veritable of crash of worldly interests has occurred and much has been said and written about an inevitable clash of cultures, one represented by Time Warner, the other by AOL.
Now, my guest hasn’t recently been close to this scene, I never have been. But that won’t stop me from asking Henry Grunwald what credence he gives to the very notion of such a “clash of cultures?” That a fair question, Henry?
Grunwald: Yes, it’s a fair question. I think first of all you mentioned synergy. I, I think it is fair to say that that word has been a much overused and overexploited … in many cases there’s been much more “syn” than energy …
Grunwald: … in synergy. But I also have to say that the people who now … including myself … who now deplore the, the big merger between AOL and Time, Incorporated … really the purchase of Time Incorporated by AOL were, at that time, when it happened, quite enthusiastic about it. I thought there was something quite seductive about this tremendous distribution system that the Internet represented and all the … well, the word, I’m afraid, is content … which I hate … but all the, all the material that was generated … is being generated by magazines, by movies and so … all under the control of Time Warner. So it seemed like a pretty good idea at the time. Some of the biggest media moguls, if you will, including …you name them, they were all there … all thought it was a very dazzling idea. And they were rather frightened by it as they now admit.
Well, as you know, it didn’t turn out that way. And it was not only, I think, a matter of different cultures, obviously it was … they are different cultures … Time Inc. was based on journalism and then later on on entertainment. AOL was a much more technically oriented conveyor of information, rather than a creator of information. So there was bound to be … and the financial structures were different and the habits were different.
But I still think that if the merge had worked the cultural differences would have been ironed out eventually. There was quite a bit of cultural difference when the first merger took place between Time Inc. and Warner Brothers. And after, after a while that more or less settled down. I think the same would have happened here if it had made cultural and business sense, which, unfortunately, at least so far it has not.
Heffner: Why didn’t the merger work? And you’ve backed away from this cute “syn” … more “syn” and less energy … ah … that made sense, didn’t it?
Grunwald: Well, it didn’t, it didn’t work for two reasons. First of all there was a technical, financial reason, and that is the, the valuation of AOL was way overestimated, as was the custom in those days … you remember … it’s not so long ago … the tremendous Internet bubble. Any Internet firm, whether it made profits or not, suddenly had very high stock prices and people got very rich, very quickly. It was a magical, seductive atmosphere. And so the … I think the … technically the valuation of AOL was way, way over done. More importantly, the, the actual use to which a publishing or information or entertainment company could put the Internet was not clear. I thought, like so many others, that it was bound to happen, there was bound to be a kind of magic between the creators of information and entertainment and the conveyors of it. It didn’t, it didn’t … it simply didn’t work that way. Because it was never made clear how the value as created by Time Inc., by Time Warner could be … to be crass about it … could be sold over the Internet.
Heffner: But you believed they could.
Grunwald: I believed they could, without admittedly having obviously thought it through. I tell you something else. I still think that someday it could, it could happen. I think that perhaps the, the merger which is now, you know, derided and decried, quite properly, because it did tremendous damage to individuals and to both companies … especially to Time Warner … I still think that the concept someday may be proven, may be proven right. But premature.
Heffner: The concept may be proven right. But you say “premature”. Why not now, if what you’re saying is that essentially it was an accounting difficulty.
Grunwald: No, no, I said that the accounting difficulty was one part of it. And not necessarily the biggest part. But the other, the other difficulty simply was there was no strategic plan about how … to repeat myself … the value is created by Time Incorporated, by Time Warner … that is the information and the entertainment could be sold over the Internet because people assumed the Internet was more or less free.
A great many things were available on the Internet already, and you could not come out and say, “If you want Time magazine or Sports Illustrated in your home, on the screen, you have to subscribe to AOL.” It simply didn’t work that way. So, there was no real business strategy.
What is happening now, I gather from my former friends over there, is that AOL and Time Inc. are trying to work out ways in which the … again that word “content” … created by the communication and entertainment side of the company could be made really attractive and could really draw people to subscribe to AOL. This has not yet happened. I assume that people are working on this feverishly. I’m not quite sure how it could be done. But it is not impossible that it will happen some day.
Heffner: Why wasn’t it thought through?
Grunwald: I …
Heffner: The enthusiasm of so many dollars?
Grunwald: I think … the enthusiasm of the entire, the entire Internet bubble. Jerry Levin who is, in many respects, an extremely smart and thoughtful man, became, I think, somewhat hypnotized by this dazzling concept of the Internet. As were so many others. And I think he was so excited by the prospect that normal caution simply fell by the wayside.
Heffner: I suppose it seems funny for me to say since I know so little about this, clearly, that I think he was right. Something went wrong, it seemed to me, afterwards, and I don’t mean this clash of cultures …
Heffner: … I understand what you’re saying about that. But something stopped.
Grunwald: Well, I think something stopped and perhaps, perhaps also something was never there. In other words I do think that AOL was overvalued tremendously. There was more … there was … for instance there was great reliance placed on advertising on the Internet.
Which has a couple of problems. First of all advertising, as we all know, is a very fluid business. It fluctuates tremendously. And secondly, I believe that advertising on the net, on the Internet, is somehow more intrusive than it is in print. I may be wrong about that. People who live with the Internet may not feel that way.
But I find that when you’re reading something on your television screen, on your computer screen and you’re reading a story, some information or whatever, then suddenly pops up an ad that you don’t particularly want to see at that point, I think it’s quite irritating. So I think that advertising on the Internet has a couple of serious problems.
Heffner: Henry, do you think that … if you look back to your lifelong involvement with print, did you have to face problems that were parallel to these problems that had to do with the intake of dollars. Didn’t have to do with content, if I may use the word.
Grunwald: Well … well of course I had to face that. We all had to face that in journalism because one very obvious reason being that covering the news, gathering information, or for that matter, creating entertainment later on is a very, very expensive business. And therefore, no matter how idealistic you may want to be about the role of journalism and information in our society, it has to be paid for. It doesn’t … you can’t do it on “the cheap”, so naturally we were very often faced with problems of having to cut staff, having to do other things to make the whole enterprise more profitable.
But I think in … there were times … certainly when I was at the head of Time Incorporated, that is, the editorial side of Time Incorporated, when the demand, the insistence on high profit margins wasn’t quite as strident and quite as imperative as it seems to have become, there were ways, in those days of being moderately satisfied with a moderate profit margin. And I think that has, that has changed considerably … for all kinds of reasons.
Heffner: Do you think that it’s possible … I’m so fascinated by what you’ve just formulated here … do you think it’s possible within the context of what we now consider the American free enterprise system for that ever to turn back, to go back to the days when a moderate profit was acceptable and you could just as easily be talking about book publishing now.
Grunwald: Certain publishing. Well, it’s not easy to imagine that it could happen, but … it’s not impossible. Because market forces ultimately may take over. For example, this is not … has nothing to do specifically with AOL Time Warner, but the compensation of top executives in our corporations … huge compensation even when they, when the fail …even when they screw up …
Heffner: MmmHmmm, more so
Grunwald: More so when they fail. I think has begun to outrage a lot of people. This will not be solved by legislation, but I think it may …there may come into being a sort of … certain self-regulating trend. The same thing may happen in other aspects of this. For instance, again when I made a crack about synergy … I don’t mean that there’s no such thing as synergy. It just doesn’t … it just has to be right. The pieces have to fit together logically. When they don’t, it’s counterproductive and I think many of the, of the big conglomerates are beginning to break up, or at least to become smaller … it’s entirely possible that Time Warner AOL will not be a joint company three years from now. I have no idea, but it’s quite possible that they might once again go their separate ways. Or that certain pieces of it will go their separate ways. Which ultimately might make a more rational … create a more rational structure.
Heffner: You know, you a moment ago said, not by legislation, of course, talking about perhaps if not reversing then modifying this emphasis upon more and more profit, greater and greater profits. Not a … not the sort of modest need and desire to be profitable that one experienced in other generations. Have you experienced the kind of turn about in your many years as a mature adult in the business system that says, “We will … we’ll make concessions, we’ve been too selfish, we’ve been too self-seeking.”
Grunwald: I think things like that have happened on a sort of relatively modest scale. But I don’t want to be misunderstood. When I, when I talk about the profit margin which is …
Grunwald: … which is … the insistence on it being stronger and stronger. This is not entirely a matter of greed. Not even principally a matter of greed … I think it’s, it’s partly greed of course … certainly the executive compensation is, but there are demands made on companies now … especially on information companies that are quite different from what they were. The people .. these companies need more and more a global reach … they need huge staffs, they need a tremendous investment in technology. All of this is .. and they have stockholders who want to see a return on their money, so it’s very, very difficult to, to say “we’ll just reverse course and we’ll be satisfied with less.” But I think it will eventually happen. Out of … because market forces will say, “well this can’t go on like this.”
Heffner: Who do you think will be the first one?
Grunwald: I have …
Heffner: … to cast …
Grunwald: I have no idea. But you’ve seen some … you’ve already seen some voluntary moves. For example, a number of companies … this gets a little arcane, but a number of companies have decided that, that stock options should be treated as expenses. This is a, as you know, a somewhat agitated issue. But quite a number of companies have said, yes, they should be treated as expenses. Many of them are holding out, many others are holding out. But that’s one example of sort of self-restraint, or self-regulation. And I think things like that could happen. I think it could happen that certain executives … don’t know which ones … will say, well this … this compensation that I’m getting here, regardless of my performance, really, is excessive, we have to stop this.
I happen to be in my more optimistic mood today. If you talk to me …
Grunwald: … tomorrow … I might feel differently.
Heffner: [Laughter] Well let me, let me, let me not ask you about this tomorrow, but let me switch the field a little bit and ask you about this matter of greed. Let’s call it greed. When it comes … if you’ll forgive me to the content of media. The, the last time we spoke together I think I was baiting you …
Heffner: … about the content of Time magazine, no longer calling it “Time, the weekly news magazine”. And you were defending, you were no longer the Editor, you were no longer Editor-in-Chief of Time, Inc. And you would not say an unkind word from your prospective as Editor, years and years ago … in terms of what your standards were … about the content of the magazine today. Would you, would you move a little on that? Would you move a little on what has become increasingly the more and more popular mass appeal content of what had, what had been in the past essentially informational magazines, papers?
Grunwald: Well, I still think that Time as it exists today, which is very, very different from the Time magazine that I used to edit, of course, is still, still contains quite a lot of information and some of it very good information. The huge difference is this, the news magazine, for decades was an instrument of order it organized the news, it gave you the notion, it gave you the impression, frequently correct that it gave you a little bit of everything that was more or less important that week whether it was ballet or Wall Street.
The very structure, the physical structure of the magazine, with standing and repeated department headings and fairly rigid columns and so on, created a sense of order … almost, I might say like the encyclopedia of the 18th century. That has gone by the wayside. I regret that.
There are still some magazines that are organized that way, notably The Economist, which is my favorite news magazine. But more and more this structure, this sense of order has disappeared. For, for many reasons, including changes in our society. We are much more picture oriented, we are movie oriented, we are television oriented and this, this kind of regular structure simply did not seem to appeal anymore. I can’t really blame my successors at Time magazine for that. I think they were responding to, to social trends. But given that, and that’s a big … that’s a big matter, of course, but given that, I think Time still does a very good job, and I think so does Newsweek, for that matter.
Heffner: Responding to social trends … where do you fit that into your education of a journalist? When you teach succeeding generations of journalists, where do you put that? Responding to social trends?
Grunwald: Well, where do you put that? First of all, I’m rather skeptical about teaching journalists anyway … I don’t … I’m not a great fan of journalism school and so on.
Heffner: You mean they’re born, not made?
Grunwald: No, I think they’re educated, but not necessarily educated in schools of journalism.
Grunwald: My, my complaint about many journalists, although I think the situation has gotten better, is that they’re not well informed, generally speaking. They’re not well informed about history, especially on television, history begins five years ago. They are not terribly well informed … they used to be quite ill informed about economics. I think that has improved greatly. But where would I, where would I try to give them a sense of the society and how we live and so on? I would simply do it by a good general education. Then I would then encourage them if they wanted to specialize in one field or another, if you want to become … if you’re interested in medicine, you should become a medical reporter or science reporter. And really ground yourself in those disciplines. That is much more important than learning how to write a good lead. Because if you have any sense at all, any talent for writing, you can pick that up by working three months in a newsroom.
Heffner: Well, as always, Henry, you’ve demonstrated to me about how I should change my language.
Heffner: And you’ve always taught me, and I should have said, “The Managing Editor”, the Editor-in-Chief, teaching those who work for him, or leading those …
Grunwald: Oh, I’m sorry … yeah, yeah …
Heffner: Where does he put the question of what … not the public’s interests are, but where the public interest is?
Grunwald: Well, I think the Editor-in-Chief of whoever controls a publication has to, first of all, work on himself. He has to, he has to have a sense of what is important to the society and to what extent the importance to society can be balanced with the need to make, to make a decent profit. So I think it is self-education most of all that is necessary for the people who control the media. And then I think you just, as far as the reporters and other editors are concerned, I think the big issue, the big instrument always is, always has been, still is … asking questions. If I have any complaint about … well, I’ve lots of complaints about American journalism, but one of them is that it is not always curious enough.
I can take, I can take any issue of any number of The New York Times, for example, which is, in its way a very, very good paper, and does better reporting and more extensive reporting than almost anybody else, leaving aside some of their painful politically correct attitudes … that’s another issue. It’s a very, very good paper. What I could find in practically every story when it appears … ten unanswered questions … or ten unasked questions. That I think where editors should, should really take a hand.
Heffner: Why do you think that is? The ten unasked questions?
Grunwald: It is probably a matter of, of the daily pressure. That’s only partly an excuse. And it’s also a matter of your sense of economics because many of the questions that should be asked require a great deal of time consuming reporting to be answered. So these things … it’s not an easy, it’s not an easy thing to, to cope with.
And then, finally, if you are running a newspaper and if you run a certain department, let’s say of a newspaper, a certain section … day after day, month after month, you become a little intellectually lazy. This is, this is inevitable. So I think the attempts the Times has made and many other papers of kind of turning over the staff, changing people around, some of it is very, very useful. But, but it is not enough.
Heffner: In the two minutes we have left, what did you mean by … if I heard you correctly, The Times “politically correct?”
Grunwald: Well, I think The Times is … sometimes bends over to be, to be very politically correct. There’s nothing wrong with political correctness, with fairness and with decency. But sometimes I think it becomes a little … a little …
Heffner: For instance?
Grunwald: No, I don’t want … I don’t really want to go into specifics and I have no, I have no serious complaints about The Times, it’s a great newspaper. And it would be foolish of me to kind of pick this or that particular story that irritates me.
Heffner: Okay. You know that I, I … I’m not in the business of pushing …
Grunwald: I understand.
Heffner: … those things. But I am interested in … in the minute we have left now …
Grunwald: All right.
Heffner: How you feel about the whole matter of print journalism now. What do you say, at this point, about American print journalism.
Grunwald: Well, I’m happier with American print journalism, or rather what’s left of it, than I am with television journalism, which is … for the most part … painfully superficial, and substitutes, in many cases, people yelling at each other for people going out and reporting things. I think the surviving print journalism is still quite good. I think the newspapers, all newspapers are perhaps too chincey in the money they spend on, on reporting. Because, again, we’re back to the need for a sizeable profit margin …
Heffner: Rather than a decent one.
Grunwald: Rather than a decent one. And … but I repeat, this, this, this requires balance because as I said … again … you cannot run a good newspaper without making money because it’s expensive to do. So in some … I wish there were more coverage of … especially of foreign affairs … the American public is not sufficiently informed about foreign affairs, although it has changed somewhat since 9/11. And I just wish that there was less fragmentation. I mean we pick up news these days … a bit here and bit there … television, the Internet and so on. And I, I guess I long for a little bit more of an organized and integrated approach to information.
Heffner: Henry thanks so much for joining me …
Grunwald: Thank you.
Heffner: … on The Open Mind.
Grunwald: Thank you.
Heffner: And thanks, too, to you in the audience. I hope you join us again next time, and if you would like a transcript of today’s program, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.
Meanwhile, as an old friend used to say, “Good night and good luck.”
N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.