Book Review: The Curse of the Mogul, Jonathan Knee

Any media executive who doesn’t “get” The Curse of the Mogul—or anyone who doesn’t think it will be a long-term bestseller—proves the point that authors Jonathan A. Knee, Bruce C. Greenwald, and Ava Seave are making throughout the book: most media companies—from Rupert Murdoch’s Newscorp to Sumner Redstone’s Viacom, with lots of music and magazine and book companies in between—have their proverbial heads in the sand, operate on an outmoded business model that was probably always destined to fail, and stick with their old ways out of fear, inertia, and, yes, vanity. There’s a difference between judging a media company on its actual performance or on the number of times its high-profile CEO is seen around Sun Valley—but it’s the stockholders, not those selfsame CEOs, or a handful of senior executives, who suffer the consequences.

Fact: since 2000, the largest media conglomerates have, altogether, written off more than $200 billion in assets— “making Citigroup’s red ink look like a pale blush.” Still, media companies are among the biggest acquirers—of other media companies, largely—of our age. Given how little attention is paid to the realities of running those newly acquired companies—they tend to simply melt into the big-media culture—it’s hardly surprising that more losses ensue.  

Those are the salient points the authors—Knee is the well-known Columbia University business school professor and the author of “The Accidental Investment Banker” —make more than once in this fascinating book and, if the prose throughout is more business school than bestseller list, it is nonetheless very powerful. Thanks to a number of charts and graphs, even the most dyed-in-the-wool old-media skeptic should be able to see why, for example, a company like Google has succeeded (economies of scale, yes, but the fact that it’s initial operating costs were almost nil is more significant) where large media companies (Time Warner et al.) are struggling. Years ago, Conde Nast chief S.I. Newhouse, Sr., reportedly remarked that the “assets” in his magazine company “went up and down in the elevators”; his “assets” were the “talent,” the executives, editors, and writers who created the magazine. As The Curse of the Mogul makes clear, that overemphasis on— and overcompensation of—talent will need to change.  Now that the Internet has reduced the barriers to entry for reporting and editing, for example—and now that most users don’t seem to know or care about the difference between professional and amateur talent—it becomes difficult to justify high six-figure salaries. “Talent…is likely to come up short,” the authors write (pg. 260) now that businesses must pay more attention to, and pay better rewards to efficiency and those who create it. (For one who has spent most of her career as editorial “talent,” this is not easy to read, though I—and the thousands of editors and writers laid off in the past year—are all too aware it’s true.)

So, what’s the answer? Knee & Co are, predictably, shorter on answers than on analysis—and one can’t help but think of the old adage, “If I knew the secret, I’d bottle it and sell it.” Still, in the epilogue, they do offer up some aphoristic advice: Dare to Dream, they say, Keep It Focused. Remember: Efficiency is Cool. Don’t Be Such a Big Shot (They mean you, Rupert Murdoch, among many, many others:  Did you really need to pay all those millions for MySpace?) and Watch Your Back. However, it’s the last piece of advice in the book that is the most disconcerting, but perhaps the most apt. “There Is Much To Be Said for Dying with Dignity,” the authors explain. “Rather than milking a declining franchise and returning the proceeds to shareholders, moguls often decide to reinvest them in projects that have little prospect of generating an adequate return.” In other words, they refuse to give up. Yet, while such perseverance may have passed as strength in a previous media environment, in our current one, it looks more like the inchoate self-deception of people and companies who used to be contenders—but painfully, obviously, no longer are.