I Want My MTV (41 page)

 

BOB PITTMAN:
Jim Robinson had a whole plan about getting into this new cable world in order to retail their services. It did not pan out. So cable came to be viewed as a non-core business. Plus there was a lot of capital expenditure in cable. It ate cash. American Express reevaluated Warner Amex and decided to get out, and they sold their stake to Steve Ross. But the collapse of Warners' Atari business had made them financially vulnerable, too. They needed money. So the Warners board approved the purchase with the provision that Steve had to sell either MTV Networks or half of the cable franchise business. We were on the inside, so we knew Steve had to sell something. That's when David Horowitz and I decided to try a leveraged buyout for MTV. We'd lead it, and take the senior managers with us, and we'd all share in the equity. We were introduced to the private equity firm Forstmann Little: Teddy Forstmann, Nicky Forstmann, Brian Little and Steve Klinsky. Steve was a young guy and he championed us. He got Fortsmann Little to commit.

 

TOM FRESTON:
This was at the height of the LBO mania. We each had a little money, although the way the stock options were distributed—Bob got something like 100,000, David had 100,000 or 200,000, everyone else got between 1,000 and 10,000—raised a lot of eyebrows.

 

BOB PITTMAN:
Not long after David and I met with Forstmann Little, Steve Ross called me in to his office. He said, “Listen, Bob—I've made a deal with Viacom to buy MTV Networks, and I want you to be part of it.” Viacom was a television syndication company that owned half of Showtime/The Movie Channel; Warner Amex owned the other half. At that moment I was Mr. MTV; if Viacom tried to purchase MTV and I didn't stay, they wouldn't get their financing. Now, Steve had been very good to me. He was a father figure. I said, “Steve, of course I'll stay, because I owe it to you, but I'm going to ask one thing first: Please listen to Teddy Forstmann before you say yes to Viacom.” Teddy came in and pitched Steve. He offered a lot of money for MTV: $475 million. And Steve said yes. He accepted our offer. David and I brought together Sykes, Freston, and the whole inner group, and told them we had a deal. We actually began working out how we would divvy up the equity.

 

JOHN SYKES:
We were preparing to take ownership. We were going to have to carefully manage overhead and increase revenues, but this was a long-term play, and we knew the business had barely scratched the surface of its potential. The night our offer was accepted, I took some of the Forstmann Little people to a Bruce Springsteen concert in New Jersey to celebrate. The LBO had gone through! We had a press release written. We were having a great time.

 

BOB PITTMAN:
Steve Ross was a great trader. And as we were drawing up the papers, he was whittling away at the conditions—changing terms, trying to get more and more out of Teddy. At a certain moment, Teddy blew up at Steve. I forget what about. But things got heated between them. And at that point Alberto Cribiore, who was Steve's dealmaker, went across the street to Viacom and told them, “You pay us $525 million and buy our half of Showtime/The Movie Channel, and we'll sell you the company.”

I was having dinner with Teddy and Nicky at a restaurant on the Upper East Side when I got a message that Steve Ross had called. I had no idea what was happening. I walked over to Nicky's apartment to use the phone. And that's when Steve said, “I'm not going to do the deal with Forstmann. I'm going with Viacom. It's done.” I went back and told Teddy. Teddy said, “Well, I'm not gonna pay any more. That's it.”

 

JOHN SYKES:
We told Forstmann Little that if we matched the offer, Steve would do the deal with us. And Forstmann's quote was, “No cable network is worth $500 million. We're out.” We ran into a brick wall. Fortsmann Little were very disciplined about their deals. Once they put pen to paper and figured out a valuation, they weren't going to budge from it. They weren't emotionally caught up in the deal like we were. Our feeling was that this company could be worth a lot more than $500 million. And it turned out we were
right
, of course. Years later, I said to Ted Forstmann, “My God, if you had made that deal, you could have a multibillion-dollar company.” And he said, “If I had to do it all over again today, I'd make the same decision.” That's just the way these guys run their companies.

 

BOB PITTMAN:
MTV Networks sold to Viacom for $525 million. Teddy Forstmann's brother Nicky was a pal up until he passed away, and years later I'd periodically tell Nicky, “MTV's now worth $2 billion . . . $3 billion . . . $5 billion . . . $10 billion.” We'd laugh about the fact that we cared about $50 million back then.

 

JOHN SYKES:
Virtually overnight, we went from thinking we were going to own our company to becoming salaried employees of an outside corporation. We felt blindsided. We were all in our twenties. We didn't have enough experience to know that this was the way business sometimes went. We were demoralized. We'd built this company from day one—we had been in the room when the logo was sketched, when we named it, when we went on the air with a handful of videos. We built it cable system by cable system. We'd put our
lives
into this startup, and we felt like it was taken right out from underneath our noses. It wasn't all bad—we cashed out our stock when Viacom bought the company. But it was really a consolation prize.

And that was the beginning of the end for the original group of MTV executives. Within the year, Les, Bob, and I all left MTV.

 

BOB PITTMAN:
It was very tough to lose out on the LBO. But I felt I owed Steve, so I agreed to stay on and work for Viacom. David Geffen called me and said, “Listen, disappear from town. I'll negotiate your deal. Steve should pay you $10 million or $20 million to go to Viacom.” I said, “I can't do that.” I think I got $3 million or $4 million out of the deal. By the way: $3 million or $4 million? A lot of money to me at that age.

 

JOHN SYKES:
When Steve Ross sold to Viacom, that's when all the fun stopped. In the fall of '85, MTV Networks held an offsite at Gurney's Inn in Montauk. This was the first time most of us were meeting the new owners. Terry Elkes, who ran Viacom, landed on the property in a helicopter. That didn't make such a good impression. He spoke to us, and it wasn't a well-received speech. He basically said,
This is how we're going to do things from now on
, and then got back in his helicopter and flew back to Manhattan. MTV Networks get-togethers were always kind of wild, but this one turned a notch crazier. We were frustrated that we had been bought out by a hostile opponent and then to talked to like children by a company that, in our minds, made widgets. So the offsite turned into an Irish wake.

 

TOM FRESTON:
All the top MTV Networks management was at Gurney's. The night before we met our new owners, we stayed up drinking tequila. I remember people grabbing fish out of the aquarium and throwing them everywhere. We were tossing around six-foot palm trees. Chairs were overturned. We trashed the hotel. And then into this very hungover group walks Terry Elkes for this lunch meeting. And about the first thing he says is, “We know that many of you have stock options”—because the
only
silver lining of this Viacom deal was that our meager options would accelerate and vest. “Well,” he said, “I just want you to know that we don't intend to honor that.” This was the coldest possible water you could have thrown on this crowd. We were dumbfounded that this was their opening gambit. They did end up paying us our options. But a feeling of dread and pessimism was cemented right there.

 

BOB PITTMAN:
Every year I hear another story about that offsite, so god knows what went on.

 

TOM FRESTON:
Viacom was not a major player back then. It was run by Terry Elkes and Ken Gorman, and they owned a few TV stations and cable systems, some radio stations. Their big asset was a syndication company that distributed
The Cosby Show
. Terry and Ken were smart guys, but they were more the financial engineering types. They had a reputation for being very cheap. It would be impossible for them to look at a business and not think there was a lot of fat to be trimmed. When they saw that Bob had two assistants, they said, “Two assistants is not the Viacom way of doing things. We're a one-assistant or a split-assistant company.”

 

BOB PITTMAN:
Terry Elkes and Ken Gorman's business philosophy was one-hundred-and-eighty-degrees different from Steve Ross's. They were former finance guys who'd been in syndication sales. They were very stiff. They were not at all like the people at Warners or MTV.

 

ALLEN NEWMAN:
It started to become about profit and programming. All of a sudden, there was hierarchy and bureaucracy. The attitude changed. The fun had gone out of it. When Viacom came in, it just started to become corporate.

 

MARCY BRAFMAN:
It wasn't fun anymore. Our ideas were getting rejected. I could feel the tectonic plates shifting.

 

TOM FRESTON:
People started heading for the exits.

 

LES GARLAND:
When the company was sold, Pittman signed a long-term deal with Viacom. He was a cheerleader for the new company and talked about how we needed to make this work. Finally, in the middle of '86, he came to me, one-on-one, and dropped the news that he was leaving. I shouldn't have been surprised, but I admit it, I was like,
“Oh. My. God.”

 

BOB PITTMAN:
David Geffen had a huge impact on me. When MTV became wildly popular, he'd said, “Are you just going to be a one-idea guy?” You know when somebody says something to you and it just picks at you? That question picked at me and picked at me. I was thirty or thirty-one, and I had a lot of other ideas I wanted to try. I'd come out of radio, where every year or so I moved to another station. Plus, as a preacher's kid, we moved every two or three years. I've got it in my blood; always on the go. But it was tough, because I felt like I was leaving my family. MTV was my baby.

It was a very difficult decision. But at a certain point, I realized that Viacom had taken my company and my heart wasn't in it anymore. People would offer me jobs, and my attorney would say, “No, not that one.” Finally, Sid Sheinberg at MCA said, “Why don't you start your own company? We'll finance the company and split it with you fifty-fifty.” My attorney said, “You should take that deal.” So I left MTV and started Quantum Media.

 

TOM FRESTON:
I think Bob was getting a sense that the bloom was off the rose for MTV. And Bob very much wants to be associated with success. I believed the bloom
wasn't
off the rose. Hell, five years earlier I was living in fucking Afghanistan. Who was I to complain?

LES GARLAND:
One of the terms of his exit from Viacom was that Bob wasn't allowed to poach people, but I can admit now that he and I had some conversations. We decided that the move had to take place in two steps. First, I had to resign. There was a great going-away party at the China Club; David Bowie's band played, and I got up and did “Secret Agent Man” with them. We blew it out, and I said good-bye to MTV. I went on vacation for a while. When I surfaced a month or so later, I took an office over at Quantum Media. Nothing was official. We let it go real slow like that, and ultimately MTV allowed it to go down.

Quantum developed TV shows, we had a music company, we had publishing, we were gonna do magazines, we wanted to do films. We'd come off a home run, we were ambitious guys, and my recollection is that there were no budgets. We launched
The Morton Downey Jr. Show
, which was huge, until Downey claimed someone painted a swastika on his forehead in an airport bathroom.

 

JOHN SYKES:
When Viacom took over, I checked out. There was nothing there for me emotionally. I left in the summer of '86 to go work for Mike Ovitz at CAA. Bob went to work for MCA. Les left with him. The dream was over. We cashed in. We didn't make the kind of money guys make now when they cash in, but we all made more money than we ever thought we would.

 

TOM FRESTON:
I was the general manager of MTV and VH1 and had been for some time. When Bob left, he anointed me to be his successor. He made me copresident with a fellow named Bob Roganti. I was the president of MTV Networks Entertainment, and Roganti was the president of ad sales and operations. When I took over, a lot of people were leaving the company, not just because of the change in ownership, but because they were burned out. Our ratings were eroding, and as they slipped, the perception grew that MTV was a flash in the pan, that this downward trend was irrevocable, that we'd burned hot and bright, and now we were going to crash.

 

 

 

 

 

STEVIE NICKS:
“I Can't Wait” is one of my favorite songs, and it became a famous video. But now I look at that video, I look at my eyes, and I say to myself, “Could you have laid off the pot, the coke, and the tequila for three days, so you could have looked a little better? Because your eyes look like they're swimming.” It just makes me want to go back into that video and stab myself.

Was I doing drugs on the set of my videos? Absolutely. Which videos? All of them. I knew only two people from that era who didn't do drugs. And one of them did drugs, but never very much.