Death of the last tycoon

At a star-studded memorial, Hollywood bids farewell to legendary Universal head Lew Wasserman, a Mob-reared patriarch who makes today's show-biz honchos look like midgets.

By Kathleen Sharp
Published July 17, 2002 8:00PM (EDT)

When Lew Wasserman died on June 3, his wife of 66 years, Edie, didn't want a show-business funeral. Instead, she quietly buried her husband, the former chairman of Universal Studios. Wasserman slipped from bedside to grave site in five and a half hours -- surely some kind of record -- and his unusual burial added to his iconic status. But it left a gaping hole in an industry that needed to mourn its patriarch's passing.

So, earlier this week, Edie Wasserman and Universal Studios hosted a memorial inside the Universal Amphitheater. The somber event was attended by movie and political stars: Sharon Stone, Warren Beatty, Jodie Foster, Larry King, producer/director Ron Howard, investment banker Robert Strauss, Jayne Meadows (aka Mrs. Steve Allen), Suzanne Pleshette, Al Gore, Bill Clinton, California Gov. Gray Davis, House Minority Leader Richard Gephardt and about 4,000 others.

Although eight Wasserman associates eulogized him, none conveyed the scope and import of the man's accomplishments. How could they cover seven decades in 90 minutes? Barry Diller, now chairman of Vivendi-Universal Entertainment; Sidney Sheinberg, former president of MCA Inc.; Jack Valenti, Hollywood's lobbyist in Washington; actress Suzanne Pleshette; Dreamworks co-founders Steven Spielberg and Jeffrey Katzenberg; AFL-CIO president John Sweeney and ex-President Bill Clinton certainly tried.

Some could only describe Wasserman by alluding to the black-hearted hornswogglers who acted as CEOs of other companies in recent years -- Enron's Kenneth Lay, for example, or Global Crossing's Gary Winnick. Both men rubbed elbows with Hollywood, and Winnick even bought MCA's 1936 Beverly Hills headquarters, where Wasserman got his Hollywood start. But Wasserman never did like the junk-bond man's style, not his looting of $734 million from the company's shell nor his scooting up to his $94 million manse.

Of course, what none of the eulogists mentioned was that Wasserman had also once been in scandal's leering eye. In the late 1950s, when he was king of the screen, his firm, MCA, was investigated by two federal agencies and one grand jury. Back then, the 45-year-old ran the world's top talent agency with the most Hollywood stars; a production arm that created 60 percent of prime-time TV; a library of classic radio shows like "Amos and Andy"; some of the best old movies ever made, such as "Double Indemnity" and the buddy films of Bing Crosby and Bob Hope; the richest TV syndication firm, which sold reruns of "Sgt. Bilko" and others; and all the land, props and buildings at Universal, the biggest studio in the world.

What a difference half a century makes. Compared to the multinational entertainment conglomerates of today, Wasserman's shop was a son-and-pop operation. Today, the world is dominated by six studio-based hyphenates: AOL/Time Warner, Vivendi/Universal, Walt Disney Corp., Viacom/Paramount News Corporation/20th Century Fox, and Sony Pictures/Columbia. There is little in the way of books, films, TV shows, records or magazines that is not manufactured, financed, distributed or sold by the Big Six. They are "vertically integrated" -- they own most of the businesses in their industry -- which at one time might have made them illegal monopolies. But no one Hollywood player has been hit with a federal antitrust investigation.

Wasserman also differed from the pack in his training and experience. He grew up in Prohibition Cleveland, home to the "Silent Syndicate," or Jewish Mafia. These good fellows bought bootleg liquor from traders such as the Bronfman brothers. They smuggled it in from Canada and sold it for a fair price in dance halls and speak-easies. By the time Wasserman was 12, he was working in this "open" city, selling candy in a vaudeville theater, walking several miles to work and school, helping support his family. Later, he landed a well-paying job at an elegant Mob-owned nightclub where, in the back, the rich gambled illegally, knowing that the police would never raid the place without first tipping them off. When Ohio failed to legalize gambling, the Cleveland mob moved to Nevada and built the Desert Inn in Las Vegas. The mobsters grew so successful that they appeared in one of TV's earliest dramas: Sen. Estes Kefauver's hearings on organized crime. Modest to a fault, these men remained mum or invoked their Fifth Amendment rights.

Likewise with Wasserman's mentor and MCA's founder, the late Jules Stein. Stein sold bands to nightclubs on the South Side of Chicago -- Al Capone's territory -- and dealt with guys named "Greasy Thumb" and "Cherry Nose." One of Stein's clients kept a loaded .45 automatic in his desk. Whenever Stein came to talk business, the owner would sit at his desk, prop his feet up and shoot at the sewer rats scurrying around his basement office. "You had to have steel guts to deal with those guys," said one early MCA hire. Stein qualified. He even expanded his client services and sold laundered napkins, cocktail swizzles, bathtub gin and dancing girls -- precursors to Hollywood's packaged deals. "You got to understand those times," said vaudevillian Rudy Horn, a former MCA client. "You had to work with the Mob in order to stay in business."

And so it is today. The Mob may be corporate and a tad more refined. They wield MBAs and CPAs rather than automatic weapons. But they act as though they've got friends at the precinct and still take the Fifth. As John Sweeney said Monday: "Most of today's CEOs have made their money by stepping on people on their way up." But not Lew, he added: "He lifted people up."

When William Jefferson Clinton first met Wasserman in the late 1980s, the studio chief invited him to meet a group of his studio guys. After Clinton left, Wasserman raised an eyebrow and told the group: "Keep your eyes on that young man." And they did. Wasserman eventually raised cash for Clinton's campaign -- including $1.2 million one record-breaking evening at his home -- and helped defray Clinton's $11 million legal fees stemming from his government investigation. "Lew helped me become president. He helped me stay president, and he made me a better president," Clinton said.

Also present was ex-first lady Nancy Reagan, who owes much to Wasserman. In 1952, her husband was a floundering actor, an MCA client and the Screen Actors Guild president. At Wasserman's request, Ronald Reagan and the SAG board voted to waive a union rule so MCA could act as both employer and agent to actors. That prompted outcries from other agents, who were bound by union rules. Years later, the government indicted MCA for violating antitrust laws, but Wasserman settled. By 1966, SAG had elected another leader, Wasserman was studio mogul and Reagan was running for governor of California. Before his election, MCA made sure to buy Ronnie's old movies and sell them to TV stations as reruns, where they were viewed in the crucial weeks before Reagan's victory.

With Wasserman gone, it's hard not to look at the other studio chiefs without measuring them against him. Disney's Michael Eisner is nearing 60 and has been running the company for 18 years. An early apostle of "synergy," Eisner has not been able to lift the third-place ABC network and connect it to Disney's other assets, even though that was the point of buying the network in 1995. These days, Disney's theme-park numbers are down; its Internet ventures, once enthusiastically launched, are dead; and 4,000 Mouseketeers have lost their jobs. Shareholders recently demanded more accountability from the executive suite, but Eisner seems isolated and oddly adrift in his $25 billion media ship.

Paramount Studios, home of "The Sum of All Fears," has managed modest hits under the tag-team of Sherry Lansing and Jonathan Dolgen. The studio contributes about 10 percent of the revenue to its $23 billion parent. Viacom owns the MTV Network, CBS and Simon & Schuster, making it as formidable as its 78-year-old chairman, Sumner Redstone. Yet Redstone has starred in one of the year's top boardroom comedies, fighting with his successor-turned-nemesis, the 59-year-old Mel Karmazin. Things got so bad recently that money managers pressed the carrot-topped chairman to reconcile. By then, however, the voluble Karmazin had retaliated.

Then there's the soap opera at AOL/Time Warner. Two years ago, when the Internet portal merged with the media Goliath, its masters announced that the new media age had dawned. "Convergence is really right around the corner," said president Steve Case. He, Robert Pittman and Richard Parsons became the Conglomerators, overseeing an e-corp valued at $155 billion. Believing in their bosses' vision, the worker bees held on to their stock -- even after Case, Parsons and Pittman sold some of their shares at high prices. AOL is still the world's largest media company, with Warner Music, Warner Bros. Studios, WB Network, CNN and Time Inc., but the $38 billion firm has watched its shares dive. The company is now roiling, with employees openly resentful and executive headhunters searching for replacements. "Scooby-Doo" -- where are you?

Septuagenarian Rupert Murdoch owns the $14 billion News Corp. With his Australian sports teams, English tabloids and in-your-face Fox network, Murdoch recently tried to buy DirecTV to catapult his company higher. But the bidding took on shades of "Star Wars: Episode II Attack of the Clones" and Murdoch lost his much-desired prize.

Sony Pictures is having perhaps the town's best film year, what with "Spider-Man," "Men in Black II" and "Mr. Deeds." But its $9 billion media empire is just a tiny part of a giant Japanese electronics firm that is extremely nervous. Its Tokyo leaders are grappling with an enormous banking crisis that is squeezing Japan and all its businesses. As Suzanne Pleshette said at the Wasserman memorial, "The world today sucks."

Even at home, show biz is under siege. Despite headlines about "boffo" box office receipts, movie-ticket sales have been flat for years. American audiences have reached a saturation point, according to EDI/Nielsen, and studio gains will come only from ticket-price increases, foreign box office and squeezing more dollars from video, TV and DVD sales. Musicians are agitating with their labels, trying to change the gangsterlike practices that once kept Sophie Tucker and Louis Armstrong tied to Syndicate nightclubs. And the new payola investigations unfolding in Washington sound eerily like those begun in the 1950s.

Meanwhile, studios are being sued in various courts for various antitrust claims. Some have alleged that studios colluded to sell videos at discount rates only to Blockbuster, which is owned by Viacom/Paramount. Thousands of independent video stores have gone out of business since the Big Six allegedly cut this deal yet, so far, the suits have had mixed results. Given the public disgust for overweening corporate interests, it could be time for the antitrust pendulum to swing back to 1958, when Wasserman ruled the land.

At the height of dot-com mania a few years ago, I visited Wasserman in his office. He was gruff, intimidating, funny and, eventually, charming and warm. We talked about the market mania, the Great Crash of 1929 and the folly of short-term moves. Although he didn't mention it, his own dear MCA/Universal had been volleyed to and fro by traders who had no stomach for the long-term commitment. In 1990, Matsushita bought MCA but abandoned it when trouble knocked down Japan's economy. In 1995, the Japanese sold MCA/Universal to the Canadians at Seagram Corp., owned by that old rum-running Bronfman family. Edgar Bronfman Jr. struggled to make his mark, but spent much of his time selling pieces of Universal and buying others. Ultimately, Bronfman didn't like being a mogul and, in 2000, sold Universal to a French water company.

Whereas Wasserman used to avoid huge loans, new chief Jean-Marie Messier embarked on an 18-month-long binge, borrowing $33 billion. He shopped compulsively, formed complex financial transactions and shielded them in secrecy until Vivendi/Universal was under fire. Ironically, the shareholders who forced out Messier turned out to be the Bronfmans, whom Messier accused of "bootlegger methods." In the end, however, what doomed Messier was his own savage display of aggressive capitalism -- his "Americanization," as the independent French media has dubbed it.

Now the conglomerate catchword is "unwind," as though units and workers are pieces of twine to unspool. Vivendi/Universal has to offload goods from its top-heavy cart. AOL/Time Warner will certainly shed some of its wares, while no one can say if and when News Corp. and Disney will follow suit. Today's media lords resemble nothing so much as Borscht Belt types rummaging through their pockets to make a deal: "You want a TV show? A movie? How about some records?"

The days of the global entertainment kingdom are numbered. When Redstone, Eisner, Murdoch and the others pass away or retire -- as they will -- or when Pittman, Parson and Case move on -- which, by their nature, they must -- so will their companies. No ordinary man can manage these frigate-like monstrosities, let alone steer them smoothly across the seven seas, while innovating services, mediating large personalities and recording double-digit growth rates. At some point the ship tips, the sharks circle, the crew mutinies. And the captains will retreat, well compensated, no doubt, but without any lasting legacy.

Wasserman was not perfect. And he was definitely not ordinary, especially by today's standards. No one ever accused him of defrauding employees, and he was monklike about his fiduciary duties. That's remarkable for a tycoon who spent 66 years at the top of an industry not noted for its honor or ethics. "When you look today at scandals unfolding at Martha Stewart, Global Crossing, Enron or Adelphia, you know that none of those would have happened under Lew Wasserman," said Tom Pollock, former head of Universal Films.

On my last visit to Wasserman's office, he talked and I listened. As I was about to leave, he told me a story about an MCA bookkeeper who retired in the late 1950s, after 25 years in the Beverly Hills office.

She came into Wasserman's office crying.

He said, "Sit down. What's the matter?"

She said, "The plan. The plan." She was holding a copy of MCA's retirement plan in her hand -- a plan Wasserman himself had created in 1945 -- but couldn't stop crying.

Wasserman said: "Let me see the paper. Is there something wrong?" He thought the numbers were wrong, that she had been cheated.

"No," she said, catching her breath. "I'm retiring on more income than I made when I was working."

The story might be regarded as self-serving, although I think it's probably true. But Lew Wasserman was the last Hollywood studio chief who could tell it -- and make you believe it.

Kathleen Sharp

Kathleen Sharp reports on business and entertainment from Southern California.

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