If mass media is obsolete, and pointcasting the future of media, why would anyone in their right mind want to buy a broadcast network? (Or, what does Turner Entertainment's Wunderkind president Scott Sassa know that you don't?)
__Copyright. Branding. Leverage. These three words pretty much say it all in the wild and woolly new world of digital-age content. Possibly no one understands how to deploy these three concepts in tandem as well as Scott Sassa, the 35-year-old president of the Turner Entertainment Group, a division of Turner Broadcasting.
Sitting in his Century City, California, offices, Sassa seems more the multimedia artist in his jeans and T-shirt than the typical Hollywood mogul. But he's been an entertainment whiz kid for years – back in 1986 at the tender age of 26, he wrote the original business plan for the phenomenally successful Fox TV network on his antique Mac.
Scott Sassa may just be that rare bird in the Tinseltown ecology – a genuinely nice guy who also happens to have a firm command of "the art of the deal."__
Wired: Did you ever think you'd end up working in the Hollywood mainstream?
Sassa:
Mainstream? Jeez, I spend about 10 days a month out here. The rest of the time I'm in Atlanta. When I was with the studios (back in 1986), I was helping launch the Fox network, which definitely wasn't mainstream. I was the first person hired. The place was just a bunch of legal pads. I brought in my 128K Macintosh - it was probably a 512 by then - I brought it into meetings, and I banged out the business plan for this new network.
OK, maybe not mainstream, but a mogul nonetheless, right? I mean, listen to your bio: "President of Turner Entertainment Group. Sits on the Board of Directors of the Turner Broadcasting System Inc. Responsible for all operations and programming for TBS Superstation, TNT, Castle Rock Entertainment, New Line Cinema, Turner Pictures Worldwide - "
[Sassa laughs.]
Wait, I'm not finished yet: "Cartoon Network, Hanna-Barbera Productions, TNT Latin America, Turner Home Video, Turner Publishing - oh yeah, and "Turner Licensing and Merchandising." Did I miss anything?
[Shrugs.] My job isn't literally going out and running these businesses. It's coordinating the efforts between these various businesses to make sure that the value chain becomes maximized.
What does "maximize the value chain" mean?
Well, what's interesting about our business is that it basically has two areas. One is the creation of good copyrights. Entertainment companies - whether they do videogames, movies, or TV - are always looking for that Holy Grail, that killer copyright. Whether it's Mortal Kombat or The Mask, Forrest Gump or Seinfeld. The second side of it is developing a system that leverages your content further, higher, faster than anybody else. Case in point: Snow White, which was just released on videocassette. It's probably the best animated movie ever done. Walt Disney was great at the first part - creating the product. Then Jeffrey Katzenberg and Michael Eisner created a second level of activity that extended the value chain. They took movies like The Little Mermaid - which are good, but aren't Snow White - and put them out on video, ran them on cable, released them in foreign markets, and licensed and merchandised toys and whatever based on the characters.
So an entertainment company today is different from one 20 years ago. Back then, it was just the copyright. You lived or died on the onetime success or failure of your copyright. Today, these businesses are complicated. They're vertically integrated, horizontally integrated. And every copyright that starts out anywhere in the system gets leveraged every which way imaginable.
Give me an example, something you're working on.
We haven't yet completed the ultimate example of adding value throughout the chain. It's going to take a couple years to get that done. But one thing we're doing now is coordinating the development of Johnny Quest as a live-action feature film with [famed Lethal Weapon director] Dick Donner and as TV specials. We've got new episodes of Johnny Quest, a totally different animated series. We've got a fully integrated consumer-products program to sell videogames and T-shirts, and, I hope, Johnny Quest bikes and sneakers and things like that.
This may sound really lame, but what exactly is Johnny Quest?
Johnny Quest is an adventure cartoon that we did. It's like Home Alone meets Indiana Jones. It's about a kid whose family is one of the first single-parent families on television.
Does Turner Publishing have a role?
Exactly. We'll do the graphic novels. Anyway, the next year, we're going to do The Jetsons. The year after that, we're going to do Scooby-Doo. So that's what we do. It's all about creating ways to make a good copyright, and then leverage the hell out of it.
Why this new emphasis on leverage?
Partly it has to do with the huge cost of building these major, killer copyrights. And then you combine that with the fact that the entertainment business is becoming as segmented as a Third World country. I mean, on one hand, you have a few very prosperous, huge copyrights. You have your Mask [produced by Turner-owned New Line Cinema], your Jurassic Park, True Lies, Clear and Present Danger, and your other big, hundred-million-dollar hits.
And then you have your little movies like Four Weddings and a Funeral and Barcelona.
But there's not a lot in between. Last summer, you had some movies that did over US$100 million. And you had a lot of movies that tanked well under $40 million. But you didn't have a lot of midrange, $50 million movies. It's like they either took off or they didn't.
So, as the media gets more and more fractionalized, there are going to be lots of smaller movies and projects, and then there'll be one or two giant hits that become part of pop culture. The "middle class" of movie is going to be nonexistent, whereas 10 years ago, many movies did middle-of-the-road well.
So, first, any company has got to have the capital to build those big Jurassic Park copyrights. And second, it's got to have the wherewithal to get all the value out of them, because the entry cost is so incredibly high. That's what the game is all about.
We hear all the time about how new technology is creating more channel capacity, new distribution avenues. And yet new programming is having a harder time than ever getting aired because the cable operators, for one, say their systems are full. What's going on?
Part of the problem is that we're still thinking too conventionally, using the old paradigm. It's a rough world now. If you want to start an à la carte cable channel - another MTV, say - the consumer has to pay extra for it. So the programming has to be even more compelling. Basically, any programming that's any good is already licensed someplace in cable, syndication, or network television. So all the best programming's gone.
But there's always some great new concept, some new show or slam-dunk hit movie just around the corner, waiting to be discovered, right?
The difference, because of what the FCC did to the cable operators [when it rolled back rates for basic cable service a year ago], is that the economics really aren't as favorable for new, à la carte channels. Today, it's expensive to start one because consumers have a much higher expectation level. And at the same time, because it's à la carte, it's tough to get the cable penetration levels and the audience you need to be profitable. So, what I mean about the old paradigm is that people come in and say, "I've got a killer idea. I want a 24-hour network." But in the near future, when we have expanded distribution and total interactivity, the consumer won't need to subscribe to a 24-hour channel. He or she will just get it on demand.
The future won't be 500 channels - it will be one channel, your channel. So instead of subscribing to some à la carte, 24-hour channel, you'll just get the show you want on demand, whenever you want it. It'll be W-cubed: whatever, wherever, and whenever I want it.
But how will you know it's there, available on demand, unless it's already a well-known show?
I guess that's the chicken-and-egg thing. I mean, MTV didn't start out as a popular network. In 1981, it was just a bunch of videos, and the videos weren't even that well done at first. It was a medium that literally grew up in front of our faces. Or look at Seinfeld. It didn't start out as a popular show. These things evolve. The role of the networks and basic cable is to force sampling.
And you do this in the hope that this or that show, maybe one in a hundred, will take off and spawn a mass culture?
Exactly. But soon there's going to be so much information, so much entertainment, and so much choice out there, how does a show break through? How does it stand out from all the others?
Branding?
You got it. Why do Disney animated movies do better than anybody else's? First, because they're great. And second, because we've come to know and trust the Disney animated-movie brand. That's the value added. I mean, what's the scarce commodity of the '90s? Time. In the '80s, it was capital formation. Now it's time. With all the new choices, who has the time to watch everything, go to every movie?
So, by making sure that we're able to leverage our assets to create brands, we're able to make people's time more valuable. However high-tech the world gets, we can't lose sight of the fact that we've got to enhance the consumer's disposable time and make it more enjoyable. That's the new paradigm for success.
You talk about a new paradigm, but until very recently, Ted Turner was meeting with officials of NBC, trying to work out a deal to buy the epitome of what some would call the old mass-media paradigm. He even had the backing of John Malone in making a bid. [TCI's Malone owns 21 percent of Turner Broadcasting and sits on its board.]
You interviewed him, right?
Malone?
Yeah. What did you think of him?
Well, I guess I like his straightforwardness.
Yeah. You know, I think if you stepped into his shoes and looked at what he does.... I mean, this is the guy who basically put the cable-TV industry together. He sunk a lot of money into it. He didn't have to, but he did it. As a result, cable has largely fulfilled its original promise, right? We've got CNN, Nickelodeon, MTV, all kinds of diverse programming that simply didn't exist before Malone helped blaze the trail, so to speak. Is he a motherfucker? Well, aren't we in this game to win and be successful? And if you had that kind of leverage, wouldn't you be a motherfucker?
If I had that kind of leverage, maybe you'd be interviewing me. But let's get back to the networks. Some people say mass media is dead, and the networks are dinosaurs. So why were you interested in acquiring one?
Obviously, the networks have been damaged over the years by some erosion of their audience. But we still think they're a good business. Why? Because they still have the only beach-front, class-A real estate there is. And they have economies of scale that nobody else comes close to.
What do you mean, beach-front property?
Look ... we own Castle Rock now, which produces Seinfeld. I could argue with you that if we had owned it a few years back, we could have just created Seinfeld, episode by episode, and run it on our cable systems. But you and I both know that Seinfeld would never have made it onto the cover of Time magazine. Only the networks can create that kind of cultural phenomena. Think about it: with all the choices in cable and everything else you have today, the networks' prime-time shows - Seinfeld, Home Improvement, Monday Night Football, the Super Bowl - these shows attract audiences that cable can only dream about. The audiences are extraordinary.
So, why were we interested in NBC? Well, we thought we could offer enough unique benefits that would have made this asset even more valuable than it is now.
How, exactly?
OK, what is a network? It's a bunch of stations that get together and amortize the cost of producing top-of-the-line, million-dollar-an-hour programs. They create copyrights based on that relationship. That's the basics of a network. Now, what's interesting about the economics of a network is that for every Seinfeld or Home Improvement, there's a whole string of very costly shows that make up the lower part of a network pyramid. This is the most costly part of their operation because they have to keep retooling each year, dumping the shows that don't catch on, and producing new shows for the next year in hopes of coming up with a winner. So, there's almost no payoff for all the investment they've put into the bottom half of their lineup.
But our company could get a lot of value from those shows that are doing just OK - you know, the ones down the ladder that aren't the Seinfelds, aren't the Home Improvements - because we have a guaranteed place to run them where the economics make sense.
You mean, your cable systems.
Right. I'll give you another example. There's a show called Saved By the Bell. It's a teen sitcom that used to run on Saturday mornings on NBC. As a prime-time show, it wouldn't have a chance going up against Roseanne and shows like that, which have broader audience appeal. And it didn't do well in syndication because it appealed only to teenagers, and teenagers alone aren't enough of an audience to make the local TV station that's running it competitive. So, we got it for TBS. Now TBS runs it all across the country and - surprise, surprise - its 2.5 rating makes it the highest-rated sitcom on cable. [In contrast, the network show Roseanne gets a 17.5 rating.] In a local syndication market, a 2.5 rating is a disaster. But spread over a much larger base, where the costs are much less, a smaller audience can work.
So, the fact that our economics allow us to do this sort of thing would make a network an even better business than it is. We believe that a network could be a fantastic leverage point for creating copyrights and maximizing their value throughout the chain.
OK, let's talk about this notion that "content is king." First, there was the battle for Paramount, and now three phone companies just signed a deal with Hollywood talent agent Michael Ovitz to develop video programming for the interactive networks they're building. My question is, Can you really just buy content and be assured of success?
I'm not clear what their strategy is. Are they doing this because they want to amass a number of valuable copyrights? Are they doing this because they feel they need propriety in the programming they offer to the consumer? I'm not sure exactly what their mission is.
Some have asked, Why spend $10 billion for Paramount? With that money, you can start your own studio.
You know, our company today owns the world's largest film library - 3,800 titles. Not just any titles, either. Movies like Citizen Kane, The Wizard of Oz, Gone With the Wind. We also own 7,200 cartoons. Now, do the math. You can start your own studio, and even if you make 30 movies a year, 40 movies a year, it's going to take 100 years to create that kind of library.
So, is it possible to start a new studio and create a library of valuable, leverageable copyrights with the quality of Citizen Kane, the Wizard of Oz, or Gone With the Wind? Maybe. But not in our lifetime.
As you know, you can spend $100 million producing what you think will be a megahit - hire the best writers and directors, the most bankable actors, run a bunch of focus groups - and it can still flop. Like Last Action Hero.
That's right. You never know for sure what audiences will like and respond to. It's a little magical. I think sometimes people look at false indicators. Take CD-ROMs. Everybody's harping about getting movielike images in CD-ROM games. But movielike images don't matter. What matters in games is playability. Tetris has no movielike images, and yet you see all these people hooked.
It's the same with movies. If they're going to be successful, they've got to engage me.
Offer an immersive, emotionally compelling experience.
Right. That's why I don't believe that movies are ever going to be interactive. Good movies are made by good storytellers. Even the guys who are great sports producers are all great storytellers. N.F.L. Monday Night Football was a hit because Roone Arledge was a great storyteller, and he had a great on-camera storyteller, Howard Cosell, who was able to set the drama.
And drama has its own inherent logic, right? It's got a beginning, a middle, and an end - it sets the stage, pulls you into the conflict, then resolves it. Hollywood didn't invent the basic three-act structure. Maybe there's something hardwired in the brain that responds to this inherent logic of drama.
You're right. It's how we think. You know, Don Ohlmeyer, who runs NBC, said something funny to me when we were talking about the notion of interactive movies in which each viewer can pick his or her own plot line or ending. He said, "I pay people hundreds of thousands of dollars to sit in editing trucks and do it right. Even they can't always get it right."
Well, some digital savants say that soon we'll all be able to make our own movies and distribute them over the Net, so who needs Hollywood?
You know, the other day, we had a staff meeting, and someone from the TNT Group mentioned that the guy who answered the phone in the program area did a music video. He shot it with a Betacam, edited it on an Avid, and then he went online. Did it for less than 400 bucks. Even two years ago, that wasn't possible to do for 300 or 400 dollars, but because of the Avid he could do it. So, yeah, absolutely, there's going to be a ton of really innovative grass-roots entertainment put out.
And because technology reduces the number of people who have to be involved in what used to be a big studio production, the "hyphenate" becomes more important. You know, someone who can write, direct, produce, shoot it, edit it, market it. Look at Spike Lee. He knows what's happening. The generalist - the person who can block, tackle, and catch - will definitely have an advantage.
But all that said, it's completely wrong to think that Hollywood's going to wither away. Even with this explosion of grass-roots stuff from below, we're also going to see Hollywood get even more powerful and more competitive. The above-the-line talent that's already so expensive is going to get paid more and more and more.
Is that because with all the new media forms and new channel capacity and distribution options, Hollywood is going to be starved for content?
No, I think a lot of people on the programming side get shortsighted when they say, "Ah, this is great! New channels and delivery systems." Phone networks, satellites, et cetera. The problem is, you may have 500 channels instead of 50, but you won't get 10 times as many people willing to pay a penny more for what they get over the air for free.
Meaning that neither people's discretionary income nor their time is likely to increase very much?
Yeah. If you look at the growth from 1970 to today in household income, it was a second income that fueled it. And we've tapped that one out. So it's not as if this pie is just going to keep expanding. There may be somewhat more movies produced, but again, the basic pie is not going to grow that much.
So Hollywood's not dead?
Did you ever see the original episode of Max Headroom? You should watch it. Rent it and watch it, because it's really cool. What happens is that in this apocalyptic future, everybody has his or her own channel, but nobody can afford to make any real movies, so all the TV shows are like.... You know, it's like people carry their own little camera and walk around with a little satellite dish producing this really boring stuff. You know, just people talking. The point is, even with the explosion from the grass roots, there's still going to be a need for mass culture, for truly great entertainment that transcends all the little niches and links people together.
So even when some guy in Akron, Ohio, comes up with a funny show, it'll just be one in a universe of little grass-roots shows out there. How do people find it? How do they know about it? Hollywood is still going to popularize the best that comes up from below, and try to make killer copyrights out of them.
And finally, don't forget: just like there are only so many Monets and so many Picassos, there are only so many filmmakers who can make a Citizen Kane or a Gone With the Wind and capture the imaginations of tens of millions of people. Not everybody can do that. Really great artistic talent is not a commodity. It's always a scarce resource.
So yeah, Hollywood's going to have to reinvent itself. But Hollywood as a leading cultural force, as a major industry, and even as a physical place - a watering hole that brings together this critical mass of storytelling talent and resources - that's never going to change.
