Looking back, the truest sign that then-Vivendi Universal honcho Jean-Marie Messier was toast may have come when he showed up for a public forum at the Beverly Hilton two years ago with Viacom Chief Executive Sumner Redstone and other entertainment industry power players, and he wasn't wearing a necktie. The accepted sartorial style for Eurobusiness potentates is, after all, buttoned-up, highly starched, primary colors formality with all the accoutrements — forget the pocket square and you might as well be naked. On that occasion, Messier had on a shrimp-colored open-necked shirt under his charcoal gray suit. But that affront to taste was just one sign that yet another outsider had gone Hollywood. He had gotten slimmer too, and radiated a healthy tan even in photos.
Little did he know that he was headed for that nearly inevitable fate, the one that has befallen scores of interlopers who've dared to become moguls in that alluring but inscrutable culture known as the motion picture industry: Messier was about to be spanked by Hollywood.
"We don't go for strangers," spoke one of F. Scott Fitzgerald's characters in the writer's final, unfinished Hollywood novel. But he didn't get it completely right. The Industry likes interlopers just fine—as long as they empty their wallets and don't overstay their welcome. That scenario has been repeated in Hollywood almost as often as the two-unlikely-cops-become-wisecracking-crime-fightin'-buddies action thriller. An outsider, flush with success in some other industry or bankrolled by a family fortune, bursts onto the scene with dreams of becoming the next Louis B. Mayer, only to slink away a year or three later in ignominious defeat. The most recent, high-profile examples—Messier and Edgar Bronfman Jr., the Seagram heir whose Hollywood ambitions were intertwined with Vivendi's—are only the latest in a series that goes back to the early days of Hollywood, when sharpies such as William Randolph Hearst and Joe Kennedy came West to get their pockets picked.
Since then, scores of other West Coast carpetbaggers have met with varying degrees of failure—old-line industrialists, Wall Street financiers, insurance conglomerates and corporate raiders, New Economy wunderkinds from this country, plus Dutch, Japanese, British, Italian and Israeli hopefuls. The recent news that Comcast, the Philadelphia-based cable-TV giant, may make a hostile bid for Walt Disney Co. raises the possibility that Hollywood may welcome yet another outsider and would-be mogul—Comcast Chief Executive Brian L. Roberts, a publicity-shy, squash-playing scion of a family that amassed its wealth by making belts. But with few exceptions, such as Australian media baron Rupert Murdoch, the movie industry has chewed up and spit out newcomers like hunks of Morton's prime-cut steak.
Why do all these powerful, wealthy alpha males venture out of their comfy enclaves and plunge into an utterly unfamiliar, notoriously Byzantine business that they often approach with distain and condescension? What sort of mass-induced hypnotic state convinces a German investor, for example, that it's a sensible idea to sink millions into a film homage to L. Ron Hubbard's "Battlefield Earth"? Or an otherwise adroit telecommunications mogul into putting his name in the credits of an unnecessary remake of "Around the World in Eighty Days"? Is there some sort of semiotic explanation for why otherwise astute people from another culture—whether it's Amsterdam or Peoria—get hopelessly tangled up in movie industry lingo and end up mumbling about "synergy" after that disastrous first-cut screening?
To truly understand why would-be moguls mostly fail, we must look past the conventional explanations and into the realms of behavioral psychology and anthropology. It also helps to understand a bit about chaos theory.
The film industry is so notoriously hard to crack that there's a rich literary genre on the subject—ranging from "Final Cut" (Steven Bach's account of Transamerica's disastrous stewardship of United Artists in the 1960s and 1970s) to "Out of Focus" (Charles Kipps' account of David Puttnam's brief tenure as head of Coca Cola-owned Columbia in the late 1980s) to innumerable fly-on-the-wall exposés of the tribulations of Bronfman and others. Similarly, the precise strategic mistakes of the Matsushitas, PolyGrams and JVCs have been dissected and number-crunched by savvy business journalists in the Wall Street Journal, Variety and other business publications. Yet the mountain of bleached bones does little to deter the next wave of wannabe moguls, simply because the one enduring truth about all this is that we're dealing with human nature, not logic.
"Outsiders who've been very successful and made a lot of money rightly think they're smarter than the average person and perhaps even somewhat creative," explains Roderick Kramer, a onetime Hollywood script reader who is a professor of organizational behavior at Stanford University's graduate business school, where he also teaches a course on the movie industry for MBA students. "They want to believe they can translate that experience and power into success in Hollywood."
Unfortunately, the world's dream factory, by its very nature, doesn't quite work that way. And it could be that even the business world's richest and smartest minds are helpless to resist a fate that may be determined, in part, by our genes.
Syracuse University evolutionary psychologist John Marshall Townsend suggests that would-be moguls may be driven metaphorically—and sometimes literally, in the cases of Joe Kennedy and Howard Hughes—by the same urges as male bulls: the biological imperative to dominate and procreate. "You're talking about the place where there are the most desirable women in the world," says Townsend, who has studied the sexual behavior of powerful males. "Couple that with the fact that male attractiveness doesn't matter in the subculture—you can look like the Elephant Man if you have enough power. The problem is that the cows are encircled by the bulls who already are in the herd. You've got to get past them."
Daniel Fessler, an assistant professor of anthropology at UCLA, notes that Hollywood in many ways functions as a classic ethnic group. "Essentially, the movie business is a culture of its own in which members use common behavioral markers—their style of dress, various decorations, a distinctive dialect and so on. What these markers are telling you is that another person shares the same values and cultural understandings and expectations of what is appropriate. An out-group female may be allowed in, because from an evolutionary perspective the in-group males stand to benefit from the opportunity to mate. But an out-group male is merely a competitor for resources."
Instead of locking horns like real bulls, the in-group may resort to trickery and exploitation. "The in-group members may look at the outsider and think, 'I'm not going to have reciprocal relations with this person in the future, because he's not going to be allowed to stay.' So instead they go after whatever he's got that's of value."
The idea of biology as destiny might seem odd in a culture where so many conspicuous body parts are fake, and Viagra is dispensed like Pez. But that theory neatly meshes with Roderick Kramer's field of organizational behavior, which studies the motivation, decision-making, uses of power and other things that people do inside businesses, and crosses into the realms of psychology and economics. Kramer sees Hollywood as a series of interlocking networks, composed of various combinations of movie potentates who started together in the proverbial mailroom and clawed their way to the top. Because they didn't kill one another in the process, they form alliances that last—and are almost impenetrable from the outside.
"The most important thing is [your] knowledge base, the contacts that give you 'reputational capital,' " Kramer says. "That's what gets you in. An outsider has a lot of trouble breaking into that kind of network, because outside money and power aren't going to trump those connections. They don't really have time for you. The ones who are willing to let you into a network are the ones who are less reliable, the ones who are out to take advantage. Because the only thing an outsider brings to the network is money—while he still has it."
Of course, the playing field is hardly level for newcomers to the game. Neophyte actors and screenwriters can rely on books such as Fran Harris' "Crashing Hollywood: How to Keep Your Integrity Up, Your Clothes On & Still Make It in Hollywood." But nobody has written a cautionary how-to manual for, say, an oversexed, middle-aged Italian financier who fantasizes about running a movie studio. And seductive illusion is, after all, Hollywood's stock in trade.
"When Europeans fail in Hollywood, they always blame it on the superficial culture," says French anthropologist G. Clotaire Rapaille, who lived in Hollywood for eight years and has known his share of washouts. "They say, 'Everything there is fake!' I say, no, the problem is that everything in Hollywood is real fake. It's so believable that you can't help but be fooled, even if you know better. When I'd go to the studios, I'd see fake antiques that were made as props. They looked so good that I wanted to buy them. It's the same with the deals."
But just as movie viewers suspend disbelief when they gaze on the digitally generated Gollum in the "Lord of the Rings" trilogy, the seduction of would-be moguls entails self-deception. Some have show business in their blood—such as Bronfman, who as an adolescent persuaded his father to invest $450,000 in an obscure British teen movie so he could work as a gofer in the production. Others, such as Sony co-founder Akio Morita, have found themselves seduced by the idea of being at the controls of the Hollywood dream machine. In his book "Sony: The Private Life," Japanese-speaking author John Nathan details an August 1989 meeting at which Morita announced that he was abandoning his proposal to acquire Columbia Pictures because the price was too steep. "It's too bad," he reportedly lamented to his top aides. "I've always dreamed of owning a Hollywood studio."
But Morita's underlings, showing a loyalty unknown in Hollywood itself, didn't want to see their elderly patriarch disappointed, and the next day the group reconvened and decided to buy the studio. They ultimately had to pay an exorbitant $3.2 billion and assume an additional $1.6 billion in debt. Sony was further seduced into hiring two Hollywood insiders, Peter Guber and Jon Peters, to run the place. After a string of flops in the early 1990s, it cost Sony $250 million in production deals and money to ease them out. (Sony persevered, and in recent years, with megahits such as "Spider-Man," which brought in an estimated $500-million profit, the studio has been considerably more successful.)
"They don't do the same sort of traditional business analysis that they would if they were entering, say, the machine-tool business," says Dartmouth College business school professor Sydney Finkelstein, author of the book "Why Smart Executives Fail." "Then again, when you're making machine tools, you're not seduced by the idea of sitting in the audience with a bunch of movie stars at the Academy Awards. Instead, you get seduced by the glamour and it screws you up"—even someone as astute in business as Morita.
Not that conventional business analysis would do much good. Arthur De Vany, a former UC Irvine professor, industry consultant and author of the book "Hollywood Economics," points out that outsider-newcomers have three times the failure rate as veterans in any business, so it's not a total shock that they usually bomb in the movie biz. From an empirical point of view, though, an outsider would have to be totally insane to try the movie industry in particular, because the economic model is bizarrely different from just about any other business. The movie industry actually earns only a 3% to 4% return on investment, which is lousy when compared with steel-making or book publishing.
To make it worse, the statistical curve for movie profits isn't much of a curve at all. If the movie industry followed a bell curve, the typical movie would make money, and it would be extremely rare for a movie to take in more than three times the standard deviation—the average amount that the films differ from the middle. Instead, it's shaped more like a playground slide —6% of the product earns 90% of the money, and 70% to 80% of the product sinks into oblivion. This results in what economist De Vany calls an industry of "extreme uncertainty." That is, successes are aberrantly rare and outlandishly enormous. The movie "Titanic," for example, grossed $600 million domestically in 1997, in a year when the average film grossed $23 million. Results like that are impossible to predict.
Instead, the Hollywood economy may be best understood in terms of chaos theory, a mind-numbingly complex discipline that De Vany explains as the equivalent of trying to figure out how tens of thousands of individual fans, moving independently, manage somehow to exit a football stadium much faster than a mathematician might calculate. "To quote the screenwriter William Goldman, when it comes to what works, 'Nobody knows anything,' " De Vany says.
Another added complication: Most industries don't have Hollywood's peculiar distribution system, in which a would-be blockbuster suddenly covers most of the nation's movie screens like kudzu and competitors get what's left. That's the equivalent of one brand of microwave oven getting all the shelf space at Best Buy, Target and WalMart for a week, but then disappearing instantly if it doesn't sell.
De Vany figures this alone confounds most would-be moguls. A guy who has made a fortune selling microwave ovens, for example, is used to basing his business strategy on the most probable outcome for a venture—that is, a microwave that at least a decent number of consumers will buy. With movies, the most likely outcome is, say, "Gigli"—that is, a consumer reject that's destined for the remainder bin at Blockbuster. He hypothesizes that most outsiders aren't aware of these realities, or choose to ignore them: "For some reason, they keep flocking to Hollywood, even though it's like [playing] the lottery."
The carpetbagging mogul usually doesn't realize that until it's too late. Early in his Hollywood misadventure, William Randolph Hearst was so confident that he brushed off Adolph Zukor's offer of management help. "Making pictures is fundamentally like making publications," proclaimed Hearst, who orchestrated such flops as 1933's "Going Hollywood," in which Marion Davies starred with Bing Crosby—an unfortunate bit of casting because the two shared an interest in alcohol and spent much of their time on the set intoxicated. The movie lost $250,000. Just a few years later, Hearst was ready to quit the movie business, despairing: "I don't think I can make any money at it."
Stripped of his competence and confidence, the outsider is vulnerable. Stuart Fischoff, a sometime screenwriter and professor of media psychology at Cal State L.A., compares the process by which outsiders get sucked in by the Hollywood culture to cult recruiting or North Korean prison camp brainwashing. The would-be mogul is "brutalized and humiliated, then infantilized and reduced to a helpless state, and then introduced to the new set of values," Fischoff says.
For example, a Euromogul must master a whole new meal etiquette. "In Europe, you spend two or three hours on lunch, and you don't talk about business except maybe in the last few minutes," explains French anthropologist Rapaille. "You might say a few words about the deal. What you're really judged on is how you behave, what you know about wine. In Hollywood, everything is organized around the deal. You're at the table for five minutes, you're already working. It can be very disorienting."
Language also can be a problem for outsiders. Matsushita's executives reportedly spoke little English when they took over MCA in 1990. Although that type of handicap is rare these days, the peculiar semantics of Hollywood can be a hazard even for the linguistically fluent. "The language of Hollywood is so filled with hyperbole that you have to be able to decode it," behavior expert Kramer explains. "Otherwise, you don't pick up that when a guy tells you that your project is fantastic and it'll be exciting to work with you, he really means that he's going to tell his assistant not to put through any more of your calls."
Some would-be moguls simply fade away. Japanese electronics giant JVC spent more than $100 million to launch its film company, Largo Entertainment, only to quietly shut it down a decade later. Others, such as Messier, depart in a storm of recriminations, litigation and bad karma. Some salve their egos by keeping things in perspective. (In his rented Los Angeles home, David Puttnam reportedly kept a framed quotation from Darryl Zanuck dismissing legendary French director Jean Renoir: "Sure, Renoir's got a lot of talent, but he's not one of us.")
But Hollywood is a dominatrix with a waiting list. The industry has "a never-ending need for money," says economist De Vany, and as long as eager outsiders have it, they'll be allowed to indulge their dream of being players, at least for a while. Sooner or later, though, most will end up like Messier, humbled and somber. When he returned to Paris to face angry Vivendi shareholders in April 2002, shortly before his ouster, the open-necked look was gone, replaced by a starched white shirt and red tie.
The periodic fall of feckless would-be moguls also enables Hollywood to lead the world in producing another entertainment product that's nearly as popular as its films and TV shows: what Germans and the would-be Eurohipsters among us call schadenfreude—the experience of taking delight in others' misfortune. Notes Kramer: "Hollywood is a zero-sum culture—there are only so many screens, only so many moviegoers. So my success is by definition your failure. That's why everyone is secretly pleased to see others fail—especially if they're outsiders."Copyright © 2015, The Baltimore Sun