The Highwaymen

1      
 
DILLER PEEKS INTO THE FUTURE
 
Intimations of Interactivity
 
(The New Yorker, February 22, 1993)
 
When Barry Diller, the former chairman of Fox, Inc., speaks of his Apple PowerBook, a laptop computer, he grows rhapsodic. “My odyssey began with the PowerBook,” Diller says of the months he spent after leaving Fox. The odyssey was Diller’s ten-month search among the seven industries hoping to dominate global communications—studios, TV networks, cable companies, telephone companies, computer companies, consumer-electronics companies, and publishers—to decide where he should stake out his own future. In fact, the search began in the fall of 1991, several months after Diller and Rupert Murdoch, whose News Corporation owns Fox, met to discuss Diller’s future. After being head of prime-time television for ABC Entertainment in the early seventies, and chief of Paramount Pictures for ten years—into the first half of the eighties—and then guiding Fox into the nineties, Diller told Murdoch that he wanted to be a principal, not just a well-paid employee. Murdoch, who had moved to Hollywood and plunged into Fox’s business—Diller’s business—asked for a few days to consider Diller’s request. When he had done so, he responded bluntly, Diller recalls, saying, “There is only one principal in this company.”
 
Diller was grateful for the candor, he concedes, but, with his fiftieth birthday approaching, he began to think about leaving. Lifting up his PowerBook, he explains, “I learned it to leave Fox.”
 
A tutor taught him how to use it. The machine’s allure was that it promised a certain kind of freedom—from secretaries, meetings, memos, press leaks. Diller used it to compose his resignation statement; to fax draft copies of the statement to Murdoch and to his closest friend, the clothing designer Diane Von Furstenberg; to list things he must do before issuing the statement; to sort from his copious address book the three hundred people he wanted to have receive the resignation statement before they heard or read about it; to jot down notions of what he might like to do next and whom he might consult. The PowerBook went with him everywhere. Diller punched keys in the middle of meetings, while others were left to stare at the top of his bald head or to listen as he related the many extraordinary feats his machine could perform. “He’s had an unbelievable love affair with his computer,” Von Furstenberg says. “It has expanded his horizon. No question that his relationship with his little screen—which is irritating to everybody in the room—has altered his life.”
 
Among other things, the machine helped Diller better understand the new video democracy. Through it he could see how technology, with incredible speed, was transforming dumb television sets into smart ones, making it possible for viewers to select, organize, and interact with programming and information rather than passively consuming what was offered on fifty, or even five hundred, channels. The PowerBook became for him a means of peering into the future, for he uses the laptop the way Apple Computer, which makes it, hopes “that people will use a book-size machine, referred to as a “personal digital assistant,” that Apple is developing. Just as Diller could convert his laptop into a word processor, a fax, a file cabinet, a spreadsheet, a conveyor of commands, or a link to various networks of news or data, so in the next few years, he came to believe, viewers will receive video on demand—be able to watch what they want when they want. With a click of a remote control or a telephone button, they will summon up movies from the equivalent of a video jukebox. In an instant, they will send for and receive a paperless newspaper, a program they missed last night, a weather report.
 
Still, as the day Diller would announce his departure from Fox neared, he felt vulnerable. “I liked my life,” he says. “I liked power.” He worried that no one would call, that he might lose his conspicuous seat at restaurants, that it might appear Murdoch had dismissed him, that the story would leak before he was ready.
 
Diller issued a statement on February 24, 1992, which came as a complete surprise to Fox employees and to Hollywood. In it Diller said he “yearned” to be an entrepreneur like Murdoch, whom he called an “inspiration.” Murdoch responded with wide praise for Diller’s many accomplishments, from creating a fourth TV network, which in 1991 made more money than either NBC or CBS, to engineering the comeback of the Fox film studio. “It’s nice to read your obituary while you’re living,” friends told him. Diller left Fox in good financial condition. He received a severance, bonus, and stock-payment package that a Diller intimate says was worth $140 million; upon his departure, he bought a thirteen-seat Fox Gulfstream jet for some $5 million.
 
Within days, he recalls, thirty-three executives offered either to back Diller or to become his partner in any future venture, and their names were immediately filed in his PowerBook. Among the most persistent of these suitors in the months that followed were John Malone, the chief executive officer of Tele-Communications, Inc. (TCI), which is America’s and the world’s largest cable company, and Brian L. Roberts, the president of the Comcast Corporation, which is the nation’s fourth-largest cable company. Both men believed that cable’s weakness—programming—was Diller’s strength. They knew that technology would one day allow a virtually unlimited number of channels, but they also knew that viewers watched programs, not technology.
 
For months, rumors chased Diller. It was said that he might be acquiring NBC from General Electric, and that he might be asked to run Time Warner. Whenever he was seen lunching with a wealthy financier, the news would appear in the columns, increasing speculation that Diller was about to launch something big.
 
Ten months after his Fox announcement, Diller’s plans were still a mystery. People in the entertainment and communications worlds began to say that he couldn’t be a principal, because he had no capital. “A guy who’s an employer is a guy who writes checks and he can’t,” one Hollywood power broker said. Then on December 10, 1992, it was announced that Diller had become a partner of Malone’s and Roberts’s in something called the QVC Network, a twenty-four-hour home-shopping cable network. People passing Diller at his regular table in the Grill Room of the Four Seasons had almost embarrassed expressions as he kept looking around, as if for applause. Those who knew Diller waved a greeting, but they seemed to be thinking: Barry Diller’s going to run what? A home-shopping network? You’ve got to be kidding!
 
“All they care about is status,” Diller said some weeks later, in his suite at the Waldorf Towers. “That’s why they can’t understand why I’m doing this. They say, ‘It’s not very glamorous.’ ” Every now and then, he glanced over at his PowerBook, which was sitting on a coffee table relaying minute-to-minute QVC sales. In 1991, QVC made a net profit of nearly $20 million; in the first nine months of 1992, it already showed a profit of $36 million. It was recently rated America’s “fastest-growing small public company” by the magazine Inc.
 
The people who found QVC insufficiently glamorous probably weren’t aware of those numbers. Or, if they were, they wondered why Diller, who had done so much to attract mass audiences, was now in the narrowcasting business. Worse, they wondered why he was hawking “tacky” merchandise. Diller pretends to be unfazed, but friends admit that he is sensitive. “Remember, the royalty of America is Hollywood,” one friend says. “We are the place of fantasy and intrigue and overnight rags to riches. For the time being, Barry is concerned that he’s out of that limelight. He feels that what he’s in is a bit undignified.”
 
Diller seeks to counter the skepticism in several ways. After ten months of searching for the future, he thinks that he has become a pioneer in a new form of interactive television—one that began with home shopping and will soon include news and programming. He thinks of QVC not as just two televised shopping channels, which is what it is now, but as a springboard to a universe beyond the limited world of channels. He also thinks of QVC as a gold mine. Within two weeks of the announcement that he would run QVC, its stock rose from about thirty dollars a share to forty. On paper, Diller’s seven million shares climbed in worth by $70 million, yielding half as much in two weeks as he got when he left Fox. “If he fulfills his vision at QVC, he’ll be the richest person any of us know,” says Jeffrey Katzenberg, chairman of Walt Disney Studios, who is a close friend. “Barry Diller will be worth many billions of dollars.”