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Ken Auletta
Ken Auletta
Three Blind Mice:  How the TV Networks Lost Their Way
ISBN: 0307766330
Three Blind Mice: How the TV Networks Lost Their Way
Mr. Auletta talked about his book “Three Blind Mice: How the TV Networks Lost Their Way,” published by Knopf. His book looks at the effects of increased competition and advanced technology on U.S. network television. He explained how the television networks gained a monopoly over entertainment and news from the 1950s to the 1970s, and the current status of the networks in U.S. media.
Three Blind Mice: How the TV Networks Lost Their Way
Program Air Date: October 6, 1991

BRIAN LAMB, HOST: Ken Auletta, author of “Three Blind Mice: How the TV Networks Lost Their Way,” what was your most interesting finding?
KEN AULETTA, AUTHOR, "THREE BLIND MICE": Well, actually I found a lot of things of interest. One, I was amazed sometimes that people let me sit in their office as Aaron Spelling is a doing casting session for a show called “Nightingales,” which was a piece of fluff, prurient almost. And as I'm sitting there, he and his casting director and vice-presidents and writers, these women are traipsing in the office, and they're trying to perform to show that they're good actresses. And, of course, all these men want to do is see what kind of figure they have and how they'll look in a bathing suit. I'm scratching my head and I'm saying, "Don't they know I'm in here as a reporter? Don't they know I'm taking notes and taping this?"

So there are moments like that that surprised me, that people who are in the public eye, who normally don't talk to the press and I would have thought would have been a little more defensive, in fact were incredibly uninhibited. I'm grateful for that. I'm not sure they are, but I am. That was a surprise.
LAMB: When did you set out to do what you did and what did you do?
AULETTA: I was doing a profile of Laurence Tisch, who had just acquired stock in CBS in 1985, for the New York Times Magazine. I realized in the course of doing this profile on Tisch, who it was clear was making a move at that point on CBS and, in fact, did acquire controlling interest in CBS in September of '86, that there was a bigger story going on here, that within a year the three networks had all changed hands for the first time in their history and new owners arrived. General Electric took over NBC, Capitol Cities Communications took over ABC and Larry Tisch and Loews Corporation took over CBS.

They were coming into networks that were in a period of decline. I said, "God, that's an interesting story." I was a bit of a naif about television. I watched it like anyone else, not as much as I do now, and I thought it might be kind of interesting to watch the struggle of these business lions to control and make prosperous once again networks that were no longer a monopoly and yet had such a profound effect upon our lives and our children's lives. I thought it would be a good story and that's what I set out to do -- to sit with these people, get them to allow me to be a fly on the wall over a period of six years as they ran these networks and tried to make them once again dominant.
LAMB: You sat with Larry Tisch 50 times?
AULETTA: I did approximately 50 interviews. Every time I interviewed him -- all these people -- I kept a note of the dates, which are all in the back of the book, and I just counted them up and there's 50 times. These are extended interviews. These are not episodic. I would basically do what I would call temperature checks on these people -- not just the network presidents nor the anchors nor the head of entertainment or sales or sports, but other lower level employees of the period of that six years, I would take their temperature on a regular interval because they were basically living through what I describe as an earthquake. They had once been dominant and as they come to work every day, they see their share of audience dwindling day by day. Their profits dwindling day by day. New competitors growing up day by day.

I mean, just think about it. In 1976, which was arguably the best year network television ever had, 92 percent of all the people watching television in the evening were watching the three networks. There was no C-SPAN, there was no cable to speak of, no Disney Channel, no MTV, no ESPN, no CNN. There was no Fox Network. There were very few independent TV stations relatively speaking. No VCR. No cordless remote control equipment. And there were only an average of seven channels in the average home. Today the average home has 33 channels. So the world of television for the viewer has totally changed. No longer are they dependent on three networks, just as no longer automobile buyers depend on the big three auto manufacturers here. That change has had a profound effect upon what we see and how we see it.
LAMB: You sat with Larry Tisch for 50 interviews. How often did you sit with the head of ABC-Cap Cities, Tom Murphy?
AULETTA: I had, I think, 10 interviews with Murphy. I had a few more than that with Dan Burke, who is now the CEO and was then his number two.
LAMB: You say in the introduction that Dan Burke didn't know you were meeting with Tom Murphy.
AULETTA: One of the things that was really hilarious ... They were very generous with their time and allowed me to roam the halls of the networks for six years. The expectation would be that I would write -- which I set out to do and hope I did -- a book that not only told a story, but described how network television works. But I did a final interview with Dan Burke this past February. We were sitting in the ABC cafeteria for about three and a half hours one morning, and he said, "Ken, I'm just going to ask you one thing before you go. I hope you're not going to be unkind to my friend Tom Murphy." I said, "What do you mean?" And he said, "Well, because Tom didn't speak with you." I said, "What? Why do you say he didn't speak to me?" "Well," he said, "I know he didn't because he told me he didn't." I started laughing. He said, "Why are you laughing?" and I said, "Because I interviewed Tom about 10 times and sat in meetings he attended. I can't believe he'd go around saying that." In fact, it was almost comical at one point.

At CBS, the board of directors passed a resolution in 1987 that no one should speak with Ken Auletta, who is writing this book, except the chairman or the president of CBS, Larry Tisch. When I heard about this, I started to giggle, and the reason why is that I had already interviewed more than half the board. So here these men and one woman at the time are voting, saying, "We won't talk to him, only Larry can," and they're talking to me. So that happens and people want deniability and fine by me.
LAMB: How many times did Jack Welch, the CEO of GE, talk to you?
AULETTA: I don't remember the number. It's about a dozen times I interviewed Welch and then obviously attended some places where he spoke. They allowed me to attend a management retreat where Jack spoke. And then for those four days -- with 150 of the top executives at NBC including Welch -- for most of those days he would attend meetings and talk about the future of that company.
LAMB: How often did you meet with Bob Wright, the president of NBC?
AULETTA: I probably interviewed him -- I have the figure in the book -- about 18 or 19 times, just under 20.
LAMB: Right here on the jacket cover it says "author of ‘Greed and Glory on Wall Street.’" Had you already written that by the time you came to them?
AULETTA: Yes. “Greed and Glory On Wall Street” was about the breakup of Lehman Brothers, the oldest investment banking partnership on Wall Street. It came out in early '86, and it was basically a tale of how a brilliantly run company in terms of profitability, entrepreneurial spirit, all the things that are supposed to make for a successful company, destroyed itself because of human factors like greed and panic and vanity -- the things of Shakespearean plays. I had written that. It had been best seller and now I did appear at the network.
LAMB: When you went to all these men, what was your calling card? Did they all know you before you got there?
AULETTA: No. In fact, the waters didn't part for me when I got there. There were many people who at first wouldn't talk, and I had to wear them down. One of the advantages that an author has is he's going to take six years, as opposed to a columnist or someone who's writing a magazine piece. I had time to wear people down, and if Jack Welch at first didn't want to see me, I had time to figure out how I might get to see him, who I might ask to talk to him so that he might cooperate with this project. But there were people at first -- Tom Murphy didn't at first cooperate. Some CBS board members didn't at first cooperate, and it took me time. There are some people it took me a year to see, but then I saw them regularly.
LAMB: Having written the book -- the book's been out for a while -- if you were to go back now, who would be the first one of this group that says, "No more."
AULETTA: Larry Tisch, I'm told. My guess is that Tisch would say no because he, I'm told, is offended by the book, but he proclaims that he hasn't read it. There are things in the book that have to displease him. I mean, there are times when he told things that were not entirely true. I described them because I was there with a tape recorder.

For instance, I attended a closed-door affiliate meeting. I was the only reporter there -- it was June of 1988 -- and the affiliates were irate. CBS had slipped to third place. There were rumors that Tisch was going to sell the network. There was a lot of unhappiness, and one affiliate from Oklahoma stood up and he said, "Mr. Tisch, why don't you step aside and let a broadcaster run this network?" Well about an hour later, Tisch held a press conference with the rest of the press, and I attended that as well. There were no other reporters in the room with me when I was tape recording the affiliates session. A reporter said, "Mr. Tisch, I understand that some affiliate stood up and suggested you step aside and let a broadcaster run it. Is that true?" I'm sitting right there and Tisch said, "No, it's not true. No one ever said that to me." I'm thinking to myself, "I can't believe he would deny something that he knew I was in the room." I was right in front. And so that was not the truth. When I write that in the book, it's obviously embarrassing to him to read that.

There are always going to be people who object, as I understand some do. Michael Gartner, the head of NBC, objected to the fact that the book reports that he was -- which was something he didn't know -- that he was about to be fired in the summer of '89 and replaced by Don Ohlmeyer as sports producer. It's embarrassing, humiliating when you read that. It happens to be true. It hasn't been denied. My sources were Welch and Wright, the head of GE and NBC respectively. People obviously are going to be unhappy. But the truth is when you write a book, your constituency is not the people who cooperated with you, though you're thankful for that generosity of time, but ultimately your obligation is to the reader and hopefully to the truth.
LAMB: Where were you born?
AULETTA: Brooklyn, N.Y.
LAMB: Did you grow up there?
AULETTA: Yes. Lived in New York. Lived in Washington for a time, went to schools in upstate New York, both undergraduate and graduate school.
LAMB: What's the school?
AULETTA: I went to [NY] State University at Oswego, an undergraduate teachers college, which is the only school that would take me. I got in because I had a good fast ball and the baseball coach helped me. Then I went to the Maxwell School at Syracuse [University] and got a masters degree in political science.
LAMB: What did you do when you lived in Washington?
AULETTA: I worked for the fellow who was the acting secretary of commerce, Howard Samuels, and then resigned -- it was the Johnson administration -- to work for Bobby Kennedy when he ran for president in '68.
LAMB: And you worked for Bobby Kennedy in '68?
LAMB: What did you do?
AULETTA: Oh, I was a gofer. I was sent up to New York because I knew New York and helped prepare for when he would come back to New York right after the California primary and engage in the New York primary, which was 10 days later. But he was assassinated in California, so he never came back.
LAMB: Other politics?
AULETTA: Yes. I was the genius who help Howard Samuels lose when he ran for governor of New York in '70 and '74. I was executive director of the Off-Track Betting Corporation when it started in New York, the first to start in the United States, which was a fantastic management experience. So I had some executive experience, which perhaps helps me in writing about business. Then after Samuels lost and I was involuntarily unemployed in '74, I went into journalism, which is something I had wanted to do and I'd done a little bit of before.
LAMB: What was your first job in journalism?
AULETTA: I worked for the New York Post as their chief political correspondent in New York for about two weeks, and then I had a run-in with the publisher. Left that, freelanced for various places including the Village Voice where I became a staff writer. I basically worked for the Village Voice and for New York Magazine. Then when Rupert Murdoch took over those publications in a hostile takeover in early '77, a whole group of us, myself included, quit. Then put together a life basically where I wrote longer pieces for the New Yorker Magazine, a column for the New York Daily News once a week on politics and government, urban affairs a lot and then books. That's what I've done.
LAMB: How many books?
AULETTA: This is my sixth.
LAMB: How is it doing?
AULETTA: This one? I'm told it's on the best seller list in Washington, Los Angeles, national chains. It's doing very well.
LAMB: What's your best seller of all the six?
AULETTA: Well the last one, “Greed and Glory,” was a bestseller for, I think, 16 weeks on the national bestseller list.
LAMB: Do you write to make money or do you write to make money and to get something done?
AULETTA: The latter. I mean, obviously I write to make money since that's how I support myself. I'm not doing it for charity, but I am sometimes amazed that people pay me to do it because it is a lot of fun. I mean, after all, I have a ticket to go meet interesting people, to travel. People are paying my expenses often to do that. But ultimately, what I'm trying to do is replicate the way the world works, and what I was trying to do with television is not only tell the story of the struggles at the networks and how these interesting men -- mostly men, a few women -- try and cope with it -- not just the businessmen, but the Brokaws and Jennings and Rathers and the Aaron Spellings and Brandon Tartikoffs out on the West Coast and Hollywood and their new competitors, be it Ted Turner at CNN, or HBO or C-SPAN. But also to tell how the business actually works, and because I was allowed a bird's-eye view, hopefully I was able to do that, to really explain how a network sells ads and how executives really make decisions.

When Larry Tisch spends, as he did at CBS, a total of $3.6 billion on sports, did he make that judgment -- which is not losing CBS money -- did he make that judgment just for business, dollars-and-cents reasons, or were there other factors involved? Human factors? Panic? Competition? Vanity? One of the conclusions I draw in this book is, in fact, is that even the most smartest, most able business investors like Larry Tisch, like Jack Welch, like the people at Cap Cities are human, and they're going to make decisions sometimes for human reasons -- competition, vanity, panic, whatever.
LAMB: How did the networks treat your book? Did they invite you on?
AULETTA: I was initially treated as a non-person. I was scheduled to do the "Today Show" to launch my author's tour on September 4, and when Michael Gartner and the officials at NBC read the galleys of the book in July, they canceled that appearance in early August. I was invited, at that point, on no other morning network news show. I don't have a right as an author to appear on any show, but it seems the public has a right to know that those entrusted with a scarce public resource, the air waves, are not abusing their privilege and their power to deny someone air space simply because what they wrote makes them uncomfortable.
LAMB: You called Michael Gartner, the president of NBC News, in here a First Amendment absolutist.
AULETTA: Yes. In the interviews we did and in reading of his life and the many things he's written over the years, he does parade as a First Amendment absolutist. He named the alleged rape victim in the Miami William Smith case because he said he believed the public had a right to know that person's name. He has often talked about how he doesn't believe in anonymous sources, even though NBC uses them as much as anyone else does in the business of journalism. But he believes there ought to be no government regulation, no fairness doctrine, whatever. Yet ironically, when it came to my particular case, a guy who supposedly believes in the First Amendment suddenly is acting like the editor of Pravda. I should say the former editor of Pravda because Pravda is more democratic today.
LAMB: I still don't understand why all those people talked to you. When you went through this, did you say to yourself, "I can't believe this?"
AULETTA: Well, no. First of all, I've done it before. I mean “Greed and Glory” was a book that basically recreated what happened at Lehman Brothers. How did this firm go under? There was a clash between the chief executive officer and chief operating officer of the company, Lew Glucksman and Pete Peterson, former secretary of commerce. I had to recreate that event and to do that, every member of the board -- the partners who were on the board -- talked to me. I know how tough that is to get them to talk to you. It takes time and perseverance. But ultimately people talk to you for lots of different reasons. Let me just quickly touch on what they would be, and I think it applies here as it did in the Lehman book and other pieces I've done, be it a profile on Governor Cuomo his first year in office for The New Yorker or Mayor Koch's first year in office for The New Yorker. People talk to you.

One, you don't get to be the head of General Electric, for instance, or any of these people I'm writing about, without a sense of self-confidence, without believing that you could take anyone and convince them to your point of view, to your worth -- particularly a lowly reporter. And so if you're Jack Welch or Larry Tisch or Tom Murphy and Dan Burke, you say, "Auletta, I'll show him that what I'm doing is noble."

They really believe that, which gets to a second reason. If you come in like a prosecutor and say, "All right, I want to know everything," they don't have to talk to you. There's no constitutional requirement that they cooperate with me. But if you come in as a reporter who listens and takes notes and seems intent on finding out what it is they do and how they do it and what motivates them, what truly motivates them, you in their eyes take on the aspects of a biographer because you're really searching for the truth. I'm not trying to say, "Gotcha! Give me the scoop, the headline."

I'm not writing tomorrow. I'm not writing next week. Six years away, which gets to a third reason. Six years away offers a sense of relief. There is no penalty for talking to the author today or tomorrow. He's not disclosing secrets of the meetings he's been sitting in, so you trust him a little more.

Fourth is that if you know your competitors are talking to him, then you better get your two cents in as well. Those are some of the reasons that people talk, but they wouldn't do it if they didn't enjoy it because they don't have to do it.
LAMB: You know this book backwards and forwards by now, I assume. What is in this book that surprises you that people haven't picked out? In other words, there have been lots of reviews written, but what's squirreled away in here that you think people should have focused on that they haven't?
AULETTA: That's a good question. I think the thing that most surprises me that hasn't been picked up more -- it's picked up a little bit, but not as much as I would expect or want -- is the management stuff. This is a book that tries to do several things at once, but one of the things it tries to do is tell the reader what kind of management works and what kind of management doesn't and why, with real first-hand experience.

I've written a lot about business over the years and looked at what works and what doesn't, done profiles of a failed company, which is Lehman Brothers in “Greed and Glory.” I did a New Yorker profile, which turned into a book of what then was one of the best companies in the world, Schlumberger, a French-based company in the oil service business. What I found here, which I think is relevant and reaches way beyond the business of television to any business, is why General Electric has been less successful than they might like to be at NBC and why Larry Tisch has been less successful than he might like to be at CBS and why on the other hand, for instance, Cap Cities has been more successful at ABC.

Among the reasons that I come to -- and let me graphically illustrate it by talking about General Electric -- General Electric is a brilliantly run company. It is an American success story -- now the third most valued company in the world. Under the leadership of Jack Welch, who's been there running G.E. since 1981, by every measure it has been wildly successful -- profitability, productivity, money invested in research and development. Welch's attitude is that if you work for G.E., you're in the marines. You always stayed on the toes of your feet, you always are insecure. That sense of insecurity works in the G.E. jet engine division or the plastics division. It doesn't work, I found, in the entertainment business. The difference, among others, is that the entertainment business, a network, is basically not a command decision organization. It's basically an office building that rents its product from the Hollywood studios or the sports teams and then rents time on local stations to distribute that product. They don't own the distribution system. They don't own the creative system. So people choose to work with the network or not work with the network in part depending on whether the network is a congenial atmosphere.

If you strive to create a sense of insecurity, to portray the place you work as the Marines, you will not have a congenial atmosphere, and that's what happened at NBC. It also happened at CBS for a slightly different reason. It was a less than active management philosophy on Larry Tisch's part and it was the fact that he had spent his entire life staring at a Quotron machine. His brother had always run the businesses of Loews and suddenly Larry was expected, without his brother's presence, to run and be the hands-on chief executive officer. He didn't know how to do that basically. He didn't know how to give compliments. He was cheap with compliments. He didn't know how to make an organization strive and want to do better because they cared about it, and he robbed them of some of their pride.

At ABC, because the people at Cap Cities had come out of broadcasting, because they understood they were renter, not a landlord, they created a much more congenial, more democratic institution -- much like a well-run Japanese company. They basically did things like they took the executive dining room, which they had closed when they first came in to save money, and a year later reopened it, but reopened it for 160 vice presidents. Anyone who was a vice-president could dine there. Burke and Murphy, who ran ABC, dined there three or four times a week in a buffet-style fashion, sitting down at a different space every day, no assigned seat. So everyone got to know them and you knew that today you might sit next to the CEO and have his ear for a long while. Now over the last few years what they do is they dine in the employee cafeteria three or four times a week, and so they meet different employees. That radiates out and creates a good feeling, a feeling of security at that place. That matters.
LAMB: Who named it “Three Blind Mice?”
AULETTA: I did. The original title was going to be "When the Good Times Stopped." My editor said to me, "Ken, you know it's kind of wistful, but I can never remember the title of your book." This is just when the book is done, but long before it's published. So, I went to the Island of St. Bart's on Easter break this March with my family, and sitting there with some friends and having a rum and tonic. I said, "I need a new title. There's a whole chapter, Chapter 10, about how these men go from business lions to feeling like mice." Lions to mice, mice to lions. A friend of mine, Tully Plesser, who is in the marketing business and he's an old, old friend of mine, a very clever guy, said, "Three blind mice." I said, "That's it!" He said, "No, no, it's too cute." I said, "Wrong. That's it!" So the concept of using mice was mine, but he actual three blind mice was Tully Plesser's.
LAMB: You write in the introduction, "I have known Howard Stringer for more than 20 years, since he was a researcher for CBS." He's now the COO of CBS?
AULETTA: Yes. He runs the broadcast room.
LAMB: "Because of this friendship, I probably give Howard less attention than he deserves. I am a friend, too, of Tom Brokaw and Tim Russert" -- Tim Russert running the NBC Washington Bureau -- "and Peter Jennings of ABC. I mention this by way of full disclosure, but also to assure the reader as I trust will become obvious that this book is not dependent on information gleaned from them." Why did you say those things?
AULETTA: Just full disclosure. I don't know how I can write about politicians, which I do, and hold them to account if they don't make disclosure on their finances or friendships or special interests that they may be beholden to or apparently be beholden and not make the disclosure myself. I think that when politicians complain about reporters not wanting to disclose their lecture fees or having thin skins, I think politicians are right. Maybe I feel that way because I was in politics at one point in my life and in government at one point in my life. But I think that we have a public trust just as a public official does and we ought to make disclosure where we can so the reader trusts you.

I think if you're going to read a 500-some-odd-page book that I've written and I'm going to describe scenes including dialogue, you better trust me and know that it's right. You could read Kitty Kelley, and if you trust her, you're a fool. I don't think people trust her. They read her to be titillated by what she writes. They shouldn't trust her because she doesn't give the sources and doesn't make the disclosure I think she should. I try to.
LAMB: Is news a public trust?
AULETTA: Yes, I think it is. First of all, most Americans get their information from television, and whether it's print, as the business I'm in, or television, I think you do have a public trust because I think people are depending on the information you provide. You can make things up as Janet Cook once did to win a Pulitzer Prize for the Washington Post and then she was caught. She made it up about an 8-year-old drug addict, and it embarrassed the Post, which had the good sense to sever her and make a full disclosure right away. But I think that we in journalism have a privilege and part of that privilege is we have access to a printing press or a broadcast booth and people depend on us for the information that they get and they use to make public judgments about issues and about candidates and we should not abuse that. If we do, we get to be pretty unpopular, and some of the abuses have made us unpopular.

In fact, one of the conflicts that runs throughout this book, which has received more comment than the management material, is the conflict between the new owners, who tended to worship at the shrine of shareholder responsibility and the people, particularly in news, who had been at the network for a while -- like the Brokaws and Jennings and Rathers and Stringers -- who worshipped at the shrine of public trust and public responsibility.
LAMB: You write a lot about money paid people in the news business -- Roone Arledge, $3 million a year, Dan Rather, $3.5 million, Peter Jennings, $1.9 million, Barbara Walters, $1.7 million. I think you said that, maybe more than that.
AULETTA: Barbara Walters makes more than that.
LAMB: Diane Sawyer, $1.7 million. If it's a public trust, is that the kind of money these folks should make in this business?
AULETTA: I don't think people should make that kind of money in journalism, but they get it. I don't want government regulating what they can or can't make. But I must tell you, when I'm sitting with Dan Rather interviewing him as I did on numerous occasions -- and I respect Dan Rather as a newsman -- but I'm sitting there and I'm going to pay for lunch because I can't let him pay for it. We're eating at the Park Lane Hotel in New York and the bill was $160. As I grabbed the check from him and I'm signing it, I'm saying, "This guy makes $11,000 a day -- a day! -- and I'm paying for his lunch." It's a lot of money, and I think one of the dangers is that when you get that kind of money; it's not just money, but when you get that kind of fame and notoriety -- I mean, Dan Rather and Peter Jennings and Tom Brokaw are more famous than Tom Selleck, for instance, the actor, and everyone has an opinion about what they do in news. They don't all have an opinion about a Tom Selleck movie. It's very heady stuff, yet journalism is a business of asking questions, which presumes humility. So it's very hard to retain your humility when you become the celebrity, when you become the star. That's true not just of the anchors, but it's true of people who appear on television a lot, who are news people.
LAMB: Did the new owners have any right to try to cut back on the news organizations and how much money they spend?
AULETTA: Yes, I think they did. I think the new owners were half right. I think they were right to come in and say they networks had grown fat, complacent, smug, if you will. For instance, NBC under Bob Wright did a study -- they hired McKinsey to do a study -- and they found that half of the feature stories at NBC had scheduled and assigned -- meaning softer features, not breaking news events -- half of them never got on the air. That's an inefficiently run operation. That's just wasteful. The new owners were right to try and pose some more management discipline on the network. Where I think they're wrong and have been wrong -- and each does it slightly different ways, but I'm generalizing now -- where they're wrong is not to recognize that the word quality is not only an excuse to spend money, it's also meant as a desire on the part of people in news to better fulfill their public trust.

That is to say, when the new owners say, "Well, why can't someone in a local Miami bureau, our affiliate or our own station in Miami, let them cover Central America. We can close up the bureaus. We don't need a Central American bureau. We don't even need a Miami bureau to cover Central America. We'll just close it up and let the local TV station there cover it for us." The network comes back and says, "We don't believe that a local correspondent, in most cases, can cover Central America as well as, say, Garrick Utley can of NBC News." I think it matters. Quality does matter. Network quality tends to be greater than local news quality. The new owners just quantified things -- coverage. "We'll have coverage. We just need a body there" or "we just need the pictures there from overseas." Not always "What is the quality of the picture, what is the quality of the report the correspondent does?" So I think they were half right. They were right about cost and insensitive about quality.
LAMB: I don't know if you want to do this, but would you mind telling the story about the dinner party at Larry Grossman's?
AULETTA: Oh, no. Fine.
LAMB: The audience may not know who some of the people are.
AULETTA: Okay, I'd be glad to. I begin the book, my first chapter, with a dinner party scene, which I call "The Fateful Dinner Party," the night of Oct. 25, 1986. Larry Grossman, who was then the president of NBC News and had been there for a couple of years, wanted to impress his new bosses, Jack Welch, the chairman of General Electric, and Bob Wright, the new president of NBC. And so he decided he would invite to dinner at his Westport, Connecticut home, Tom Brokaw and his wife Meredith, Bryant Gumbel, the host of the "Today Show," and his wife June, Jane Pauley, then the co-host of the "Today Show," and her husband Garry Trudeau, the cartoonist and social commentator.

So here they are at dinner at his home. The book begins with Tom Brokaw. The first sentence was, "Tom Brokaw knew the dinner would be a disastrous before the first course was served," because as he looked around, he noticed that Gumbel was whispering to Wright who was whispering to Welch who was whispering to Garry Trudeau and Jane Pauley, and what they're whispering about is, "Have you seen a TV set." The reason a TV set was important was that Oct. 25, 1986, was the night of the sixth game of the 1986 World Series between the Mets and the Red Sox. Now, it mattered particularly because NBC was telecasting the game and it mattered because Welch and Wright were Red Sox fans.

Well, the truth of the matter is there was no television set downstairs, and as they sat down to an elaborate four-course meal, Jack Welch, the head of General Electric, and Bob Wright, the new head of NBC, are incredibly restless and uncomfortable. All through the four courses, Welch is getting up and going to the bathroom, Bryant Gumbel is getting up and going to the bathroom. What they're really doing is not going to the bathroom; they're looking for a television set. When they come back and they haven't found one, they're interrupting the butlers who are serving the dinner -- it was a catered dinner -- and they're saying, "Do you know the score of the game?" The butlers are bringing the scores, so by the sixth inning -- Larry Grossman at this point has noticed none of this. He's so intent on persuading the new owners of the righteousness of news, of the importance of its public calling, of its responsibility, that he's missing the human even that's taking place, which is that this is the sixth game of the World Series, Welch hopes that the Red Sox after 68 years will finally win a World Series. Larry Grossman is just oblivious to this.

So by the sixth inning, his dinner party is totally disrupted. Instead of talking any longer about serious matters and what news does, Welch and Gumbel and Brokaw are upstairs in a little tiny den watching the game on a television set. The reason I use this is story is because it illustrates a couple things. It illustrates the clash of cultures. Grossman's church was public trust, public responsibility. Welch and Wright's church was shareholder responsibility. There was a chasm between these men that was hard to bridge. Secondly, it illustrates the importance of personality. Larry Grossman's fate was sealed that night. I mean, as a good man he is, a generous man that he is, the sense of public obligation he had -- but he lacked the feel for the men he was really dealing with, as well as lacking other things, they came to feel, like management ability. But essentially his fate was sealed because he totally alienated them by what they thought was his overly serious, heavy-handed somber approach to the world when all they wanted to do is just enjoy a good baseball game.
LAMB: Did everybody tell you the same story about that night?
AULETTA: Yes, including in many respects, Larry Grossman. I interviewed all the people at dinner that night in recreating what happened. The few points where there's some disagreement, I put at the bottom of the page with an asterisk saying, "When Brokaw says he warned Grossman to cancel the dinner two days before, Grossman says he doesn't recall he was warned, but other people in news said he was warned."
LAMB: This will take just a second. I want to read three different pages on something and get your response to it. Jack Welch, again who is the top guy at General Electric that owns NBC, says on page 17 or you say about him, "Welch saw no difference between the public trust of his aircraft engine division and that of news. In fact, the public trust required in the consumer business was often greater, he thought."

Let me go to page 36, and now you're talking about Tom Murphy, who is the top guy at ABC. "And though he rarely watched or had much interest in the networks primary money-making product -- entertainment programming -- he knew how to read the bottom line." One last one. This is on page 55 and this is Larry Tisch and it may be a combined statement about Tom Wyman, both men running CBS at one point in this process: "Neither man had much appetite for the principal product of the network." These are three men responsible for the three commercial television networks and you say they don't even like what they have on the networks.
AULETTA: Yes, I think one of the problems the new owners had and still have -- I think there are some differences. I think the problem is less at NBC because they're a little different at ABC than they are at NBC and CBS. They're in a business that manufactures shows by renting those shows, and yet they tend not to be consumers of the shows they manufacture. It's as if Lee Iacocca didn't drive a car. I think that you need to pay attention to what's on that screen because that's how you're making your money. You're not making your money by more efficiently running a personnel department. It may be helping your company. But essentially overhead at a network is about 20 percent of your cost. Eighty percent of your costs go into what's on that screen.

Now, they know news. They watch news. They're consumers of news. They are not, by and large, consumers of entertainment product, and they should be. The early owners, the people who created the television networks and they'd always been under the control of the proprietors who started it -- first Paley at CBS, Goldenson at ABC and Gen. Sarnoff at NBC -- these are people who watched television. These are people who cared about the shows, who spent time on it, who took some pride that they had a gut feel for programming. The new guys came in and actually took some pride that they didn't have a gut feel. They said, "Listen, we take pride in the fact that we delegate these decisions for other people." The smarter ones, and I think that Murphy and Burke were smarter in this respect, realized that they couldn't always delegate, that they had to be involved in the product-making decision, and they, in fact, by '88 were involved.
LAMB: Another quote later on in the book from Jack Welch: "Ted Turner puts on CNN for 24 hours a day for only $100 million. Ted Turner makes $50 million to $60 million. We do three hours of news. We spend $275 million and lose $100 million." Why?
AULETTA: There are lots of reasons for that. First of all, Turner was non-union, cheaper pay. He didn't have an anchor who made more than a half-million dollars a year, and that was only Bernard Shaw. He paid much less. He did things much more cheaply. He started a business, CNN, that was entrepreneurial, that knew it was small and knew it traveled light, like the Viet Cong in some ways. They were the guerrilla outfit of TV journalism, and the networks were this big fat lumbering giant. The technicians flew first class as well as the correspondent, and so the cost structure was just so much greater. And also CNN had an ability to program 24 hours a day. News had just a few slots in the 24-hour schedule. They had a morning slot. At ABC, "Good Morning, America" is produced by the entertainment division. But they had one half-hour newscast every night and a few other spots. But other than that, they had this big worldwide news gathering operation and very few places to put these people. So if you had 90 correspondents maybe on average, the average correspondent was on the air once every two weeks. At CNN you're on every day.
LAMB: Do the commercial networks make money on news today?
AULETTA: Some do, and they do for different reasons. That's the other reason. Ted Turner at CNN had two sources of revenue -- both a subscriber fee that is paid for CNN, which cable gets and the networks don't enjoy, and advertising, which is the networks' sole source of revenue. CBS makes money, though I'm not sure they will this year because of the cost of the Gulf War, but they make money at CBS News largely because of the profits churned by "60 Minutes" -- about $70 million a year in profits from "60 Minutes." So a successful magazine show will often tip the balance between profit and loss at a network. At ABC, "20/20" is a profitable show, as is now "Prime Time Live," as is "48 Hours" at CBS. Those networks in news are profitable, though this year they might not be because of the extra cost of covering the Soviet Union as well as the Gulf War. At NBC they have lost money, though they've struggled mightily to reduce their costs over the last five years under General Electric, to get to the break-even point. They don't make money because they don't have a successful magazine show.
LAMB: You said earlier you've written six books altogether. What's your sense as you travel around the country about this one? I know you did a lot of shows in New York, and that's a communication center. But do you think people will be as interested in this subject?
AULETTA: Yes, I think actually they may be more interested because this is a book that has potential appeal to a business audience. I mean, General Electric and Jack Welch and Cap Cities and Warren Buffett, who owns 20 percent of ABC, and Larry Tisch of the Loews Corporation, these are giants in the business world and of great interest to business people. It has interest in the Hollywood community because there's a lot in this book about how Hollywood works, how a network chooses programs, how the studios work, how the producers produce shows and the writers write them for the network. So I think there's some interest out there.

In fact, it is a bestseller in Los Angeles, which is an indication of that. I think the advertising community, which is quite large in New York, Chicago and other places, has interest because it tries to tell how a network sells advertising. I literally sat in meetings where they were selling advertising to advertisers. It has interest to anyone who is in the broadcasting business, and that's an industry that employs millions of people. And hopefully it has some interest to the people in the news business. There's a lot in here about news and how the anchors work. People who are interested in celebrities -- celebrities populate this book from the anchors to Aaron Spelling and Brandon Tartikoff and Steven Bochco, who produces "Hill Street Blues." I think there's potentially a broad audience. That's the assumption that Random House has made in sending me all around the country.
LAMB: When did you write the last word?
AULETTA: I was making little inserts as late as early July of this year from the galleys. The book was actually delivered to Random House on the 17th of August. I know I remember that day because I came in from the country to receive it and sign some copies.
LAMB: In the beginning of this book you have a dedication here, I think I remember, to Kate and Amanda.
AULETTA: That's right. Kate is my 9-year-old and Amanda is my wife.
LAMB: Have you already thought of another book to write?
AULETTA: No. A book is like a marriage. I'm married to the subject for six years, and before I get married again, I want to be sure I'm in love. My mind's too clouded with this book. I have to get it behind me before I can think about it. What I generally do is I'll do a magazine piece or two and go write a column again, which I've been on leave from at the Daily News, and basically decide what I want to do. Is there a subject that arouses my interest, a subject I don't know much about? That was the criteria for doing this as well. I thought it was a big interesting story that I could learn a lot about with fortunately publishers subsidizing my education.
LAMB: Because you were in all three of these networks and had so many conversations with people that run them, has anybody come up to you and said, "Come work for us"?
AULETTA: A network?
LAMB: Yes.
AULETTA: No, I don't think I'm in danger of that happening. I wouldn't, either.
LAMB: Why?
AULETTA: Well, because I love my independence. I run my own business. I have one employee -- me -- and no one gives me orders. I go out and I meet interesting people and I wrestle with interesting subjects that are complicated and it's fun to try and master that. Then at the end, I sit down and I'm just thinking about how I tell the story in the most truthful and interesting way that I can for the reader. It's joy. I mean, I love it, and I wouldn't love being an employee in a business going through a period of decline and where insecurity is constant and people are constantly worried about it. It's like you're worried about Scud attacks. Every day you may get laid off. It's not pleasant to work at the networks today. They're going through the throes as other industries have -- as the automobile industry has, the steel industry, the coal industry.

That's why I think this book has interest potentially to other people in many other walks of life who live with that constant insecurity that the good old days are old days. They're not today's day, and you try and adjust. The people who succeed best in my judgment are the Cap Cities people at ABC who created more of a sense of security there than so far the NBC and CBS new owners have managed to do.
LAMB: Who was your favorite character?
AULETTA: Favorite in the sense that I found him interesting or that I liked?
LAMB: Well, both. You know, people that you'd love to go back and spend time with and enjoy or people that you really admire now that you've been close to them.
AULETTA: I admire Dan Burke a lot, now the CEO of ABC -- he was the number two at CAP Cities -- because I just think he's a really skilled manager, and America managers could learn a lot from his way of balancing both shareholder responsibility and the public trust and always keeping in mind that you're dealing with human beings who don't have to do business with you and whose morale really does matter to the success of your product. So I think that he's someone I admire.

I find Jack Welch, the head of General Electric an electric personality. It's a word I use in the book. I loved interviewing Jack Welch. I find him not only a brilliant business executive and a really smart man, but it was a challenge to interview him because you would go into his office and you would ask questions, and I tend to be soft spoken and listen reasonably well. And then at some point the combative part of Welch's personality would come out and he'd say, "Come on, come on, come on! Give me your best shot. Give me your best shot. You can ask a tougher question than that." He loved combat, so the two-hour sessions or the two-and-a-half hour sessions we would have were always lively and on your toes. I enjoyed that a lot.
LAMB: Did you tape record any of those sessions?
AULETTA: I taped every one of them. When I interview anyone who might later challenge me and has the ability to perhaps sue me and the resources, I always tape it. I also tape people who talk fast. I also tape people who talk technical. So, yes, I tape all of those conversations.
LAMB: Did you tape conversations for your earlier books?
AULETTA: Ye, it's the same thing. I follow those principles in taping.
LAMB: What are you going to do with all those tapes?
AULETTA: I keep them. I don't throw anything out. My wife accuses me of being anal. Everything lasts there, and she wants to get rid of it, give it to a library. It's all somewhere in the house.
LAMB: Will you eventually give it to a library?
AULETTA: Oh, yes, I'd love to. The problem is I don't want to give it to a library in Wyoming or Boston. I live in New York and those places come at me and say, "Can we deposit all your papers and tapes and all that?" I'd rather give it to a place in New York.
LAMB: One last question. We're just about out of time. You write on page 570, "The public also has a stake in the networks. Whenever it's failings, a mass medium creates a sense of community." Are you sorry that these networks are losing?
AULETTA: I'm both sad and happy. I'm happy because I think the public enjoys a video democracy they didn't enjoy 15 years ago. They have many more choices. If they want to watch C-SPAN, CNN or anything, they can do that, and that's great. They get many more sources of information. The negative is that you lose, unavoidably, a sense of community, that you don't have a common source of information that you once did when the networks dominated 92 percent of all viewing at night. That's going to be a problem down the road in a much more practical way for your viewers, and that is what happens five or seven years from now when the networks are out of the sports business as I think they will because they make no money on sports anymore. Suddenly the viewer turns on the TV and finds out they can't get the World Series or Super Bowl and have to pay pay-per-view or cable for that. There will be hell to pay.
LAMB: Do you see any signs -- I shouldn't ask you this question at the end -- that the cable television industry has some of the same problems already that these networks have had?
AULETTA: Yes. People overpay to get access to an event, as ESPN did for some of the sporting events, and they find they've overpaid. So they've got to worry about their cost, too, and they have new competitors coming on line just as the networks did. I mean, it is a business that increasingly will cannibalize itself. But there will be some survivors and the survivors will be those who can merge and make alliances. We're back in 19th century Europe here -- nation states, none a super power, studios and networks and cable companies and telephone companies and stations all vying to become a super power. Those who succeed will be those who government allows to merge and make alliances with one another.
LAMB: Another conversation some day about this and other things. “Three Blind Mice” is the title of the book, and the author is Ken Auletta. Thank you very much.
AULETTA: Thank you Brian. I enjoyed it.
Copyright National Cable Satellite Corporation 1991. Personal, noncommercial use of this transcript is permitted. No commercial, political or other use may be made of this transcript without the express permission of National Cable Satellite Corporation.