Analyze This

Ray Katz has never been good at job hunting. A victim of an ax-swinging Larry Tisch after he took control of CBS in 1986, Katz scrounged for months for a new financial gig. After an afternoon interview at Chase Manhattan Bank, he took advantage of the crisp day to take a leisurely stroll.

When he got home, his doorman had an envelope from Chase waiting for him. "It was a rejection letter," Katz says. "It was the first time one beat me home."

His fortunes changed when he landed on Wall Street, leveraging his network background in accounting into a job as a securities analyst at Mabon, Nugent & Co. and later Lehman Bros. He eventually became senior managing director at Bear Stearns and one of the most influential media analysts on the Street. For 11 years, he has been ranked as one of the top media analysts by Institutional Investor

His rep is due to his methodical approach to entertainment and cable companies. Some of his Wall Street rivals pepper their clients with reports, particularly as companies post earnings. Katz focuses on bigger themes. He spends months preparing reports on topics before the broader market seizes on them. (Cable companies still point to a 2003 Katz prescient report on digital-technology conversion that's two years away.)

Then again, tech planning is Katz's forte.

He sees most of the big changes in the media business as tied to technology and loves to think ahead. "Talking about broadband today is like guys in 1963 talking about color television," he says.

Despite his success, Katz never planned a media career. He started out as teacher. After studying American history at SUNY, Albany, Katz taught in the Bronx. He describes it as a typical school for a depressed, inner-city neighborhood in the mid 1970s, starved for resources and filled with kids with family problems and learning difficulties.

The experience left him with an unshakable belief in the importance of affirmative action. "I saw what these kids went through in their lives, and they still got decent grades, not 90-95 but 85," Katz says. "You put them in the right environment, they'll get 105."

But after seven years as a teacher, Katz called it quits. "Frankly, I wasn't that good," he says. "You need patience. And you need more patience for kids who need attention."

Instead, Katz got his MBA at NYU, seeing it as a practical path to a better-paying career. But upon graduation, he could not find a job. Companies weren't interested in a 30-year-old MBA grad with no business experience. He got lucky at a Christmas party, when a contact got him into CBS Records, where he was hired as a cost accountant on the strength of a single course. It's the less glamorous side of an exciting business, allocating the costs of CBS Network's broadcast studio and, ultimately, strategic planning.

His dream, however, wasn't to predict media futures but to write the definitive history of the 1919 Versailles Conference, the peace conference that settled World War I. Katz is fascinated at how it divided Europe between Western and Communist hands.

He contends the Versailles Treaty is mistakenly blamed for setting the stage for Hitler by burdening Germany with war reparations. A myth, notes Katz, since "the Germans never really paid the reparations."

His opus, he admits, was preempted by Margaret McMillan's Paris 1919. So Katz now concentrates on what's next for media companies.

Since change springs from either geography or technology, he's watching cable-network opportunities in China and India. Stateside, he sees the ability to target consumers through the Web and video-on-demand as greater threats than TiVo. His next prediction: "One-to-one advertising is going to take share."