Greg Meidel had a big presentation to make. He had hammered out a sales pitch and put together a PowerPoint presentation-a software program he had only recently mastered-on one of the few new computers that was set up and running. Most were still in boxes, awaiting the arrival of desks and other furniture. He and his staff of 25 were just settling into their new Santa Monica, Calif., offices. It was late, and he realized he needed color copies. He headed out to a nearby copy shop. "You know you've arrived when you're at Kinko's at midnight," says Meidel, a 40-something who no longer has much use for the 30 or so Armani suits in his closet. "I sure as hell don't wear those anymore."
In Meidel's former life as chairman of Universal Studios Television Group, he had a staff of 500 with another 1,000 producers reporting to him. That was then, and this is now in the "lean, mean" world of Internet start-ups. "You can't do this unless you really believe you can deliver. But if you succeed, it's awesome."
Meidel is president and chief operating officer of Massive Media Group, a venture that will help companies stream video on the Internet without piracy worries. And he is just one of many former high-powered media executives choosing the dotcom life over the fat salaries and perks offered by brand-name media companies. "We share offices and assistants, and you wear many hats, but everybody has a piece of the rock."
IPO dreams
What's driving the exodus? Clearly, most are looking for that pot of gold at the end of an IPO. "One goes into the Internet business hoping that down the road there will be a significant payday. You don't do it for the income during the year. Salaries are considerably lower," says Tom Baxter, former president of Comcast Cable. He's now running Audible.com (Nasdaq: ADBL), which features books that can be downloaded, along with newspapers and lectures that can be streamed to desktop PCs. Two weeks ago, the site premiered a weekly series produced and performed by Robin Williams featuring comedy, commentary and conversations.
Over at Massive Media, Meidel says the "combined salaries of the four partners [Meidel; Frank Biondi, former chairman of Universal Studios; Howard Weitzman, also formerly with Universal; and Michael Kassan, from Western Initiative Media] in our company is less than half what I used to make in base salary. We're all in it for the equity."
Former broadcaster Bert Ellis was an early defector, and he has never looked back. "This is the most phenomenal business opportunity that has ever existed. Broadcasting is still a very good business. But there's nothing that can touch the Internet economy," says Ellis, chairman of iXL Enterprises (Nasdaq: IIXL), an Internet services company. He compares the emergence of the Internet with "the industrial revolution and the invention of the steam engine and light bulb. This is the biggest gold rush that has ever occurred." Ellis sold the TV and radio stations of Ellis Communications to Raycom in 1996 to focus 100% on the Internet. Ellis says iXL, which employs 2,500 in Atlanta, has made millionaires out of more than 300 employees.
Another broadcaster turned dotcomer is Peter Desnoes. He ventured onto the I-side after selling most of the stations in his group-Burnham Broadcasting-to Rupert Murdoch in 1996. Desnoes was serving on the board of a privately held dotcom, iBeam Broadcasting, which delivers audio and video streaming by satellite, when he was recruited to run the company. "The truth is, I've made far more money doing this than I ever made in 30 years of broadcasting," he notes. "Opportunities are leaving the broadcast environment and gravitating toward the next means of distribution," says Desnoes.
Inspired by a revolution-or a midlife crisis
Many former TV executives insist they're motivated by more than money, and describe an irresistible urge to be a part of history in the making. "This is a moment in time. People say this is bigger than the industrial revolution. How can you not want to be a part of that?" asks Scott Carlin, former executive vice president of Warner Bros. Domestic Television Distribution. Carlin now runs DigitalConvergence.com, which will instantly connect TV viewers to advertisers' Web sites on the viewers' PCs.
Roger Keating, creator of Zatso, which tailors local newscasts to individual subscribers, says he left behind his career as a senior vice president at Comcast because he was "drawn to being part of this revolution." He says he wanted to create a dramatic change in the user's experience, adding, "I believed in it passionately."
Last month, Keating brought on board Bill Carey, former news director for WCBS-TV New York. Carey, too, says he wants to be on the front lines of a new industry. "I felt like this was a time in history where you can help shape a new way of sending information."
Audible.com's Baxter agrees, citing his desire "to get into the early stages of an important new media." But the content of his site was another key element. "I wanted to work in a product category that I love, and I'm a great book lover."
It was also a content play for Lou Dobbs. The former CNN anchor who founded space.com, says the Web offered an opportunity to pursue a dream to popularize space. "We built space.com into a $150 million enterprise in eight months." Dobbs, who left CNN last June, says, "One of the things I've learned from all of this is that I'm a damned sight smarter than a certain large media company thought I was, and not quite as smart as I thought I was."
Some say they are drawn to the creative opportunities offered by dotcoms. David Bohrman, a longtime news producer for CNN and ABC, is now running Pseudo.com, which produces Internet-TV programming from its loft in "Silicon Alley" New York, an Internet community in the downtown part of the city. He describes the dotcom experience as "one big, blank sheet of paper where it all needs to be invented and created."
Others from the TV business seem to have tired of corporate culture. Dean Daniels, a CBS alum who's now president of theglobe.com, which features e-mail clubs, games information and Web-site-building tools, thinks many ex-TV types find themselves at mid-career and ready for a change and a challenge. "You get into a rut if you do the same thing for too long."
Over at The FeedRoom, President Jonathan Klein, former CBS News executive vice president, notes: "It's like The Blair Witch Project here. Whoa! Where are we going? Haven't we crossed that creek already? What's that shrieking? Oh, it's just the new systems administrator."
Liquid assets?
For some, the money's not rolling in yet. Rich Frank, whose TV career includes the top jobs at Walt Disney Television, Paramount Television and Comcast's C3 venture, is now running Food.com, an online takeout and delivery business. "We still lose a lot of money," says Frank. But that has not stopped a "staggering number" of job applicants from knocking on his door with two questions: "How much stock and when are you going public?" Frank says one IPO fortune-hunter who came calling earned $600,000 the previous year, but was willing to take a $500,000 pay cut to get in the door at Food.com. Why? "Stock. That's what's going on," Frank says.
Executive recruiter Brad Marks, whose company specializes in new media and entertainment, says, "Some are still waiting for payday. But take Rich Frank, who was immensely successful in his career in traditional TV. He made lots of money but nothing like the potential he has in Food.com. If that hits the jackpot, he will be dealing with many multiples of millions."
Asked whether he thinks the recent erratic behavior of Nasdaq will rain on the executive parade to the Internet, Marks says: "People are going to be very careful that the companies they talk to have solid financial underpinnings and are well funded. I don't think it will dampen interest." Marks runs his own firm, Brad Marks International.
Klein, who oversaw 60 Minutes and 48 Hours at CBS, got together with several of his former news colleagues from CBS and NBC and launched The FeedRoom, a broadband Internet news network. He says dreams of IPO riches should not be the only driving ambition. "You have to slay a lot of dragons and kill a lot of gnomes that jump out of nowhere before you get to level seven in this very complex video game. Your best bet is to concentrate on building a strong business. Then maybe, maybe, if you get lucky, you'll hit the jackpot."
Plenty don't, however.
"For every one person you hear about that's getting rich, there are 10 others where the company either didn't make it or is just hanging out. It's no superstar. That's the more common scenario," says Allan Horlick, former president of NBC Europe and CNBC Europe. He is now president of CNX Media, which produces and distributes personalized original programming for TV and the Internet. "People can find themselves on the Internet side with a very inexperienced management team. And after the mad rush to go public, there is enormous pressure to meet commitments to investors, and that's not an easy thing to do."
Lee Masters, former president of E! Entertainment Television, is now running Liberty Digital, an arm of Liberty Media Group that invests in interactive TV programming for the Internet and other digital platforms. He points out that stock prices have retreated for many Internet ventures. "A lot of these folks have options that are under water."
Indeed, as Desnoes explains, options are valued at a price that may not exist when those options mature. "By that time, the venture may turn out to be an unsustainable business model. All that money could be vapor."
' I miss the car service'
As exciting and promising as a dotcom venture may be, TV executives often must walk away from the security and perks offered by big TV companies: high salaries, administrative support, company cars, expense accounts and enormous resources.
Carlin says he agonized over the decision to leave Warner Bros. "I woke up in the middle of the night with anxiety that I didn't have at Warner Bros., where I didn't have to worry about the company going away or about making a mistake that would eviscerate everything."
Marks has seen plenty of agonizing over such decisions. The biggest challenge he says he faces as an executive recruiter is "to offer reassurance about the new opportunity." He points out that mid-career executives have established lifestyles and may have families to consider. "It takes guts to leave a company like NBC that's taken care of you for many years. You've had a corporate structure to embrace you, and all of a sudden you're out there in a free fall. The chute will probably open, but what if it doesn't?"
Keating says he left stability and comfort behind when he departed Comcast. "It takes a special type of person to leave behind the security and comfort of a resource-laden enterprise and take on what seem like insurmountable odds and the resource-constrained environment of a dotcom."
Indeed, many executives will not walk away from big paychecks and jobs with media behemoths. Bohrman and others at dotcoms say that sometimes a job offer from a dotcom will be refused. "They're in golden handcuffs at the networks because they're paid really well. It's hard for some people to rearrange their lives to take a hefty cut in salary. They've got kids in college, mortgages."
Former NBC-TV President Neil Braun, who's now president of start-up VastVideo, an Internet application service provider, warns, "If the accoutrements of power are important to you, you will not be happy in a start-up company, Internet or otherwise. But if you don't define yourself by your title and perks but by what you accomplish, a start-up is the best place to be."
Braun chose to continue to pursue life in the Internet business despite filing a lawsuit against his former employer, CMGI, which manages venture-capital funds investing in the Internet. The suit alleges breach of contract.
The lesson learned from the experience, Braun says, is this: "Agree on a business plan with the source of capital before you lock yourself in. A contract, $100 million of capital and good intentions are not necessarily enough to get everyone on the same page." In the end, Braun says, "my experience at CMGI only whet my appetite for the Web."
Klein says, "You can't make the same lifestyle changes with confidence. "And," he adds, "I miss the car service."
Stemming the tide
Stock options, creative freedom and the desire to get in on the revolution all play a part. But supply and demand also is at work. The TV business is consolidating, and the dotcom economy is expanding. Investors, entrepreneurs and those simply looking for more excitement in their professional lives are peering over the fence. As Bohrman points out, even if a business fails, "the area is so fertile that you just move on to the next one." Although no statistics are available, it's likely that media companies have suffered losses in all levels of management.
So how can TV hang onto its best and brightest and attract new talent? Networks, stations and studios all offer Internet opportunities, and many are creating or increasing equity packages. Excite@Home President George Bell, whose résumé includes Times Mirror Magazines, Outdoor Life Network and ABC and CBS, suggests that companies create phantom stock plans that track the performance of individual business units.
Ellis says traditional media companies should put "take-charge entrepreneurial types [on their Internet ventures] and give them the latitude to make decisions." Klein believes TV must "embrace change.and give employees an ownership stake and a voice in decision-making."
Bailing out / 100 who've made the switch from old to new media.
