April 13, 2010
 

My Dinner With Stanley, Part 1.

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Stan Moger's a natural. You don't meet someone like him that often.

I remember one particular instance where a bunch of us from SFM were at a Time, Inc. function back in the 1990's. It was just getting started when we all started gawking at "the" power couple of that moment. Ted Turner and Jane Fonda were in our midst. Jane looked extremely nervous in the crowd. She was seemingly glued to Mr. Turner's side. They looked out of place.

Having just arrived, Stanley saw them and went right up and acted as if he knew them. Of course, he did. Stanley was Ted Turner's first national advertiser back when Turner aimed WTBS, his local Atlanta TV station into the stars and created the medium we know refer to as cable Television.

Moger then turned to Ms. Fonda-Turner and gave her a big kiss on the cheek, whispering something in her ear which she belted out a laugh to. It may have had something to do with Stanley and his friendship with her family. Who knows? Stanley's not the kind of guy who kisses and tells.

Of course it goes without saying that during this entire exchange we non-celebs had our eyes glued on Stanley too. His easy going manner changed the electricity in the entire room.

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Seeing the rich and powerful guests amid us settle down and begin to enjoy themselves, it sort of gave all of us some unspoken permission to feel like celebrities ourselves.

Recently, I felt like a celebrity once again when Mr. Moger invited me out to dinner to share his thoughts with the MadAve Journal and its readers about observations he believes should become part of the Madison Avenue conversation.

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The timing couldn't be more perfect; particularly in light of next week being Advertising Week. Stanley told me to pull up a chair and "make myself at home." I smiled and realized he was going to have the same effect on me as he did on Ted and Jane!

Stanley: We're on the air! (said in an accent) "This is WTEL, the voice of Tel Aviv, 1300 on your dial, but for you 1295".

Tim: (Laughing out loud) Let's begin by talking first about the present. As you know we've all been waiting for new media to arrive. And it's finally here. When you founded SFM, you created the first independent media agency, and then added special, branded content as an additional service to your clients. What you created 30 years ago is now what everyone else is doing, whether it's in TV or online.

Stanley: That's the way it always was. I didn't re-invent the wheel. What happened was, when I came up with the idea to start SFM as a media buying service. Bob [Frank] Walter [Staab] and I didn't think we were going to start a whole new industry. We just thought we were going to make a living. And we did it honestly because none of us were Doctors or Lawyers or Indian chiefs. And if it failed we had to get a job back in the industry. So we didn't want to lie, cheat, or steal!!

Tim: (Laughing...)

Stanley: Which is the truth. We fashioned ourselves after the classic advertising agency and because of my love for old radio, from which I understood through my Dad. I already knew about the movie and advertising business. I knew that all of the great radio programs on the air were all created by the advertising agency. All of these shows were created by agencies or the clients themselves and then they used the networks as the distribution method.

Tim: Right.

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Stanley: All the new TV shows were all just translations of radio shows to TV, and they were fully sponsored pretty much by the same companies who sponsored them on radio. Every show that hit TV in the beginning came out of radio in the 1947, 48, 49 eras…whether it was "I Love Lucy", or "The Lone Ranger" or "Dragnet" or "Inner Sanctum".

Tim: So, are we now going to see TV shows migrate onto the Internet?

Stanley: Not as easily. You now have a complicating factor; things like residuals and unions and to some degree, greed. All of the shows that were produced prior to 1961-62 on TV had a total buyout clause after a certain number of runs. After that, the rules changed.

Tim: How so?

Stanley: The rights for a TV program or a film are spread out over more parties, like the actors or the directors or companies that manage estates. For example, today if you want to use Humphrey Bogart to promote the film Casablanca, CMG, the company who manages his estate gets a fee. There are some exceptions to that, like with the work I do with the American Film Institute but other than that, the problem with the Internet, broadband, iPods and all the rest of the new technology is that no one knows how to handle all the residuals issues yet. Because the rights to a program or a film are spread out among a number of players, the time to work out rights issues is incredible.

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Tim: Right.

Stanley: So what they have tried to do; they being the unions, the actors and talent from the guilds have initially tried to translate over--from what applied to cable--to these new technologies. Well, it doesn't work. The model doesn't work. For example, let's say you want to run a song that is owned by a certain publisher. The publisher is entitled to a fee to run their song. When you do a DVD, the publishers are supposed to get paid every time you run that DVD. They get paid per disc.

Journal: Got it.

Stanley: Let's say they get 10 cents per disc and say you have a 4 disc set with 24 shows on it that you want to produce. Let's say the song run at the beginning and the end of every show. That becomes a fair amount of money just for the songs. You can't afford it. If you sell one iPod, one download or if you sell 80,000 you still have to pay. That could be a minimum of $5,000 per song. So what are you going to do? What are you going to sell? Are you willing to be liable for all the music? We live in a litigious society. In order to try to fix this problem Warner Brothers just came out with an agreement where they were able to clear something like 14,000 shows. It makes me think of the great line in Sunset Boulevard by Gloria Swanson where she says "The stars are not getting bigger; it's the pictures that are getting smaller."

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Tim: One of my favorite lines.

Stanley: It could take 2 or 3 years to put something together today. There's a lot of legal work and a lot of expenses. SFM Entertainment has literally thousands and thousands of shows and episodes that people want to run. They want, want, want, and want, but they are not willing to pay, pay, pay, and pay! Take for example a situation I had with a guy from LA. He came to me with an interest in some of the programs I've been packaging for DVD. He said his company would be willing to pay on a per-use-basis. But I said. "You don't understand. As soon as you rent one of these things I'll be liable to the guilds. Are you telling me I have to wait until you run enough of them to cover all my costs and fees"? He just stared at me blank. I then said, "I'll tell you what. You pay what the guild's fee is and then just credit it up against the total cost we agree on. You're the guy that's running it; you're the guy that's making the profit off my product". Of course, he said he couldn't do that. And I said, "Well then you can't have my product".

Tim: When you were just starting SFM, was the business different in terms of how people did business together?

Stanley: It was a more personal business.

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Tim: How so?

Stanley: When we started SFM in 1969, cable did not exist. There were 3 networks, PBS and a bunch of independent station groups. You could go to a national syndicator with a TV program who you knew from NATPE. Everybody already knew each other. You already knew the station management and you had local TV Program Directors who had authority to buy the program for the station.

Tim: People weren't as afraid of getting ripped off or expecting things for free.

Stanley: Exactly. Everyone tried to get a good deal, but it was a business where your reputation counted. It was a straight, above the board business. TV stations were different then. Stations had a responsibility in their local community. There was an FCC that had teeth. There was a rule, a 3-year holding rule where a company who bought a local TV station had to hold it for 3 years and a day, before you could sell it. This meant you had to manage station well whether you wanted to sell it or not. It meant that you had an obligation.

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Tim: Which meant that you just couldn't flip it?

Stanley: Right, you couldn't flip it. You also had FM radio, which back then hadn't really taken hold much. You had a simpler time. Remote controls hadn't come in yet; so you had to get up out of your chair to control the TV set. And then in the early '80's, everything broke loose. It broke wide open. Wall Street and Drexel Burnham came in and in my opinion, really contributed zero to society. Those guys came into the media business with the only intent to make money. They didn't have any interest in investing in a TV station or a program, which meant Program Directors' could no longer invest in building an audience for a new program.

Tim: That's when everything began getting dumbed down.

Stanley: Everything had to show an immediate profit or it was cut. It brought in a lot of financial people who would do whatever they could to make money. The interpersonal relationships started to be destroyed. There were no more ethics and trust. It went from a business of "let's work together" to a business of "let's screw anyone we can." And when that started--Wall Street, with its junk bonds and all the rest--that was the beginning of the decline of not only our business, but the economy. It really undermined fabric of our industry, because it was such an interpersonal business.

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Tim: You could do a $5 million dollar deal with CBS over lunch.

Stanley: That's right. You could do it on a handshake.

Tim: I remember when all of the Internet money started coming in the late 90s to run on TV, we began having to run TRW or D&B checks or put the cash in escrow before the buy went on-air because new media companies had no concern if the network got paid or not. So then, all the stations and the networks began wanting all the money upfront. And then agencies stopped using their relationships with the media on behalf of their clients.

Stanley: That's a good point. It was typical of what happened. In the early '90's, the President of the United States and his FCC figurehead took off any marketplace restrictions and let Wall Street run rampant. One day the story is all going to come out. Wall Street pocketed a fortune while all the little people lost fortunes. All these companies that were investing their profit sharing funds into Wall Street lost tons of money. They went bankrupt. Thievery within corporations all began there. In 1995, there was a meeting between the White House and the large media companies. Let's just say there was an agreement made which was very favorable to the White House and to the Broadcasters. In my opinion, it helped Clinton get re-elected. It was no coincidence that right after the election, even before Clinton was sworn in for his second term, CBS was acquired by Viacom, ABC was acquired by Disney and so on and so forth. The timing couldn't have been better for everyone involved.

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Tim: The timing? Why the timing?

Moger: Good question. Back in 1973, a law was passed called the "Financial Interest Syndication Rule" because in the early '70's, even then people thought the networks were getting too powerful. It was called the "FinSyn Rule". The networks at the time were producing both their own shows and also running them on their own programs. They had a monopoly from start to finish. Norman Lear led the fight for the program producers to create a more balanced playing field, because the networks were stifling any new programming. Lear got the FCC to apply the same laws that the government legislated for the movie business when the similar problem happened with the movie studios in the 1940's. It was called the "Paramount Decree" back then. Lear got the government to place the same type of rules to TV as it had to Hollywood.

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Tim: So "FinSyn" worked similarly to "The Paramount Decree?

Stanley: Yes and no.

That's where we leave it for today. Tomorrow, we resume with our chat with Stanley in our 5-part interview with one of our industry's most influential visionaries.

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