December 1996: Volume 65: Number 2
But Can He Schmooze? 
by Jennifer Reese
View from the Top: Jeffery Bewkes, MBA '77
He built his career in finance, but he's found his niche in entertainment.
Entertainment company executives aren't known for their modesty. They tend to be the charismatic self-promoters who show up in the gossip columns, make controversial pronouncements, and earn their descriptions as "bullies" and "thousand-pound gorillas." Michael Fuchs, who was chairman of HBO until last November, was one such executive. From all accounts, his successor, Jeffrey Bewkes, is not. Indeed, the biggest concern raised when Bewkes took over was that the genial Stanford MBA who had worked his way up the company's financial side wasn't flashy or "creative" enough to run an entertainment empire like HBO—a place where Madonna and Michael Jackson come to televise their concerts; where the likes of Roseanne and Robin Williams cut loose in uncensored specials; where sly, innovative sitcoms like The Larry Sanders Show are born.
But after a little more than a year in the top job, Bewkes seems to have silenced many of the naysayers. "Because Michael Fuchs was such a larger-than-life character and did such a terrific job, the assumption was that whoever replaced him would have to do it the same way he did," says Lee Masters, president of E! Entertainment Television, a cable network partially owned by HBO. "Jeff is doing it extremely well, but in his style. There isn't an ounce of pretense in this guy. But he's got an outrageous sense of humor and an easy manner, and he's creating a nurturing, fun environment where people can do great work."
His sleek corner office on the 8th floor of a mid-Manhattan high-rise is filled with best-selling books, state-of-the-art video equipment, and an extensive library of tapes—just the decor you'd expect from an entertainment executive immersed in pop culture. A self-described movie buff, Bewkes has increased the company's programming budget by some $75 million.
Bewkes has moved quickly and confidently into the public arena, if not the gossip columns. Last February he hosted a comedy festival in Aspen, trading quips with Rosie O'Donnell and Dennis Miller. A married father of two who values his privacy, he nevertheless seems perfectly at home at the star-studded social events that are an integral part of his new job.
"When I started this CEO phase, people asked: 'Can he schmooze?'" says Bewkes. "Twenty years ago, if someone had asked my friends from Stanford if they thought being able to party would be a major challenge for me in holding down a job, they would have laughed!"
"Jeff is a master at a party," says Peter Kreisky, MBA '77, who runs the media and entertainment practice for Mercer Management Consulting and has known Bewkes since they were GSB classmates. "He was also smart enough when he was number two at HBO to be almost invisible. Michael Fuchs was someone who wanted the limelight and wanted all of it. Jeff has been very astute."
Raised in Connecticut and New Jersey, Bewkes graduated from Yale in 1974 with a degree in philosophy. His first job out of college was as a researcher for NBC documentaries, but he quickly decided journalism wasn't for him. "I didn't want to be a news reporter or newscaster. I didn't think I'd be good at it," Bewkes says. "But it occurred to me that the whole nature of what was happening on TV had to do with economic management, and what I thought I saw at the networks was a lack of management. This is what I told the Stanford Business School, which I think is what persuaded them to let me in."
The GSB, he says, helped him identify what it was he really did want to do with his life. "All those disciplines, from accounting to marketing to production, were a great education in how the world worked, which was different from undergraduate education, where I was studying abstract things," he says. "It was food for the hungry, because at the time I was wondering: What should I do? What would I like to do? And when you get such a broad survey—'Here's what marketing people do, here's what finance does'—you can just sit there and say, 'Well, okay, which of those things would I be good at?'"
The answer, he decided, was finance. After graduating in 1977, he took a job at Citibank in New York, making lending decisions on tankers. "It was a great job. It taught me how to analyze whether a proposed business makes sense," says Bewkes. "But then I decided I didn't want to work long term in a lending bank because there's so much emphasis—and properly so—on clients. I thought I'd rather be a client than service one."
Hence his move in 1979 to HBO, then a fledgling pay-TV company with fewer than one million subscribers. "When I told the executive vice president at Citibank that I was leaving, he said: 'You're not going to Morgan Guaranty, are you?'" recalls Bewkes. "I said: 'No, I'm going to HBO,' and he said: 'HB-what?' People in banking thought it was risky, but it seemed to me you could hardly miss with cable TV in 1979. Sure, I was nervous. To leave an industry which has a predictable path to it and go into something completely unknown always makes you nervous. But I was young and I was optimistic."
He had reason to be optimistic—and nervous. His first job at HBO was marketing a channel called Take Two, which offered G-rated movies to HBO subscribers for a fee of about $4 per month. "Even though consumers said they wanted cleaner programming, no one actually subscribed to it," says Bewkes. Take Two was a flop.
A year later HBO launched Cinemax—which was similar to Take Two, but featured a wider range of programming—and Bewkes was made director of sales planning. This second venture was a roaring success. "It's not me that did it," he says. "It was in the water."
After this, his resume starts to look slightly unreal: In 1983 he was promoted to vice president of corporate and financial planning, and in 1984, he took a year out to work for Time Inc., HBO's parent company, in an attempt to coordinate HBO with Time's cable operations.
Bewkes returned to HBO as vice president of finance in 1985, became chief financial officer a year later, and in 1991 was named president and chief operating officer. "Working at this company is like being in a war. You start as a captain, and only two years later you're a general," says Bewkes. "Things happen that never happen in peacetime."
Still, his swift, steady ascent through the company ranks was not attributable to a wartime mentality nor to dumb luck: He was instrumental in HBO's expansion into international markets, which required forging alliances with other movie studios and with strong local partners. He also helped build HBO Independent Productions, which produces and markets programs for other networks. "He's an incredible thinker and a terrific strategist," says Lee Masters, who has worked with Bewkes since 1990. "In my view, he's the smartest media executive in the business today, and the company has benefited from his thinking for many years. It's one of the primary reasons he's in the position he's in."
He also has the invaluable knack for keeping a level head. In a decade when studios and networks seem to change hands on a weekly basis, HBO has seen its share of tumult. In 1989, Time Inc. merged with Warner Brothers; then last year Time Warner announced plans to purchase Turner Broadcasting System, with its vast cable holdings, including CNN. Each change has involved a new cast of characters, a new set of egos, agendas, and problems. Bewkes seems to take everything in stride.
"Everyone who works at HBO lives at a speed that is five times what's normal. When I came in 1979, 10 percent of the country had cable. Now it's 90 percent," he says. "In the time I've been here, the three TV networks have all changed hands, HBO merged with Warner, and today the big question would be: What about Ted Turner? For anyone else this would be a huge, once-in-a-lifetime event, but that's just what it's like in the entertainment business."
And what about Ted Turner? When informed in September that he will be reporting to the mercurial Turner, Bewkes responded with characteristic cool. "Like us at HBO, Ted understands what it takes to make networks like CNN, TBS, and TNT stand out," he told the New York Times. "So it's a natural fit."
Not everyone at HBO greeted Turner's entrance with such equanimity. Over a year ago, before the Turner/Time Warner merger was even approved by the U.S. government, Fuchs reportedly became upset by the prospect of the famous billionaire helping to run the show. He made his feelings known and was fired. Of Fuchs, with whom he is still on friendly terms, Bewkes says simply: "We worked together very closely; what do you say about that kind of thing?"
One thing you can say is that Fuchs's departure meant a dramatic adjustment for Bewkes, who replaced him as chairman. "I'd been president and chief operating officer for five years, but during all that time I always had a senior partner," says Bewkes. "And then he left. It's very different to be the guy who's ultimately responsible. Suddenly I had to do everything he did, including overseeing the programming, which has been a steep learning curve. It's not quite the same as learning accounting. You're talking about picking shows and relationships and producers and stars."
And HBO doesn't pick just any shows, relationships, producers, and stars: The company is known for going after offbeat but interesting projects that most other networks and studios wouldn't consider. The movies HBO produces aren't the mindless action pics that keep the multiplexes packed all summer, nor are they the trite, low-budget dramas that end up on the networks. HBO specializes in projects that fall in between those categories, films like Gotti, starring Armand Assante, and If These Walls Could Talk, an unflinching look at the role of abortion in the lives of three generations of women.
"You don't make a Twister for 50 or 80 million dollars and put it on HBO. We do the 5 to 10 million-dollar movies, the ones that aren't something the studio wants to do for mass consumption but aren't as run-of-the-mill as what you put on broadcast TV," says Bewkes. "We can do things that are more adult and sometimes more subtle."
Original programming—supplemented by a slate of uncut blockbusters, like Clueless and Batman Forever—has helped HBO capture roughly 60 percent of the U.S. pay-TV business, and over the last 18 months, the earnings growth rate has doubled to more than 15 percent a year. Bewkes wants to continue to invest in more quirky sitcoms, more movies, and more events to deliver 15 to 20 percent earnings growth. "If we make an episode of The Larry Sanders Show, we show it to 25 million subscribers. If Showtime makes the same episode for the same money and shows it to 10 million viewers, it costs them 2 to 3 times as much per home. So if you ask me why I increase the programming budget, I say: Because I can, and no one else can follow. We have the people and the capability to do more, and we have the ideas in development. So it's a propitious time to increase the budget."
Increasing the budget is one thing. But what about actually identifying the next Larry Sanders Show? Figuring out which projects to adopt—or drop? Discovering new comic talent? Bewkes admits he is still new to this. But he is fortunate: With its reputation for producing top-quality series and films, these days HBO has talented people lining up to bring their projects to the network. This summer, HBO took home 14 Emmy awards—more than CBS, ABC, or Fox. All this should make Bewkes's adjustment a lot easier, at least in the short term.
"When you have years of momentum and success at doing distinctive programming, you attract the most powerful writers, directors, producers, and stars. The best people in the business are willing to work with HBO because they have freedom to treat a subject without undue dilution and meddling," says Bewkes. "The real job, I think, is to make HBO into the place where the best creative people want to come."