Jack Valenti’s Balancing Act : MPAA’s Chief Walks the Line as Studios Expand Interests

Jack Valenti learned the facts of life, Hollywood style, at his first meeting with Lew Wasserman, Arthur Krim, Jack Warner and other studio chiefs who hired him 23 years ago to advance their common interests as president of the Motion Picture Assn. of America.

Fresh from Lyndon Johnson’s White House, Valenti wanted to talk issues.

“Listen, Jack, let’s cut through all this,� Darryl Zanuck, then head of 20th Century Fox, told him instead. “Your biggest problem is the men around this table.�

More than two decades later, most of the faces have changed. But the chiefs around the table remain Jack Valenti’s biggest problem.

Not one known to back away from a fight, the 67-year-old Valenti has been struggling lately just to keep diverging interests and expanding egos from destroying the unity of his group, long known as one of Washington’s most powerful trade associations.

“There are obviously divisive issues . . . I hope the balance of the MPAA can be preserved. Unfortunately, I would not be surprised if it is not,� said Barry Diller, chairman and chief executive officer of Fox Inc.

Perhaps pointedly, officers of Warner Communications and Paramount Communications didn’t jointly attend any strategy session of the eight-member MPAA--which represents all the major movie studios--while the two companies were locked in a bitter war over competing plans to combine with Time Inc.

With Time Warner’s court victory over Paramount, the dust may have settled enough to permit a peaceful session when studio representatives meet again, probably in the fall.

Yet Valenti will have to step carefully around some potentially volatile issues, most notably the studios’ hitherto virulent opposition to increasing concentration of ownership in the cable-TV business. After all, newly formed Time Warner suddenly controls both the HBO program service and the nation’s second-largest concentration of cable systems, covering about 12% of the U.S. market. That makes it tough for the MPAA to sustain its long-running attack on cable industry leader Tele-Communications Inc., which has an interest in cable systems covering roughly 25% of the U.S. subscriber base.

Similarly, Fox Inc., with its expanding television interests, is starting to look a bit like some other old adversaries, the three established TV networks--and that led to serious tension in MPAA ranks last year.

When Fox applied to the Federal Communications Commission for a waiver of rules that subject it to regulation as a TV network when it starts distributing 15 hours of programming a week to affiliates, sister companies like Paramount warned Fox that its waiver request would give ABC, NBC, and CBS an opening to attack FCC restrictions that keep them from owning and syndicating TV shows. Hamstrung, the MPAA took no official position on the matter.

“If I were just coming into this job, frankly, I think it would be almost impossible,� Valenti said of the balancing act that has been thrust upon him by the movie studios’ rapid transformation into wide-ranging media empires, with potentially conflicting interests.

(Valenti’s formula for dealing with potential internal strife: “Wait a minute. Relax. Don’t move. You’ve got to hunker down like a jackass in a hailstorm.�)

How long Valenti will choose to keep his job is the subject of increasing speculation. One Washington-to-Los Angeles rumor in recent weeks had it that former Democratic House Whip Tony Coelho, a friend of MCA chairman Lew Wasserman’s, was about to take over the MPAA presidency.

An aide to Coelho said, “There is absolutely no truth (to the rumor).�

Of the talk that he might step down, Valenti said: “If I could find something that offers this kind of fun, and also challenges me . . . yeah, I might consider it.� An indefatigable globe-trotter, who spends his airborne hours working on a laptop IBM computer and reading serious works like a biography of Lord Byron, Valenti is currently writing his first novel, about politics, and considering another, about the movie business.

The head of one major studio, who declined to be identified, said that increased pushing and shoving among his peers has posed a severe test of Valenti’s endurance and political skills. “The members ought to treat Jack Valenti better,� he said. “I wouldn’t want to put up with those animals. Sooner or later, Jack’s going to get tired of the craziness.�

By many accounts, Valenti’s personal style has become a primary force in holding the MPAA together during an era when no single studio officer has been able to mobilize his competitors behind policy positions, as the 76-year-old Lew Wasserman often did when he was more active in industry affairs.

In the mid-’60s, Wasserman cultivated Valenti, then a presidential assistant to Lyndon Johnson, as a means of strengthening his access at the White House. As early as July, 1964, according to one letter in the Johnson presidential library in Austin, Tex., Wasserman was already offering Valenti the use of his Palm Springs home. The MCA chief became a primary force behind Valenti’s MPAA appointment at a time when, according to one published report, the short list of candidates included defeated presidential candidate Richard Nixon.

Individuals familiar with the inner workings of the MPAA say that in today’s configuration, Fox’s Diller, Paramount’s Frank Mancuso, MCA’s Sidney Sheinberg, Warner’s Bob Daly, and Disney’s Rich Frank and Jeffrey Katzenberg all function as roughly equal “barons,� generally leery of ceding leadership to one another, except in narrowly defined situations.

Columbia and Orion have usually played a lesser role in the organization, possibly because the companies are focused more in New York than in Hollywood, while MGM/UA has drifted in and out while going through constant corporate restructurings.

Founded in 1922, the MPAA has customarily not included the film industry’s smaller companies, although some studios recently have suggested a move to solicit broader membership. (Many smaller distributors belong to the American Film Marketing Assn., which has been increasingly active with regard to global movie issues.)

The MPAA members separately belong to the Motion Picture Export Assn., which deals with international issues, and the Alliance of Motion Picture and Television Producers, which conducts labor negotiations. Valenti is chairman of both groups, though he has left management of the alliance to its president, J. Nicholas Counter III.

An adroit consensus-builder, Valenti has governed the MPAA under a “rule of two.� Rather than depending on majority votes, and risking action on positions that a substantial minority might oppose, he has insisted that the association take no step to which any two members objected.

Thus, when Sen. Albert Gore Jr. (D-Tenn.) introduced a bill that would have forced cable system operators to make their programming available to back-yard satellite-dish owners, a minority of studios--Warner, Paramount and Disney--opposed the measure, and prevented the association from taking a position to support it even if some favorable rumblings among the other companies had hardened into a majority.

As various studios’ corporate interests in cable, theater ownership, broadcast, and even print media continue to expand, such deadlocks may increasingly force the organization to avoid tough battles in favor of what are internally regarded as “motherhood� issues--international trade restrictions, anti-piracy campaigns and the ratings system.

“I don’t think the MPAA will have a diminished role. But we may redefine it to things that remain common to the members,� said Katzenberg, who is chairman of Walt Disney Studios.

If internal differences do begin to hobble the MPAA, the studios will have squandered a network of political allegiances--much of it based on personal loyalty to Valenti--that has clearly been among the most effective in Washington.

“They’re in the top five� among lobbying groups, said Rep. Marty Russo (D-Ill.), who once prevailed on 35 members of the Ways and Means Committee to sign a letter to the Canadian prime minister warning of severe consequences if Canada enacted new restrictions on American films (Canada backed off).

“They are strong. Jack Valenti has built great relationships. His word is good,� said Rep. John D. Dingell (D-Mich.), chairman of the House’s powerful energy and commerce subcommittee on oversight and investigations.

One source of Valenti’s clout on the Hill has been his ability to deliver not just well-attended screenings of yet-to-be-released movies at the MPAA’s Washington headquarters, but also access to Hollywood’s treasure trove of political money.

The organization’s own political action committee is relatively small, and reported just $57,142 in disbursements last year. But Valenti has often pointed congressmen toward the Hollywood circuit of lucrative fund-raisers like one this year at the home of Paramount chairman Frank Mancuso for Sen. Joseph R. Biden Jr. (D-Del).

Even so, the heightened political interests of many stars and executives may actually be reducing Valenti’s role as a money-broker. “When you have three Congressmen running out to Los Angeles in a week, we tend to lose control,� explained one MPAA insider.

So far, even the passing of Ronald Reagan’s movie-rooted presidency has done little to diminish the studios’ presence in Washington.

During a recent European trip, for instance, George Bush sharply urged the European Economic Community to avoid contemplated quotas on American TV programming, and won a substantial delay in the matter. The quotas worked their way onto the presidential agenda after Valenti, a Texan who has known and worked closely with Bush for three decades, bumped into his old friend at a casual luncheon.

“How are things in the movie business?� the President asked.

“We’ve got problems,� said Valenti, launching into the trade issue.

Bush directed him to contact National Security Adviser Brent Scowcroft and U.S. Trade Representative Carla Hills, and the studios were soon dealing almost as comfortably at the White House as they had under Reagan.

Despite last year’s internal skirmish over the Fox waiver request, which is still pending, the studios have so far remained united in their opposition to any change in the FCC’s “financial interest and syndication� rule, which since the early 1970s has kept the big TV networks from owning a share in the programs they broadcast.

But the expiration in November, 1990, of a consent decree that further limits the networks’ ability to produce their own programs promises to test the studios’ continued political muscle.

Negotiations between the studios and networks toward a new compromise on the linked issues appear stalled, and studio representatives are bracing for a network assault in Congress and before the FCC on the financial interest rule by the time the consent decree expires.

Studios argue that the networks will simply appropriate all their TV profits and drive small producers--who are allied with the studios on this issue--out of business if the barriers come down. The networks have argued that both the rule and the decree should be stripped away, to let them compete on an even footing with growing empires like Time Warner--and to protect the future of free TV in an era when they have lost market share to cable and videocassettes.

NBC President Robert Wright and CBS President Laurence Tisch have been assiduously working to persuade Congress that financial interest is a potent consumer issue. “This is about the future of TV, whether network TV as we know it will survive,� said Martin Franks, head of CBS’s Washington office.

The networks, out-maneuvered by Valenti in the past, are now taking a page from the studios’ glamor-heavy political handbook. “We’ll never be as political as Hollywood. But we’ve been fairly aggressive in using our sporting events, getting (politicians) up to New York, and showing people it’s worthwhile to be friends with the networks,� said one TV lobbyist, who declined to be identified.

Significantly, the MPAA’s most visible defeat in the Valenti years was its failure to block home taping of copyrighted programs, or to get a royalty placed on blank cassettes--a fight that clearly got the studios on the losing end of a consumer issue.

“Our adversaries were able to say, ‘Mr. and Mrs. VCR, don’t let them tax your tape. . . .’ I will never again, ever, get involved with any kind of a public controversy where I don’t have a consumer issue as part of my weaponry,� said Valenti, who maintains that the true consumer interest in the financial interest controversy is diversity of program sources.

At the moment, Valenti’s hand appears strong in Congress on syndication and other issues, and it will probably stay that way, at least until some new complication develops among his members--for instance, the purchase of a studio by a big foreign company.

Australian-based News Corp. already owns Fox, but Rupert Murdoch, who controls News Corp., has become an American citizen. Fellow Australian Christopher Skase’s Qintex Corp. has made a deal to acquire United Artists, but Kirk Kerkorian, MGM’s major shareholder, will own a stake in Qintex and will distribute films through UA.

But would it be harder to back the studios if one or more of the biggest players--say, MCA or Columbia--were owned by a Japanese parent?

“Yes, it would. There’s an emotional element, particularly in a controversy that involves U.S. firms,� said Dingell, who represents a district in southern Michigan’s automobile heartland.

House judiciary committee chairman Jack Brooks, one of Valenti’s strongest backers and oldest friends, seconds that opinion--which may signal future MPAA headaches if Sony Corp. or some other high-profile foreign shopper finally decides to buy a movie company.

“I am concerned about foreign ownership of communications and other economic entities in the U.S.,� says Brooks. “They are not allowed to own TV stations. If they control satellites and TV companies, that may be almost as important and dangerous to the independence of the American people.�