Money and Power Part 5

Most of all, though, Robert Woodruff understood that brand gets built through advertising, and not just any advertising.

By the 1920s negative advertising had become very nearly the standard of the industry. Domestic tragedy waited around every corner, and lapses in personal hygiene had far-reaching consequences. The wrong hand cream, the wrong detergent, or stockings, or foodstuff could cost you your job, your social standing, your friends, your health, or even a future for your children. Postum sold its caffeine-free, grain-based hot breakfast beverage not by promoting its taste but by showing a boy "Held Back by Coffee" who was being tutored after school to make up for his academic deficiencies. Hoover sold its vacuum cleaners not through promises of cleanliness but by screaming in print that "Dirty Rugs Are Dangerous!" Ads that weren't negatively on the offense were positively on the defense, trying to counter the charges made against their products.

In the years before Woodruff took over the company, CocaCola had gone down both paths. One standard ad for the product showed a relentless sun beating down on shoppers: Buy c.o.ke or melt, seemed to be the message. Another featured the testimony of a Dr. Schmiedeberg that Coca-Cola was, indeed, not addictive or ruinous to the brain, digestive tract, or moral fiber. ('A woman who becomes an addict to it loses her divine right to bring children into the world," United States Senator Tom Watson had a.s.sured his colleagues in 1921.) Such charges would persist throughout the 1920s, kept alive by the Women's Christian Temperance Union and by the company's use of decaffeinated coca leaves in the manufacturing process. Under Woodruff, though, and with the considerable help of Archie Lee and the D'Arcy ad agency, the tenor of the company's advertising campaigns would change entirely: Drinking a Coca-Cola wasn't a moral or political or social matter, although doing so would put you in plenty of good company. Drinking a c.o.ke wasn't an issue of health, either, although it sure couldn't hurt you. Most of all and most important, drinking a c.o.ke was simply a chance to do something nice for yourself, a little moment of pleasure in an all too hectic world.

Archie Lee's famous phrase "The Pause That Refreshes" didn't appear in print until 1929, in an ad that ran in the Sat urday Evening Post, but the spirit of the slogan was there before the slogan ever arrived. Coca-Cola was a way to "enjoy thirst at work or at play." It was "always delightful," a good reason to stop in a "cool and cheerful place." "Refresh Yourself," a 1924 ad advised: "The Charm of Coca-Cola Is Proclaimed at All Soda Fountains."

To drive the words home, the D'Arcy agency brought on some of the best ill.u.s.trators of the day, Norman Rockwell and N.C. Wyeth among them, to create images that would tie the soft drink to the enduring moments of its customers. "You are selling not just a soft drink, but an idea," Woodruff told his ad people, and in Norman Rockwell's paintings of frecklefaced boys sitting by the fishing hole with a c.o.ke and the family dog, he got just the idea he was looking for. All that was best about America was best about Coca-Cola. Rather than merely echo culture, c.o.ke's ads began to define it. Prior to 1931, Santa Claus was variously depicted in the United States and Europe as tall and gaunt or as an elf; he dressed in anything from blue to yellow. In 1931, though, Haddon Sundblom produced the first in what would be an annual series of Christmas ads for Coca-Cola, and forever after Santa would look just as Sundblom had drawn him: fat and jolly with high black boots and a broad black belt and always dressed in Coca-Cola red.

In 1938, a D'Arcy executive spelled out for the ad agency 35 rules for Coca-Cola advertising that reflect both Woodruff's penchant for fine dicta and product micromanagement, and his broader concern for brand and image. Among the rules: Never split the trade mark "Coca-Cola" in two lines.

When the cooler is open, the righthand side which shows the bottle opener should be opened if possible.

The trademark must never be obliterated so that it is not perfectly legible.

Never refer to Coca-Cola as "it."

Never use Coca-Cola in a personal sense such as, "CocaCola invites you to lunch."

Never show or imply that Coca-Cola should be drunk by very young children.

On oil paintings or color photographs be inclined to show a brunette rather than a blond girl if one girl is in the picture.

Adolescent girls or young women should be the wholesome type; not sophisticated looking.

Within the D'Arcy agency, the wholesome though almost always buxom brunettes who drank c.o.kes in the company's ads came to be known as "the Atlanta virgins" "s.e.xy only above the hips," as one ad executive explained.

If c.o.ke's ads tended to celebrate an idealized world, its media campaigns and merchandising were anything but nostalgic. The history of Coca-Cola during the Woodruff years is the history of taking advantage of every new technological, cultural, and social phenomena in American life.

Six hundred thousand miles of highways were built in the 1920s Americans were taking to the road, and c.o.ke took to the road along with them. The first of the "Ritz boy" billboards appeared in 1925: a smiling bellhop holding a tray with a bottle of the soft drink and a gla.s.s on it. "6,000,000 a day," the caption read, reminiscent of the slogan McDonald's would employ so successfully decades later. The bottle in the Ritz boy ad was telling: Coca-Cola had been built on soda-fountain sales. By the mid-1920s it was dispensed at every one of the roughly 115,000 soda fountains in America. Now, in keeping with company policy that c.o.ke should always be "within arm's reach of desire," Woodruff went after the 1.5 million filling stations that had sprung up along the new highways to serve the newly traveling public. That meant bottles service station owners pumped gas, they didn't mix soft drinks and bottles meant a new and standardized dispenser so that the motoring public would always know that a c.o.ke was waiting inside and that the c.o.ke would always be cold. In 1928, the company developed a square metal ice box on a stand, in Coca-Cola red, and found a manufacturer to produce it for only $12.50. Within twelve months, 32,000 of the dispenser boxes had been sold, and bottled CocaCola was outselling soda-fountain drinks for the first time. Five years later, the ice boxes would be replaced with an electric cooler developed by Westinghouse compet.i.tors called them the "red devils." Soon, the electric coolers would be coinoperated, and the modern soft-drink dispenser would be born. As one bottler put it, the cooler is "advertising manager, salesman, clerk, delivery boy, warehouseman, and sometimes even the cash register all at the same time."

The bottle had given Coca-Cola legs: It could go where the market was. The six-pack would give the soft drink bulk, too. Woodruff had experimented with a Coca-Cola six pack then known as a "six box" in the mid-1920s, but it wasn't until the early 1930s that home refrigeration was sufficiently widespread to create a market. Then, the company pounced. Almost overnight, its new boxes could be bought in thousands of A & P and Piggly Wiggly food stores. To push the market, c.o.ke employed a small army of women to go door to door, handing out coupons for free samples and installing a Coca-Cola bottle opener for the housewives while they were there. If that wasn't enough to encourage consumption, the company also gave away by the millions copies of a home entertaining book written by a popular radio hostess of the day. Her suggestions included serving "Coca-Cola or tomato juice c.o.c.ktails ... with canapes" and "dramatizing the breakfast occasion" with, among other treats, "grape fruit sections in Coca-Cola."

By 1930, c.o.ke was spending almost $400,000 a year on radio, including sponsoring a sports show hosted by the wellknown sportswriter Grantland Rice. (A Woodruff pal, Rice launched the show by interviewing Ty Cobb and another of Woodruff's friends his golfing partner, the legendary Bobby Jones Jr.) Soon, the company would turn its attention to the booming movie industry, as well. The company's Los Angeles bottlers hired a former film producer from the silent movie era to hand out the product on back lots all across Hollywood: five cases a day for all current productions, Mark Pendergrast reports, and two cases every month for major stars. When Spencer Tracy asked for "two Coca-Colas please" in the 1939 film Test Pilot, c.o.ke got all the payback it could ask for. a.s.sociating your product with a brave test pilot in those perilous times was just what the company wanted to do.

"It isn't what a product is but what it does that interests us," Archie Lee had written Woodruff, and the one thing c.o.ke did was to tie itself relentlessly, and in the best possible light, to the seminal moments of American life and history.

c.o.ke went to the Olympic games for the first time in 1928, when a thousand cases of the soft drink were sent along with the United States team to Amsterdam. It went again in 1932, to Los Angeles, and to the 1936 Olympics in Berlin. While Hitler glowered at the African-American U .S. sprinter and long jumper Jesse Owens and his four gold medals, Coca-Cola was busy inundating athletes and visitors with huge quant.i.ties of the soft drink turned out by its highly successful German bottling operation. And so the soft drink has had a major presence at every Olympics since, including the 1996 "Coca-Cola Olympic Games" in Atlanta.

When the American economy turned sour in the 1930s, Coca-Cola was there also, bearing the subliminal message that things would get better, that life was sure to turn around. Rather than paint the grim reality of the times, c.o.ke's Depression era ads show the soft drink being consumed at Mardi Gras, the Kentucky Derby, in the shadow of the Old Faithful geyser, and at other similar oases from the grinding need and plummeting values of the time. For a mere nickel, a Coca-Cola would help you "bounce back to normal," a new Archie Lee slogan promised. By the end of 1941, "bouncing back to normal" seemed a long way to go, and c.o.ke seized that moment, too.

In a lifetime of brilliant marketing moves, Robert Woodruff made no move more brilliant than the 25 words he uttered shortly after j.a.panese airplanes had destroyed the U.S. Navy base at Pearl Harbor: "We will see that every man in uniform gets a bottle of Coca-Cola for five cents, wherever he is and whatever it costs our company." Beyond doubt, patriotism underlaid the pledge, but in this case, patriotism, image enhancement, and brand building walked hand in hand.

To prove the company's dedication to the war effort, c.o.ke sold 23,000 bags of stockpiled sugar to the U .S. military. To make sure it would have all the sugar it needed during the war, the company almost simultaneously began producing a pamphlet ent.i.tled "Importance of the Rest-Pause in Maximum War Effort." Not surprisingly, the "rest-pause" the pamphlet ultimately had in mind was the pause that refreshes: "Men work better refreshed," the "scientific study" concluded. "Time rules the present as never before. A nation at war strains forward in productive effort in a new tempo.... In times like these Coca-Cola is doing a necessary job for workers." Not surprisingly, either, the effort paid off. While other soft-drink makers had to make do with 80 percent of their prewar sugar supply, c.o.ke chugged along on full sugar rations so long as the sodapop being produced was meant for soldiers. And were the soldiers ever glad of it.

"Today was such a big day that I had to write and tell you about it," one Army private wrote home to his brother in a 1944 letter from Italy. "Everyone in the company got a CocaCola. That might not seem like much to you, but I wish you could see some of these guys who have been overseas for twenty months. They clutch their c.o.ke to their chest, run to their tent and just look at it. No one has drunk theirs yet, for after you drink it, it's gone; so they don't know what to do."

Under the banner of its. .h.i.t radio show "Victory Parade of Spotlight Bands," c.o.ke sent popular groups to play at military bases all over the country. On Christmas Day, 1942, in cooperation with the Navy Department, the company sponsored a show it called "Uncle Sam's Christmas Tree": 43 orchestras performing live from 43 U.S. bases. To make sure that kids too young to fight didn't miss the message, or the chance to partic.i.p.ate in the war effort, the company sold for a dime a youthoriented booklet called "Know Your War Planes."

"It's the Real Thing," the company had first proclaimed in a 1942 ad. By the end of World War II, Coca-Cola was all of that. Mark Pendergrast cites an article headlined "Millions Cheer Ike at Parade Here," from the Washington Times-Herald of June 19, 1945: After feasting copiously at the Statler luncheon yesterday, Gen. Eisenhower was asked if he wished anything else.

"Could somebody get me a c.o.ke?" he asked.

After polishing off the soft drink, the General said he had one more request. Asked what he wanted, he answered: 'Another c.o.ke."

Soon thereafter, Ike and Robert Woodruff became golfing pals.

By war's end, Coca-Cola's profits were over $100 million a year, and the soft drink had become part of the personal his tory of 11 million returning soldiers, sailors, and airmen. In a 1948 poll conducted by American Legion Magazine, nearly 64 percent of veterans named c.o.ke as their favorite soft drink. Pepsi, which had been gaining market share before the war, was favored by fewer than 8 percent. That same year, profit on sales reached $126 million, more than 5 times Pepsi's profit. Ever the zealot, Woodruff refused to let the word "Pepsi" cross his lips.

Maybe even more important than winning the hearts and souls of American GIs, the war effort had introduced Coca-Cola to millions of soldiers and non-combatants throughout Europe and Asia a "sampling and expansion job aboard which would have taken 25 years and millions of dollars," as one internal company doc.u.ment put it. Now, with the war over and the American market all but conquered, Robert Woodruff set out to subdue the rest of the world.

Almost overnight, it seemed, Woodruff had licensed 1,300 bottling plants and begun advertising in dozen of languages. Soon c.o.ke was selling 50 million soft drinks a day, everywhere from Aruba to Australia. Eventually, under Woodruff's reign the company would set up bottling plants in 72 countries, and it would sell its products in 70 more. In 1960, it added a new container to the a.r.s.enal a metal can that had been developed to send c.o.ke to the troops in Korea. What worked in World War II was put to work again.

Not all the foreign invasions were easy. An earlier attempt in the mid-1920s to expand to global markets had run up against often sloppy fieldwork. The Chinese characters for "Coca-Cola," the company discovered, translated literally "bite the wax tadpole." "Refresh Yourself with Coca-Cola" came out in Dutch roughly as "Wash Your Hands with Coca-Cola." An attempt to push the drink in Cuba with skywriting took a beating when a gust of wind turned "Tome Coca-Cola" into "Teme Coca-Cola": "Fear Coca-Cola," not "Drink Coca Cola." This second time around c.o.ke crashed and burned in a number of cultures, less from bad advance work than from a reaction to what was seen as the ubiquity and vulgarity of American advertising.

In New York City, consumers were conditioned to electrified billboards that screamed out the virtue of products day and night. Even in rural America, radios were playing more than four hours a day, filling the air with advertising jingles and promises. In Paris and Rome, though, and in the small towns of the Old World, Coca-Cola was seen by many as the vanguard of an American commercial invasion that would wipe out domestic businesses and impose a cra.s.s New World esthetic. Outraged Italians dumped c.o.ke in the streets of Rome, while the French complained of an attack on their national ident.i.ty. One French newspaper announced that "Coca-Colonization" was a threat to Western civilization or at least to French winemakers and their wine-loving consumers. Even the moderate Le Monde likened Coca-Cola's advertising to n.a.z.i propaganda. The French government even introduced a bill that would have banned the drink, and a French political party produced a public-service short denouncing CocaCola. Inflamed, the people took matters into their own hands. At a c.o.ke-sponsored French bicycle race, angry spectators threw debris on the track; elsewhere, mobs overturned company delivery trucks. But all, finally, to no avail. Robert Woodruff had a product and a mission, and as always he wasn't going to be deterred.

Coca-Cola's first international convention was held in Atlantic City in 1948, amidst an almost evangelical air. "May Providence give us the faith... to serve those two billion customers who are only waiting for us to bring our product to them," one company executive prayed. A placard on display at the convention a.s.sured attendees that "When we think of Communists, we think of the Iron Curtain, BUT when THEY think of democracy, they think of Coca-Cola." Two years later, you could find c.o.ke bottling plants in Algeria, Barbados, the Congo, Cyprus, Egypt, Gibraltar, India, Iraq, Kenya, Lebanon, Liberia, Morocco, Rhodesia, Saudi Arabia, Thailand, and Tunisia, to only scratch the surface.

"WORLD & FRIEND," the caption proclaimed on the cover of the May 15, 1950, issue of Time magazine. "Love that piaster, that lira, that tickey, and that American way of life." The image showed a smiling Coca-Cola disk with a skinny arm holding a c.o.ke bottle up for a thirsty globe to drink from. Time made it official: Robert Woodruff had won. c.o.ke was not just an American drink anymore; it was, as the journalist William Allen White had once described it, "the sublimated essence of all that America stands for." And Time had good reason to celebrate the victory: Woodruff was a hunting pal of Time cofounder Henry Luce.

"My job is to sell Coca-Cola, to see that as many people as possible are able to enjoy it," Woodruff had once said. "I am not a seer, an oracle, or a philosopher, and I doubt that my opinions on an endless variety of public issues would be sufficiently informed or authoritative to make them either useful or interesting." It was by dint of such single-mindedness that he managed to turn sugared water into a billion dollar corporation.

Robert Woodruff was 95 years old and near death onJanuary 1, 1985, when Roberto Goizueta came to pay a call. The Cubanborn Goizueta was by then CEO of Coca-Cola, a post Woodruff had given up years earlier, but in the corporate culture of c.o.ke, Woodruff still loomed monstrous, and Goizueta had come for his blessing. Blind taste test after blind taste test showed that soft-drink consumers preferred Pepsi to c.o.ke, Goizueta informed the Boss. In time, no matter how much you spent on advertising and how good the ads were, those numbers would catch up with you. It was time to change the formula. Goizueta wanted Woodruff's blessing for a product that was to be known as New c.o.ke -a clear winner over Pepsi and old c.o.ke in the same blind taste tests.

"Do it," Woodruff is said to have finally rasped, his eyes heavy with tears.

Early that spring, New c.o.ke hit the market and quickly proved one of the most spectacular product failures of the century. Robert Woodruff, though, wasn't around to witness the wreck. Soon after giving his blessing to the reformulated soft drink, Woodruff stopped eating, Mark Pendergrast recounts. By the time New c.o.ke flamed out, the Boss was in his grave a month. So well, though, had Coca-Cola learned the lessons that Robert Woodruff taught it that even the debacle of New c.o.ke didn't matter much in the long run: Three years after the New c.o.ke debacle, an independent survey found that old c.o.ke was the best known, most admired trademark in the world.

11.

TIME WARNER.

Turning Opposing Cultures to Common Advantage.

*N THE FALL OF 1989, TOP OFFICIALS OF TIME INC., the most recognizable name in the world of print journalism, and Warner Communications, the world's largest entertainment company, gathered in the Caribbean to celebrate their pending union. Only three years earlier, General Electric had purchased RCA, the parent company of National Broadcasting Company, for $6.4 billion, in what was then the largest non-oil acquisition in U.S. history. A few months earlier, Capital Cities picked up American Broadcasting Company for $3.5 billion. In November 1989 Sony paid $3.4 billion for Columbia Pictures Entertainment. In the communications and entertainment industry, everything that rises was converging. Now the biggest of the big had done just that: When it was completed in January 1990, the Time Warner merger would create the largest media conglomerate the world had ever known, worth $14.1 billion.

Time Inc. brought to the marriage nearly seventy years of publishing experience, beginning with the flagship newsweekly founded in 1922 by Henry Luce and Briton Hadden with $86,000 borrowed from Luce's friends. In the 1930s Luce added Fortune and Life to Time-the man had a genius for mag azine t.i.tles. Sports Ill.u.s.trated came along in the 1950s, another category killer. By the late 1980s, though, Henry Luce had been dead for two decades, and the printed word and image no longer ruled the empire he had launched. Luce had resisted television, even turning down a chance in the early days of the industry to buy one of the networks, but within two years of his death, Time was beginning to remake itself into a communications giant, not just a print one. The HBO movie channel and Time's extensive TV cable-system holdings were what caught Warner Communications' eye.

For its part, Warner Communications had traveled both a more direct and a more tortured path to the corporate altar. Motion pictures in anything like a modern form had been born in 1894 when Thomas Edison perfected his Kinetoscope, and the four Warner brothers had been there almost from the beginning. Jack Warner, the youngest, wasn't yet in his teens when the brothers set up a tent in their backyard to show their first movie. By the 1920s, Jack Warner had made it to Hollywood as a film producer and even had a star under contract: Rin-Tin-Tin. The famous German Shepherd, Warner would later say, was the most reliable employee in the studio's history never asked for a raise, never demanded a close up. In 1927, over older-brother Harry's objection, the Warners put up $4 million so that audiences could hear Al Jolson say "Wait a minute ... wait a minute. You ain't heard nothin' yet!" in The Jazz Singer, and with that, the Warners' fortune was made and the history of motion pictures changed forever. In that final year of the silent era, motion picture receipts reached $769 million. Two years later, in 1929, with the studios tripping all over themselves to turn out the new talkies, receipts had grown 19 percent, to $913 million.

The Warner brothers would eventually fall out bitterly, and the studio they founded would pa.s.s through a variety of hands, some of them pa.s.sing strange. Seven Arts Ltd. was the first to purchase Warner Bros., in 1967, by which time it was producing more television series than any other major studio. Two years later, Seven Arts turned around and sold Warner to Kinney National Services, publishers of the Superman comics and the irrepressible Mad magazine. Three years later Kinney changed the name to Warner Communications, and Warner became not just a movie and TV company, but an entertainment one, with everything from sitcoms to amus.e.m.e.nt parks huddled under the corporate umbrella. But it wasn't the rollercoaster rides that brought Time knocking on Warner Bros.'s door. It was the TV serials Warner had retained the rights to and the movies in its vault cla.s.sics like Little Caesar, Casablanca, and Rebel Without a Cause.

Warner had content, in short. Time had conduit. In the new calculus of the communication-entertainment industry, such synergy was irresistible. And never mind that the companies had cultures, corporate histories, and founders as different as newsprint and celluloid.

A Polish peasant who emigrated to Baltimore in 1883, Benjamin Warner and his wife, Pearl Leah Eichelbaum, would have nine children, but it was the four brothers Harry, Abe, Jack, and Sam who put the family name (which Benjamin adopted in 1907) in spotlights. A cobbler in Poland, Benjamin opened a shoe repair shop when he got to the New World; moved on to selling notions from a wagon, dragging his family through a succession of addresses across the East and into Canada; and eventually settled in Youngstown, Ohio, where he kept kosher, lived within walking distance of a synagogue, and commonly conversed in Yiddish. The older brothers, Harry and Abe, would inherit their father's devoutness. More a.s.similated, the younger two, and particularly Jack, would resist it.

Jack, who left school after the fourth grade, once explained that he had paid little attention to the rabbi his father hired to tutor the children in religion: "I didn't dig it at all." An eyewitness remembered another occasion when Harry was showing a visiting rabbi around the house: "Harry introduced the rabbi to Jack, and Jack said, 'How're ya, rab? I caught your act at the Palace. You were great!"' Both remarks are typical of the brother who would come by hook and by crook to rule the family business.

It was Sam Warner who really got the brothers into film. After he bought a film projector from an acquaintance in 1903, using his siblings' pooled savings, the brothers set up a tent in their Youngstown backyard and began charging admission to see the movie that had come with the projector--T/le Great Train Robbery. Before long, Sam and Abe were taking the projector on the road, showing The Great Train Robbery at a succession of small towns and wherever crowds were likely to gather. One early stop in Niles, Ohio in a rented store near a carnival encampment netted the brothers $300 in a single week. In 1906, weary of the road, the four Warners set up shop in New Castle, Pennsylvania, a steel town about fifteen miles across the state line from Youngstown. The Cascade, as they fancied their theater, used seats borrowed from a neighboring funeral parlor. Harry rented the films and Abe kept the books, while Sam ran the projector and a sister, Rose, played the piano. Jack, who was later to perform at the Youngstown Opera House under the exotic name of Leon Zuardo and as a boy soprano with a vaudeville troupe, sang between movie showings, mostly to chase people out of the theater.

The Cascade proved a success, but so long as they were simply renting and showing other people's films in a single location, the brothers calculated that theirs would never be more than success with a small "s." In 1907, just as Jack was turning 15, the Warners moved to Pittsburgh and created the Duquesne Film Exchange, with the purpose of buying films and renting them out to other distributors. It was a first tentative step at taking themselves national.

Commercially, Duquesne took off. Soon, the business was operating not just in Pennsylvania and Ohio, but in Virginia, Maryland, and Georgia as well. Legally, though, there were problems. Through the Motion Pictures Patents Company, Thomas Edison controlled all film patents and the right to collect licensing fees from anyone who sought to make movies or show them commercially. Like others in the growing movie business, the Warners fought the obligation, and the Justice Department smashed it for good with a 1912 ant.i.trust suit, a year after the Supreme Court had ordered John D. Rockefeller's Standard Oil broken up. By then, the Duquesne film business had been sold off, and Harry had sent Sam and Jack to St. Louis to begin producing cheap two-reel films.

The results movies such as The Perils of the Plains are by common consent painful to watch, so painful indeed that the brothers were soon back in the distribution business, this time with Harry and Abe moving to New York, where they would continue to pay attention to the books and other business matters, while Jack and Sam set up shop in Los Angeles, near Hollywood where the film industry was beginning to consolidate. Among other advantages, producers could shoot films year-round in southern California's temperate climate.

The Warners continued to dabble in filmmaking they were never content to be down the movie food-chain-and in 1917, more than a dozen years after they had first begun to nibble at the corners of the industry, the brothers finally had their first commercial hit. My Four Years in Germany had been a bestselling book by the former U.S. amba.s.sador to Berlin, James W. Gerard. In the Warners' hands, the book became a supremely jingoistic movie filled with heartless Huns, violated women, and tortured innocents. For World War I America, it was just the right combination. The movie opened in December 1917, six months after the first U .S. troops had arrived in Europe. By the time it was through its run, the Warners had netted $130,000 on $1.5 million in gross receipts, a handsome enough profit to allow Jack and Sam to set up their own small studio on Hollywood's Poverty Row. The war was also to bring Jack Warner his sole shot at fame on the other side of the camera: As a member of the Army Signal Corps, he got to star in a training film about the dangers of s.e.xually transmitted diseases.

By 1923, the Warners had incorporated themselves as Warner Bros. Pictures, Inc. Two years later they picked up Vitagraph, a failing filmmaker but one with a national distribution chain in place. With the further addition of majormarket theaters, the brothers had achieved the fundamental structure of a major studio without the track record of one. Warner Bros. movies still were made on the cheap, often as knockoffs of popular movies and popular actors. Lacking the resources to hire Charlie Chaplin, for example, the brothers hired his brother, Sydney. Neither the audiences nor the other studios were much fooled.

Thanks especially to Sam Warner, though, all that was about to change. Jack and Sam were both present in 1925 when a sound engineer told them that Bell Labs was developing a technique that would allow movie makers to synchronize sound and film. For the established studios like MGM and Paramount, the new technology held little allure: They were doing just fine without introducing sound into their very profitable world of silent films. The upstart studios, though, had less invested in the status quo and far less to lose by taking the plunge.

Years later, Harry Warner would recall the meeting that changed the course of movie history. Harry had thought he was attending a gathering of Wall Street bankers; instead, it was a demonstration of sound movies. "I am positive if [Sam had] said 'talking pictures,' I would not have gone," Harry said. The process, he had thought, was "foolish bunk." With the demonstration, though, even the most cautious of the brothers was sold. With Sam at the lead and just in front of their equally ambitious movie compet.i.tor William Fox the Warner brothers signed a contract with Bell Labs to produce a series of shorts using a sound process the Bell people had dubbed Vitaphone, and committed the first of what would eventually add up to $4 million in movie development costs. And with that the movies would be silent no more.

The first demonstration of the Vitaphone process came on August 6, 1926, before a packed Warner Theater on Broadway. Apart from historical reasons, the program wasn't particularly memorable: a series of shorts prepared by Sam Warner at the old Vitagraph studios in Brooklyn, followed by Don Juan, a full-length film made by Jack in Hollywood, featuring what the Warner Bros. rarely had, a legitimate star in John Barrymore. Nor for that matter was the technology all that riveting: The Vitaphone process played only a musical soundtrack that underscored the action, not the dialogue itself. But even such relatively simple technology had a riveting effect.

"The morning after the successful premiere of Don Yuan, Variety issued a special edition in acknowledgement of the impending revolution," the film historian Neal Gabler has written. "Warner Bros. stock soared from $8 to $65 per share. The Warners became very wealthy men overnight."

The success was short lived. The Vitaphone equipment essentially a huge record player synchronized with a projector was so expensive to install and so difficult to operate that, despite the success of Don Juan, many theaters refused to order it. Nor were the subsequent Vitaphone movies, including another forgettable comedy with the subst.i.tute Chaplin, Sydney, up to the standards of the first, either in quality or in surprise value. By the end of 1926, the Warner Bros. studio was $1 million in the red for the year, better than the previous year but hardly an omen of success. The brothers, however, had seen the future, and they had no intention of being denied their place in it.

For $50,000 the studio secured the rights to a Broadway play about an aged cantor and his runaway son who, rather than follow in his father's tradition, is drawn to singing in nightclubs. When the father falls sick on Yom Kippur, the Jewish day of atonement, his congregation urges the estranged son to take the old cantor's place singing the Kol Nidre, the traditional plea for forgiveness, and therein lies the great dilemma: Yom Kippur also happens to be the day the son's long-sought big chance, his own Broadway revue, is to open. On the stage, the part of the son had been played to critical and popular success by George Jessel: The play enjoyed a 38-week Broadway run. Although the Warners presumably had seen their movie as a Jessel vehicle, too, Jack and Sam soon decided to replace him with one of the most popular singers of the day, Al Jolson. They did keep the play's name, however TlaeJazz Singer.

The year 1927 was rife with historic events: Babe Ruth's sixtieth home run, Charles Lindbergh's solo flight across the Atlantic in The Spirit of St. Louis, and the execution of two immigrant anarchists named Nicola Sacco and Bartolomeo Vanzetti were only some of the most notable. But few moments in that memorable year, and no other moment in cinema history, was equal in impact to the opening of The Jazz Singer on October 6. By the time Jolson had closed the movie singing his trademark black-face number "Mammy," it was obvious to everyone in attendance that a night at the movies would never be the same again.

Neal Gabler wrote: The evening was brisk and clear, and the theater on Broadway was filled with notables. If they were waiting for an answer to the question of sound, they soon got it. One young Paramount executive raced into the lobby during intermission and called his boss in California: "This is a revolution." When the movie's star, A1Jol- son, strode to the stage to be showered by the audience's plaudits, tears rolled down his cheeks. The next morning Adolph Zukor called about 50 Paramount executives to the Savoy-Plaza suite and demanded to know why they hadn't made a sound film. The same scene was being re-enacted throughout the industry.

Among the few important movie people in New York to miss the opening night were four of the most newly important of them all: the Warner brothers. In a scene that it would seem only Hollywood could write, Sam Warner, who had been more responsible than anyone in the studio and maybe anyone in the industry for pushing sound, died of a heart attack 24 hours before The Jazz Singer made its first public appearance.

With the release of The Jazz Singer, Warner Bros. stock, which had sunk back down to $9 a share, skyrocketed to $132, and Harry, always the business mastermind of the studio, moved to consolidate the success and grow the holdings. By the end of the decade, Warner Bros. was adding one new theater a day to its stable, purchasing record companies, radio stations, and foreign patents, and backing Broadway shows. Rin-TinTin, found by a patrol of U .S. airmen in an abandoned German war-dog station during World War I, gave the Warners a proven moneymaker at the box office. With the acquisition of First National Pictures in 1930, they added a Burbank studio, an improved film-distribution chain, and a line-up of noncanine stars that included Basil Rathbone and Loretta Young.

Led by Jack Warner in Hollywood, the studio was also developing a formula for a new kind of gritty, inexpensive movie one ripped from the day's headlines, shot on city streets with actors the public could identify with, playing people like themselves: truck drivers and boxers, journalists and working men. In movies like the 1930 Little Caesar and The Public Enemy (1931), the studio caught the spirit of the new hard times. Through Busby Berkeley's lush musical extravaganzas, it also kept a strong presence in the escapist movies typical of the decade. And with movies like Disraeli (1930), the antilynching They Won't Forget (1937), and the 1939 Confessions of a n.a.z.i Spy, the first significant American antifascist film, the studio also showed a social conscience. Thanks to both Jack and Harry Warner, in their different ways, and to a growing stable of box-office winners that now included James Cagney, Edward G. Robinson, Humphrey Bogart, and Bette Davis, Warner Bros. weathered the Depression as well as any studio.

By the late 1930s, the surviving Warner brothers were legitimate Hollywood moguls, heads of a studio that was earning almost $180 million a year, but with Sam's death and the death of their parents within a few months of each other eight years later, the fragile truce that had existed between Harry andJack began to break down completely. Great movies would still come out of Warner Bros. Casablanca, for example, in 1942, and Watch on the Rhine the next year but the studio system that had helped the Warners and other early movie moguls ama.s.s their fortunes wasn't long for this world. In 1948, the government decreed that the studios had to sell off their theater chains. With that, a system as vertically integrated as any Henry Ford had dreamed of came to an end. More and more, too, the most t.i.tillating stories out of Warner Bros. were about the brothers themselves.

In 1915, shortly after moving to Los Angeles, Jack had married Irma Solomon and almost immediately begun chasing young women all around town and developing a well-earned reputation for infidelity. Jack's pa.s.sions finally settled on a lovely bit-actress named Ann Page Alvarado, with whom he began living openly before either of their divorces was final. In 1935, only two months after his father's death, Jack and Ann were married. For the devout and moralistic Harry, who could accept neither the unfaithfulness nor Ann's Catholicism, it was one more blow in a stormy relationship: He regularly referred to Ann around the studio as Jack's "wh.o.r.e," and he and his own wife for the most part refused to see her. Worse was yet to come.

In 1956, more than three decades after the brothers had formed their studio and a year after scoring a major hit with the James Dean vehicle Rebel Without a Cause, the three surviving Warners agreed to sell the studio or so Harry and Abe thought. On the side, Jack made a deal to buy back his own stock and stay on as head of the studio, now without his brothers. Even before the news of the double-dealing reached Harry, he had refused to enter the studio commissary if Jack was anywhere around. Informed of Jack's treachery, Harry took a lead pipe and, despite his 75 years, began chasing his brother all over the lot, shouting that he was going to kill him and failing, perhaps, only when his last desperate effort to throw the pipe at Jack went wide.

The next year, when Harry and his wife were celebrating their fiftieth wedding anniversary, Jack showed up unexpected, commandeered a gla.s.s of champagne, and demanded: "Where's Harry? I'm busting my b.a.l.l.s at the studio and he's living the good life." When Harry died in 1958, his widow Rea was quoted as saying: "Harry didn't die. Jack killed him." In any event, Jack didn't attend the funeral: He was vacationing on the Riviera with Darryl Zanuck at the time. Nor did he manage to mention Harry in his autobiography, My First Hundred Years in Hollywood.

In 1964 after yet another family blowup, Jack Warner locked his own son and namesake, Jack Jr., out of the studio and barely spoke to him again. Two years later, in 1966, he sold Warner Bros. again, this time for good. When he died another dozen years later in Los Angeles, Jack Warner had a nearly unequaled reputation in the industry for boorishness and bad manners. He also could lay claim, along with his brothers, to having taken part in the production of some five thousand movies and to being in on the birth of some of the most revolutionary entertainment innovations of the twentieth century. For good and sometimes for their own ill, Jack, Harry, Sam, and Abe Warner had ridden the movie boom straight to the top.

If Jack Warner had a polar opposite in his lifetime -a secret good twin to his evil one it would seem to be Henry Luce. Born in Tengchow, China, in 1898 to missionary parents, Luce would help to elect presidents and set American foreign policy for decades on either side of World War II. The poet Carl Sandburg once called him the "greatest journalist of all time." More sweepingly and probably more accurately, University of Chicago president Robert M. Hutchins, perhaps the most influential educator of his day, would contend that Luce, through his magazines, did more to shape the American character than "the whole education system put together." However you cut it, here was a man who mattered.

Luce's father, a Presbyterian minister, ran a small college in Tengchow (now P'eng-lai), where Chinese converts to Christianity could receive instruction. Except for very occasional visits to relatives in the United States, "Harry" Luce would spend his entire childhood in China, and he would never forget the lessons he learned at the college and in the walled compound where he lived with his father and mother, a one-time social worker for the Young Women's Christian a.s.sociation. For the entirety of his life, even when he had become one of the most powerful publishing magnates in the world, Luce would pray on his knees before going to bed. (Religion, he once explained, was a "G.o.dd.a.m.n good thing.") Nor would Luce forget the global view he learned at the knee of his father and the other missionaries working to convert and educate the heathen: America was superior to other nations, just as Christianity was superior to other religions, and capitalism was superior to all other economic systems. What's more, as a superior nation and people, America and Americans had both the obligation and the divine duty to lead the world out of darkness. Not surprisingly, Theodore Roosevelt was his lifelong hero.

Intelligent, determined, and endowed with a moral certainty he would never lose, Luce set off from China in 1913, at age 15, on a solo, four-month journey through Europe that eventually ended him up at the Hotchkiss School in Wallingford, Connecticut, one of the traditional bastions of the elite and what was then considered an enlightened blue-blood education. Three years later he would enroll in another all-white, all-male, nearly all-Protestant inst.i.tution, Yale College, where he would join that ultimate redoubt of the Establishment, Skull & Bones, later home to, among others, two George Bushes. A scholarship student who helped pay his tuition at both schools through a succession of menial jobs, Luce nonetheless shared a sense of n.o.blesse oblige with his more wealthy and connected cla.s.smates: a feeling that they were destined to lead. For Henry Luce, journalism would become the avenue toward the fulfillment of that destiny.

Trained on the Hotchkiss school newspaper, Luce helped to edit the Yale Daily News, where he so impressed his cla.s.smates that he was voted the "most brilliant" member of the Cla.s.s of 1920. After a postgraduate stint at Oxford University, he returned to the states and worked on newspapers in Chicago and Baltimore. For a Yale graduate, newspaper work was almost indecent in the 1920s A .J. Liebling once called newspapers "a refuge for the vaguely talented" but daily journalism was only a way station in Henry Luce's plans.

Ever since 1918, he and his Hotchkiss and Yale friend Brit Hadden had been talking about creating a new form of journalism that wouldn't just report events but would interpret them and do so with what in modern terms might be called an "att.i.tude" -a kind of irreverent cleverness. Like Jack Warner, Luce and Hadden both wanted to entertain readers. Entertainment had suddenly become not just a diversion in a more leisure-oriented society; it had also become big business. But ever the missionary's son, Luce also intended to instruct readers in his own world view In 1923, Luce and Hadden borrowed $86,000 from some of their well-connected school friends and created the world's first newsweekly. They called it Time-"the most precious commodity we have," Luce was to say and true to the name and its intent, pieces were edited so that the whole product could be read cover to cover in less than an hour. To grab the reader's attention, the two founders created a breezy style for the magazine and a unique diction. Hadden, especially, had an ear for then-rare usages that Time turned into commonplaces words such as "tyc.o.o.n," "socialite," and "kudos." For material, the editors culled stories from newspapers around the country, often compelling human-interest tales that made an easy connection with the educated, mostly middle-cla.s.s audience Luce was aiming for. To speed their digestion, the stories were compressed into what one critic dismissed as "the capsulized abridgement of a condensation." A fast read, though, was not meant to be an empty one: Luce always saw his magazine as feeding "true" Americans hungry for knowledge, and feeding them a very specific diet that also happened to be entirely aligned with Henry Luce's own moderate conservatism. Time favored civil rights and opposed the Ku Klux Klan it enraged segregationists by doc.u.menting lynchings, and Luce himself was a major supporter of both the Urban League and the United Negro College Fund. Time also was for evolution and against fundamentalism. It disliked Communism with a vengeance, was dismissive of Prohibition, and thought atheists were (at best) off their rockers. And sometimes to make sure that no one missed the message or got it wrong, Luce and his editors were not above ignoring inconvenient facts.

Intellectuals, for the most part, hated the magazine, but intellectuals are, after all, few in number. The middle cla.s.s felt differently, and that's what counted. In 1927, Time turned its first small profit. Two years later, Henry Luce and Brit Hadden were millionaires. Hadden wouldn't get to enjoy the ride he died suddenly in 1929 of a blood infection but for Luce and Time Inc. the good times were just beginning.

In 1930, convinced that businessmen needed help in understanding a rapidly changing society, Luce launched a business magazine that he called Fortune. As if to reinforce the point, he charged a small fortune to buy it: $1 an issue, equivalent to nearly $9.50 in today's dollars. Perhaps the formula shouldn't have worked the nation's economic strength was nearing its nadir but it did. Luce hired talent to staff the magazine, he paid well, insisted the publication be well researched and printed on the best paper with top photography, and he gave the talent he brought on board the freedom to follow their instincts. Within a few years, Fortune was publishing a ground- breakingjournalistic study of anti-Semitism in American business. Let Us Now Praise Famous Men. James Agee and Walker Evans's pa.s.sionate and lyrical look at white poverty in rural Alabama, never appeared in Fortune's pages, but the book began as a Fortune a.s.signment.

Suddenly an important figure on Wall Street now that his reporters were covering it, Luce charged ahead, buying Architectural Forum magazine and launching "The March of Time," a series of doc.u.mentary films that soon were being shown in movie theaters around the world. Convinced that he could make a large-scale pictorial magazine succeed where many others had failed, Luce in the mid-1930s bought the rights to a defunct publication with the catchy t.i.tle of Life. By late 1936, he was ready to launch his own version under the same name.

Like Time and Fortune, Life magazine would not only reflect the world as it was, this time in pictures; it would also crusade for a better planet, one without injustice and inequality. But Life was also a way for Luce to show readers all sorts of things about the world that wouldn't fall under the normal category of news. He himself had an insatiable curiosity, and he a.s.sumed his readers would share it. Luce wanted people, he once said, "to see Life-to see, and be amazed." And amazed, indeed, they were. All 466,000 copies of the first issue sold out on the very first day the magazine went on sale. Before long, one in every three Americans was reading Life every week, and Life had become and still remains the most popular magazine in American history. By the end of World War II, Henry Luce stood astride one of the largest and wealthiest publishing enterprises the world had ever known.

As was the case with the Warner brothers, Henry Luce's life would prove that great financial success does not necessarily translate into great happiness or domestic bliss. Like Jack Warner, Luce shed a wife as he grew famous and married a beauty in her place: Clare Boothe Brokaw, an editor, playwright, later a member of the House of Representatives, and an amba.s.sador. Like Jack Warner, Henry Luce also quickly developed a taste for the high life as his fortune grew and grew. Never the happiest of married couples, Henry and Clare Boothe Luce lived in mansions, spent lavishly on art, and stayed in the best hotel suites wherever they went.

Unlike Jack Warner, though, there was never anything trivial about Henry Luce's aspirations. When he wasn't making films, Warner pa.s.sed his time gambling, playing tennis, and before he met and married Ann, chasing women. Luce, in the words of former Time editor-in-chief Henry Grunwald, "saw himself as G.o.d's collaborator. He felt he was doing G.o.d's work." For Luce, that meant using his money and position to become involved in the great issues of his time.

"On the issues and people he cared most about China, American foreign policy, the Republican Party, Chiang Kai-shek, Winston Churchill, Wendell Wilkie he personally directed coverage at critical times with a feverish and occasional suffocating intensity. And on those subjects his magazines could be startlingly biased, even polemical," the historian Alan Brinkley wrote in Luce's first magazine, on the centenary of his birth.

Luce had little use for Franklin Roosevelt or his New Deal, but he backed the president wholeheartedly in the years leading up to World War II, when Roosevelt appeared to be leaning toward helping the Allied powers and rearming the United States, and he threw the entire editorial weight of his publishing empire behind the Lend-Lease Bill's proposal to ship aging U .S. naval vessels to Great Britain. In the winter of 1941, in what was to become a famous essay, Luce argued in Life magazine that America had both the duty and the opportunity to determine the outcome of the coming global conflagration and to lead the world toward freedom and order in the aftermath of an Allied victory. He called the article "The American Century," one more proof of his genius for compact phrasing.

Whatever promise Luce had found in FDR had withered by 1940. Not only did Luce play a key role in gaining the Republican presidential nomination for Wendell Wilkie; he tried to protect his investment by having the managing editor of Fortune run the Wilkie campaign and write most of his important speeches. When Wilkie backed away from the internationalism Luce favored and began courting isolationists like Charles Lindbergh, Luce complained that he should have "told the truth and gone down, with greater honor, in a far greater defeat." Twelve years later, he picked a better horse to ride and throw his media empire behind: Dwight D. Eisenhower. And by the mid-1950s Luce had power to burn. Time was selling two million issues a week; Life was selling six million; and the newly launched Sports Ill.u.s.trated was looking like a winner as well. By 1955, Time Inc. was bringing in annual revenues of over $200 million, and Henry Luce had a wonderful new place to stay whenever he visited Rome. Ike had expressed his thanks to the publisher by making Clare Boothe Luce amba.s.sador to Italy.

Internationally, Luce was always true to his formative years in China. He abhorred Communism, fought the diplomatic recognition of Mao Zedong's China, pushed wherever and however he could for military and economic aid to the Nationalist Chinese government on Taiwan, and lent both his name and money to a fistful of groups with names like the Committee to Aid Refugee Chinese Intellectuals. Luce fought the spread of Communism into Korea as well and, later, into South Vietnam. Even after he stepped down from the chairmanship in 1964, Time continued to be a strident (and finally almost a lonely) supporter of the American war effort there.

In retirement, Alan Brinkley writes in his Time centenary tribute, Luce continued to be the missionary's son, still seeking spiritual and emotional fulfillment "a search so intense that he and Clare reportedly experimented occasionally with LSD, on the advice of friends who described it as a vehicle of awakening."

Henry Luce and Jack Warner would be long in their graves by the time the two empires they founded completed their merger in January 1990: Luce died suddenly of a heart attack at age 68 in 1967, 11 years before Warner was carried off by a stroke. But as different as the two men and their two empires were, both seem in retrospect to have been on a collision course from the beginning. The two companies had been incorporated within months of each other. Both had resisted television only to be overwhelmed by its popularity. To Warner, television was "a b.a.s.t.a.r.d industry." A TV set, he vowed, would never appear in any Warner Bros. film. But that was before more than two-thirds of all Americans were watching their TV sets on a regular basis. Now, the print company had become a very profitable TV cable enterprise, and the movie studio had moved into television, theme parks, retail stores, even sports teams. Separately, though, both were having trouble competing with other media giants. Survival in the new math of the entertainment industry meant appropriating as many things as you possibly could, both cornering markets and going in every direction at once. Together, that's just what Time Warner could do, and so it was that a company formed by the son of a Christian missionary was joined to a show business outfit begun by four feisty Jewish brothers. In the synergy-driven economics of the 1990s, it didn't even seem strange.

The same set of circ.u.mstances applied in 1996 when Time Warner entered into a $7.6-billion merger with Ted Turner's Turner Broadcasting System. Turner had content and conduit, and a huge presence on cable TV that ran the gamut from Henry Luce's news reporting to the Warner brothers' movie showing and making. (What the hawkish Luce might have made of having Time Inc.'s name linked with Turner's then-wife, "Hanoi Jane" Fonda, is, of course, another matter.) Nor were the circ.u.mstances any different really when Time Warner rocked Wall Street in 1999 by announcing its pending marriage to Steve Case's Internet giant America Online. It was still a matter of content and conduit Time Warner's and AOL's but by century's end both had gone digital.

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BILL GATES and CYBERs.p.a.cE.