An Old Fox Learns New Tricks

By Richard Zoglin

Barry Diller is sitting at his regular booth at the heart of the Four Seasons grillroom, basking in attention. Even in the headiest of Manhattan's power lunchrooms, Diller, with his bullethead and designer-mogul aura, manages to draw a crowd. Henry Kissinger nuzzles onto his banquette for a brief chat; other members of the business and media elite stop to pay homage. To each, Diller offers a greeting or a quip, then gets back to his enthusiasm of the moment. He is talking about home shopping.

"It's a direct, honest way of selling goods and services," he says. "You can see the product, get a lot of information about it, and order it with no- nonsense swiftness. Compare that with going to a suburban mall. It's getting close to being no fun at all."

Home shopping? Is this Barry Diller, the manic madman who has fascinated and frightened Hollywood for more than two decades? The charismatic celebrity addicted to power and partying with people who appear boldfaced in Women's Wear Daily social columns? And why is he spending three days a week in a sprawling office park in the exurbs of Philadelphia, surrounded by wildlife photos and a bank of nine video screens? "Home shopping is the very beginning of a whole new world," he says, as he bounds around his second-floor office while assistants teach him about things like product markups and order processing. "But it's interesting enough to me in its present borders. And I'm going to learn it down to the hubcaps."

Barry Diller inspecting hubcaps: it's a sight strange enough to cause a pileup of rubberneckers on the Santa Monica Freeway. Last February he resigned from one of Hollywood's most powerful posts -- chairman of 20th Century Fox and mastermind of the Fox network -- because he wanted to run his own company rather than continue as a hired hand in Rupert Murdoch's media empire. Hollywood assumed he would return as the head of another studio or perhaps a network, and he did have some exploratory discussions about buying NBC. But when he announced his new venture in early December, it came as a shock. Joining forces with two cable-industry partners, Diller took over QVC, a cable home-shopping channel.

The spin doctors could have been cruel: one of Hollywood's biggest, baddest power brokers resurfaces as head of a rinky-dink cable outfit that hawks kitchen knives and costume jewelry. Yet the move was hailed as a stroke of visionary genius. QVC, Diller announced, would be the basis for a multimedia company poised to exploit all the new technology soon to transform TV: fiber optics and digital compression, which will multiply the number of channels available, and two-way capability, which will allow viewers to interact with the TV set. Home shopping, Diller promises, is just the first of a vast array of things people will be able to do over the TV of the future, from ordering programs to paying bills and calling up the morning newspaper. "It's coming, not 10 years from today but sooner. And what's going to help it along is someone who doesn't understand the technology and never will. I'm in the camp of people who can't work their VCRs."

To industry gurus, it made sense: Diller, with his programming expertise, joining forces with some of cable's leading techies, most notably John Malone, head of Tele-Communications, Inc., the country's largest cable operator. In one swoop, television's fuzzy dreams of an interactive future had acquired both immediacy and show-biz cachet. "I'm only surprised at how stupid the rest of us were not to see it," says Jeffrey Katzenberg, chairman of Walt Disney Studios. Jokes CBS president Howard Stringer: "Already he's scared the Sears catalog out of business."

Diller's first task is to redesign the on-air look and schedule of QVC, which is currently seen in 45 million homes. (A second QVC-owned service, the Fashion Channel, is seen in 10.5 million.) "If you're looking for sweaters," he says, "you need to be able to find sweaters." He wants to upgrade the product line -- more high-end electronics, less cubic zirconium -- and eventually to introduce self-contained programs. He has been contacted by everyone from top designers like Donna Karan and Calvin Klein to Roseanne Barr (who wants to market a line of large-size women's clothing). They would join such current QVC pitchpeople as Diane Von Furstenberg, a close friend of Diller's, and Joan Rivers, a famous enemy. (Rivers was publicly furious at Diller for canceling her late-night talk show on Fox in 1987. The two have since made up. When Diller called her in London to tell her that he had bought QVC, his first words after breaking the news were, "Are you laughing?")

Diller, 51, is a tough, frequently rude, sometimes imperious executive. "He's the most confrontational man I know," says HBO chairman Michael Fuchs. "He is fearless. He will ask anybody anything." A micromanager, he is obsessed with everything from program budgets to office design. Fox staff members in Manhattan recall secretaries scurrying around before one Diller visit, trying to replace the red poinsettias with the white ones Diller prefers. His outbursts of temper are legendary. During an argument with Stephen Chao, the former head of production for Fox's owned stations (later fired by Murdoch for hiring a nude male model to illustrate a lecture on censorship), Diller threw a videocassette so hard it broke a hole in the wall. Chao put a frame around it.

Diller seems mellower these days, his steely gaze softened more often by a gap-toothed smile. Still, there is the cool, peremptory air of a man who has experienced power, and likes it. He talks in precise, carefully judged sentences and demands the same in return. Interviews are interrupted by phone calls that give piquant glimpses of the fabled "killer Diller." (After hearing about some new, unwanted contract language: "Tell him if he does not remove it, he can take the agreement and flush it in the river. If this is a manipulation, nobody's playing.")

Diller shuttles on his Gulfstream jet between coasts and half a dozen offices and residences, including a beach house near Malibu, another home 20 miles away in Beverly Hills and a suite at New York's Waldorf-Astoria. "I am business-orphaned," he laments. He skis in Utah, sails in the Bahamas and shows up regularly on the A-list party circuit. On his recent social calendar: a birthday party for Yoko Ono thrown by Rolling Stone's Jann Wenner and a Manhattan gala hosted by gossipmeister Liz Smith. For more down-to-earth recreation, Diller enjoys hiking in the woods around Furstenberg's Connecticut country home and devouring "cheesy novels," which he claims he is able to read without his Hollywood hat on. "It will only dawn on me later, 'Why didn't I think of this as a movie?' I really can suspend my disbelief."

The son of a Los Angeles builder, Diller grew up in Beverly Hills and worked in the mail room at the William Morris Agency before landing a job at ABC-TV. While still in his 20s, he was negotiating for theatrical movies with studio moguls more than twice his age. "These were guys who had generically tortured the TV people they had dealt with, who were frightened of them," says Diller. "Of the people I'm frightened of, they weren't among them."

Diller's great innovation at ABC was the Movie of the Week, the first network series of weekly made-for-TV movies. It also was one of Diller's formative dealmaking experiences. ABC asked Universal to produce the 90-minute films, but the studio was being difficult. It proposed that it make the movies exclusively and -- what really galled Diller -- retain rights to the concept forever. Diller's bosses were ready to comply, but the young executive went to the top of the company with his objections. He got ABC to propose a compromise -- a deal granting one-year exclusivity -- knowing that Lew Wasserman, Universal's stubborn chief, wouldn't give an inch. He didn't, and ABC walked away from the deal. Diller was then put in charge of making the films with various studios. He smiles at the memory of Universal's belated efforts to get the network's business. "They laid siege to ABC," he recalls. "They totally folded, which was sweet to watch."

In 1974, when he was just 32, Diller became chairman of Paramount Pictures after another snazzy bit of negotiating, this time with Charles Bluhdorn, chairman of Paramount's parent company. Bluhdorn took Diller to lunch and offered him the job as No. 2 executive to the studio's chief, the difficult Frank Yablans. Diller's response: "I would rather have the job of that waiter than work for Frank Yablans." Two hours later, Bluhdorn called back. "I'm making you chairman of Paramount," he told Diller. "Yablans works for you."

Diller guided Paramount through some of its most successful years, with hits like Saturday Night Fever, Raiders of the Lost Ark and Flashdance. But after 10 years, he jumped to 20th Century Fox, soon to become one of Murdoch's media holdings. There Diller became the prime architect of the Fox network. He rewrote the rules, operating with a lean staff, a fraction of the size of the Big Three, and experimenting with offbeat shows like America's Most Wanted and The Simpsons.

He also drove employees slightly crazy with his mania for details. Chao recalls having to re-edit a promotional spot for the series Cops 15 times before Diller was satisfied. His combative style was stimulating to some, debilitating to others. "It's the yell-in-your-face school of management," says an ex-staffer. But for Diller, passionate argument is not just a matter of temperament; it is a management philosophy. "Arguing out of conviction and belief is positive to the creative process," he says. "Years ago I started to worry, How do you keep your instincts clean? How do you get to what you really think, rather than just repeating the morning line? To make the fewest mistakes, you've got to find out where the real opinion or passion lies. And that only comes alive in argument."

Diller's fans -- of whom there are many, at least on the record -- attribute his success also to his business acumen and showman's instincts. "He is the least cynical man I know," says Peter Chernin, now head of Fox's film division. "He has antennae for the kind of cynicism that says, 'We don't like this, but the idiots out there will.' " Says Michael Ovitz, head of the Creative Artists Agency: "In this business there are good analytical, practical and creative minds, but very few who combine all three. Barry can read a balance sheet, read a script, and forward-think."

Murdoch was most impressed with Diller's attention to detail and tight hand on the purse strings. "He was a very conservative manager," says Murdoch. "He would arm-wrestle movie producers for months." But after Murdoch moved to Los Angeles and started taking a more active role in his entertainment company, Diller began to chafe. "I never really felt I worked for Rupert Murdoch," he says. "I made decisions as if I owned the place." A turning point came at a News Corp. board meeting in the summer of 1991, when Diller made some suggestions that seemed to be ignored. "I had the feeling I was an unwanted voice chiming in," he says. "I thought, 'My God, I really am an employee.' " Diller asked if Murdoch could create a principal ownership role for him in the company. When Murdoch said no, Diller decided to leave.

He spent much of his interregnum visiting computer, cable and other high- tech firms, trying to scope out who would have the upper hand in the new information age. He also tried some restorative time off. In June he set out on a cross-country drive, renting a Chrysler convertible in Miami and wending his way along the Gulf Coast through towns like Pensacola and Biloxi. But the summer heat and stale motel air left him dehydrated, and by the time he reached Little Rock, he was running a 100 degrees fever.

Little Rock? When Barry Diller wanders the country, even unemployed, he doesn't touch base with just the common folk. Though his fever put a damper on his private dinner with Bill and Hillary Clinton, Diller still mustered some typical words of advice for the future President. The primaries were over, but Ross Perot's popularity was starting to worry the Clinton camp. "I told him, 'You've won. Act like it.' " It's one piece of advice Barry Diller will never need. Winner or not, he always acts like it.