A CONTRACT WITH THE KREMLIN
They want us to be like three scorpions fighting in a bottle. When it's over, two will be dead and the winner will be exhausted.
Thus spoke Roone Arledge, president of ABC Sports, of the way it was when the three major American television networks joined in bitter battle with the government of the Soviet Union over the U.S. rights to televise the 1980 Summer Olympic Games. It was a Cold War confrontation with an absolutely classic—if also a somewhat comic—cast of adversaries. On one side stood the network executives, representing all that is richest, sleekest, most glamorous about the free-enterprise system. They came from stately Manhattan skyscrapers, quick-witted, supersophisticated salesmen given to Gucci shoes and manicured hands. If they were not the cream of U.S. business, the network men were certainly from the tip of the vast capitalist iceberg.
On the other side stood a battery of grim Russian bureaucrats—burly, pallid fellows, some former peasants with hands still hard from years of labor in the fields of Mother Russia. They were canny technocrats and politicians from the cold corridors of the Kremlin; some were in their 70s, and their longevity alone made it clear that they were among the wiliest of men in this land of purges. It also is worth noting that the network representatives were not entirely without this instinct for survival, being no less vulnerable than Soviet politicians to swift turns of fortune that could send them to the Siberias of American business.
So they joined the conflict well matched—the minions of Red Square, Moscow vs. the moguls of Sixth Avenue, New York. It would be nice to report that the result was a hard, clean, clear-cut battle between two ideological juggernauts, that two gleaming machines performed in a way that displayed the best of both systems. This did not happen. The big Olympic TV deal became bogged down in misunderstanding, misjudgment and mistakes.
In fact, during the critical closing phase of negotiations that concluded three weeks ago with an astonished National Broadcasting Company being presented with the Olympic rights for $85 million, the only real link between the two adversaries was a garrulous little German named Lothar Bock. He is a small-time "impresario" (the term he uses to describe himself) who had more experience as a booking agent for Georgian saber dancers and Mongolian tumblers than as the indispensable middleman between a bunch of cold-eyed Soviets and high-rolling TV executives. It is true that one network man described Bock as being "a bit of a klutz," but it was Bock—and Bock alone—who plodded between Moscow and Manhattan to forge the final bond that gave the Olympics to NBC. In the bargain, he earned himself a million bucks and made his name a household word from the bar at P. J. Clarke's to the boardroom at the A. C. Nielsen Company.
This bizarre situation officially began in Vienna in October 1974, when the International Olympic Committee awarded the Soviet Union the 1980 Summer Olympics. All three networks were there just to shake hands with their new adversaries. No one was selling, no one was buying. Only one network—ABC—was absolutely certain that it would bid for the Moscow Games. Under the masterful guidance of Arledge, ABC had won the rights to six of the last eight Olympics, and it covered each with increasing excellence. But except for sport, the network had been No. 3 in the ratings for many years. That changed in the 1976-77 TV season when ABC burst to the fore, partially because of its hugely successful telecasting of the Montreal Games.
CBS had televised the Rome Olympics of 1960. That was in TV's dark ages, when rights could be purchased for $550,000. Since then, CBS had never bid successfully—or even seriously—for an Olympics. The network had been rated No. 1 for so long that it seemed to be living on its own Mount Olympus, showing a godlike disdain for the Games of mere mortals. However, in mid-1974, Robert F. Wussler became CBS's vice-president in charge of sports, and he was very interested in the Moscow Games.
As for NBC, it had televised the 1972 Winter Olympics from Sapporo—an esthetic disaster and a financial disappointment. Top management was at best neutral toward the Moscow Olympics. Carl Lindemann Jr., NBC's vice-president for sports, made a couple of trips to the Soviet capital in the early going but says, "I was essentially there to wave the flag. Higher network management was ambivalent. I wanted the Games in the worst way. We had lost the Munich Olympics because of a lousy $1 million." (ABC paid $13.5 million for the rights.)
During 1974 and 1975 the American network executives—Arledge, Wussler, Lindemann and an ever-growing cast of presidents, board chairmen, lawyers, diplomats, politicians and public-relations men—launched into a lumbering courtship that was intended to win the hearts and minds of the Soviet Olympic hierarchy. In the end, none of it seems to have made any difference in the selection of NBC. Yet the courtship was fervent, relentless—and sometimes quite public.
For example, in the fall of 1975, ABC's faltering morning show, A.M. America, woke up the nation to a week of reports on life in the Soviet Union that were so uncritical an embarrassed ABC man said, "We made Moscow look like Cypress Gardens without the water skiers." In 1976 CBS aired a prime-time bomb that featured a shivering Mary Tyler Moore standing on a wintry Moscow street corner, hosting a show about the Bolshoi Ballet. When Wussler was asked if this was part of his Olympic campaign, he replied, "No question about it."
As the time approached for the Montreal Games, there was a constant shuttling of network people to Moscow to wine and dine with Soviet Olympic officials. East and West became palsy-walsy, even kidding each other about whether it was the KGB or the CIA that was bugging their conversations. Mostly it was social, but in Montreal the plot at last thickened.
The U.S.S.R.'s Olympic Organizing Committee glittered with Kremlin stars. The leader was a hulking, dark-haired Ignati Novikov, 70. He had started his career as a laborer in the Ukraine, rising through the ranks until he became one of the top half dozen men in the U.S.S.R., the deputy premier in charge of all power construction projects. Second in command was Sergei Lapin, 64, a stern and polished diplomat who had been Ambassador to Austria and China and general director of Tass. Now, as Minister of the State Committee for Television and Radio, Lapin became the Soviet Union's head propagandist. They were invariably accompanied by a battery of deputy chairmen, vice-commissars, translators and stenographers. The Americans quickly noted a difference between two factions: Novikov, an old Kremlin hand, came on in the intransigent shoe-rapping manner of Nikita Khrushchev, while Lapin and others on the TV-radio committee seemed more subtle.
On a Saturday afternoon in Montreal, the Soviets gave a lavish party on the good ship Alexander Pushkin, which was moored in the St. Lawrence. The decks were awash with gallons of Stolichnaya vodka and Armenian cognac. The tables groaned beneath platters of cracked lobster, sliced sturgeon, caviar. The event was purely social, even jolly. But Novikov & Co. were in town to do some serious shoe-rapping. They contacted the networks one by one and made their demand: they wanted $210 million. In cash. The networks laughed. An NBC man said to a Russian, "210 million dollars? We were thinking of 210 million pennies." The Soviet representative stalked off in anger, but one of his comrades confided to a CBS representative that no one in Moscow expected more than $65 million.
In fact, none of the numbers meant much of anything. NBC's Lindemann says, "We all knew the price would be between $70 and $100 million. I think all three of us would have gone to $100 million." Perhaps so. But the real numbers would come later. The most troubling aspect of the Russian demands in Montreal had to do with the sensitive issue of just how much selling of the Soviet Union a U.S. network would have to do to buy into the Olympics. The fine line between propaganda and news seemed particularly fuzzy to Novikov. Wussler recalls, "He made it clear to us he expected some kind of favorable political coverage. We said we could not compromise CBS News. We might do something like the Mary Tyler Moore show, ice shows, circuses, sports."
Arledge says, "I wanted a clause in the contract that said ABC would have total control over our telecast of the Olympics. Novikov had said to me earlier in the year, 'If you show things we don't like, we will pull the plug.' I doubt they would do that, but the problem of even seeming like a propaganda arm for the Russians is delicate. For example, if you show the subways of Moscow—and they are superb—some people in the U.S. are going to see it as a selling job for the Soviets just because it isn't something negative."
The Soviets did not demand specific schedules of pro-U.S.S.R. programming, but the prospect of having to do such shows hung heavy over the networks throughout the negotiations.
As the Montreal Games ended, the Soviets said they would like to see some preliminary money bids in Moscow that fall. They would be secret, of course. NBC was particularly careful about security. It wrote a two-sentence bid on a page of company stationery, sealed it in a film can, sent it by courier to New York's Kennedy Airport where it was given to an airline pilot, who carried it in the cockpit to Moscow. There he gave it to the driver for NBC News, who took it straight to the committee. An hour later in New York Wussler knew NBC's bid.
The early bids received by the Soviets were: NBC $70 million, CBS $71 million and ABC a surprising $33.3 million for non-exclusive rights, meaning that it was already thinking of the possibility of pool coverage in which all three networks would participate. Arledge later bid $73 million for exclusive rights.
The autumn of 1976 arrived in New York, but in Moscow it suddenly seemed to be the season of CBS. Almost two years earlier Wussler had gotten enthusiastic encouragement in his Olympic quest from William Paley, the venerable CBS board chairman. Paley said, "I'm delighted you boys want to go after this, just delighted!" Thus blessed, Wussler and Arthur Taylor, then president of the network's parent company (CBS Inc.), had begun a series of trips between Manhattan and Moscow where they established warm friendships with important committee members. However, nothing they did was as important as the signing of Bock to be CBS' representative in Moscow.
Wussler had first met Bock, 38, in the spring of '75 as the result of a phone call from film producer Bud Greenspan. "Bob, if CBS is really serious about the Olympics, the man to get them for you is sitting here in my office," Greenspan said. Wussler met Bock and invited him to dinner. Later Taylor met Bock in Moscow, and a consulting contract was arranged for him.
Who is Bock? And how did this energetic little fellow with a real-estate salesman's smile ingratiate himself with a pathologically suspicious crowd of Kremlin politicians? The answers are not clear. Was it because Bock arranged a few years ago to have a memorial plaque placed on the house in Munich where Lenin did some of his most important writing? This impressed the Soviets. Beyond that, Wussler says, "The Russians trust him at least partly because in 1968 Lothar imported a troupe of Russian singers for a tour of West Germany. They were there at the same time the Russians invaded Czechoslovakia to crush the uprising. That week the West Germans wouldn't touch anything Russian with a 10-foot pole. Lothar had to eat about a $75,000 loss. And he did. The Russians never forgot that. They thought Lothar showed class. They trusted him."
There are stories around Munich that contradict this theory. Some people say they cannot understand why the Soviets even let Bock into the U.S.S.R. because he allegedly once left a troupe of Georgian saber dancers flat broke in Hamburg until the Soviet government sent money to pay their bills. On another occasion, Bock reportedly marooned 60 Mongolian tumblers in a Bavarian country inn, forcing Moscow to come to the rescue again.
Whatever else he may be, Bock is a loquacious chap who is seemingly quite open about himself. Sitting in his office, which is located in the basement of a green bungalow on an unpaved street in a Munich suburb, he explained last week how his prosperous Soviet connection came to be: "In 1965 I happened to see the Osipov Balalaika Orchestra, and I thought I would bring it to Germany. I wrote to Moscow and got a letter back in Russian. I hardly even speak the language now, and I certainly didn't understand it then. But instead of having it translated, I took the next flight to Moscow. They translated it for me there. It said: 'Dear Mr. Bock. We are not interested in your offer.' But I was insistent, I continued talking to them. After a while, they saw my point, and I have been dealing with them ever since. We are fair and square with each other."
Pressed further for his formula for gaining friends in the most remote recesses of the Kremlin, Bock said, "I always tell them I am a capitalist, making no attempt to hide that I am working for profit. They accept it. They love it."
That seems all too simple. But whatever the reasons, the Soviets trust Bock. As one Russian told Wussler, "All U.S. networks are bad, but you are less bad, because you know Lothar Bock." By October 1976, with Bock running interference, Wussler and Taylor felt they were on the brink of closing a deal. "We had contracts all drawn up between CBS and the organizing committee," says Wussler. They came triumphantly back to New York to tell the network the Olympics were wrapped up, and arranged a big party for the Russians at the IOC meetings that were scheduled in Barcelona a day later. Wussler was packing to go to Spain when he got the stunning news: Taylor had been fired by Paley.
If there is one thing the Soviets understand with razor-sharp clarity, it is the sudden purge of high-level personnel. And it makes them nervous. "They were shook, I mean shook!" says Wussler, who six months before had moved up from head of CBS sports to the presidency of the network. "I tried to assure them it had nothing to do with the Olympics, but it was hard for them to believe." Even the sprightly Bock was numb—for a while. Then he phoned Wussler and said. "I think if Mr. Paley would come to Moscow himself, we could put the deal together again." Wussler doubted whether Paley would agree, but when he asked him to go, Paley's only question was "How soon do we leave?" Early in November, the patriarch of American television and a leading patrician of world capitalism was welcomed with almost adoration by the old Ukrainian laborer, Novikov. They toasted each other warmly during a lavish dinner of chicken Kiev fit for a czar. Then, after two long days of meetings, the two old lions had a t√™te √† t√™te in a small room. They toasted each other. They shook hands. Wussler recalls, "Mr. Paley and I left Moscow with the definite feeling that the deal was firm."
Oddly, nothing further was heard from Moscow until Dec. 8. Then the networks received a communication outlining the framework under which the final bidding for the rights would take place. It was an amazing document. Only ABC's men had heard anything like it mentioned in Montreal, and nothing resembling it had come up in CBS' private talks. No one was quite sure what it meant.
Nevertheless, all three networks went to Moscow to find out. NBC was planning to seriously enter the fray now. Robert Howard, president of the network, went to Moscow along with Lindemann and nine other executives and technicians. "Most of our guys had never been to Moscow," says Lindemann. "I had been there only four times. I was surprised when Wussler said he had been there 11 or 12 times."
When the Americans arrived for the showdown on Dec. 15, two of the networks—CBS and ABC—were dead certain they had been chosen. Only NBC figured it was an underdog, and it was correct. NBC was about as far under as a dog could be. Novikov could never remember the network's call letters; even during the final signing, he twice referred to it as ABC.
Nevertheless, the Soviets treated the three networks exactly the same—like dirt. One by one, they were informed of the new conditions for bidding—which were outrageous. For one thing, the U.S.S.R. demanded $50 million for equipment and facilities, to be paid in staggering increments of $20 million in 1977 and $30 million in 1978.
All along one of the Russians' most irrational demands had been for huge sums of cash to be paid two or three years before the Games. Recent Olympics have taken place in such a politically charged atmosphere that it was not unreasonable to fear that an international incident might cancel the Moscow Games, leaving the Soviets with the loot and TV with no programs. But the network executives were less afraid of losing money because of political disruption—after all, in a tightly controlled country like the U.S.S.R., the chances of disruption are slim—than because of an old-fashioned business reason.
Though the networks would have no problem raising the money, an enormous amount of interest would be lost if millions of dollars were tied up over such a long period. Arledge figured that if the $50 million for facilities was paid on the timetable the Soviets demanded, $17.5 million in interest would be forfeited.
Along with the ruinous pay schedule for the equipment, the Soviets had decided to hold an auction to sell the actual rights to the Games. In effect, the $50 million was merely an admission ticket to the final round of bidding. Arledge recalls, "Their plans involved an unending series of bids that went on as long as two guys were able to stand. There was a new sealed bid every 24 hours. The winner would be announced, then the losers could up the ante by a minimum of 5%. That's when I made the remark about scorpions in a bottle."
Wussler was most shocked by the U.S.S.R. proposal. He had a letter with him from Paley reminding Novikov of their deal, and he asked for an audience with the chairman. They talked for 45 minutes. Novikov was stony. He told Wussler, "We are here to get the most money possible. That is our sole purpose. We need it for the Games." Wussler asked him about the agreement with Paley. Novikov replied, "It is a pity."
Wussler was appalled. He hurried to his hotel room. It was 4 p.m. Moscow time, 7 a.m. in the eastern U.S. He phoned Jack Schneider, president of CBS Broadcasting, at home in Greenwich, Conn. and told him that CBS' deal had collapsed. He suggested that Schneider contact the other networks and arrange a pool. Within two hours, CBS, NBC and ABC had agreed to file a brief with the Justice Department, asking it to waive the antitrust laws so the three networks could negotiate as a unified front.
Now it was 7 p.m. in Moscow, and the Soviets had decided to throw one last lavish supper before they put the three scorpions into the bottle. It was held in an elegant banquet room of the Hotel Sovietskaya. The party was a mistake. It was the first time that the three networks had been brought together in the same room in Moscow, and they were seething. At this point, no one but Wussler knew that a pool was in the works. The others were shouting angrily about the crude and insulting tactics of the Soviets. Almost immediately there was talk of walking out en masse. The hosts stood against the wall, aghast at the uproar among the Americans. Lindemann says, "They had figured there was no limit to the manic competitive zeal of the networks. That was insulting, of course. But what bothered me even more was the fact that this wasn't just another ball game, this wasn't a spat with Bowie Kuhn or Pete Rozelle. This was the United States against the Soviet Union—and we just couldn't let this happen."
The next day, taking a page from the Soviet book on diplomacy, the Americans walked out. At a meeting attended by Arledge, Wussler and Howard, Novikov was impassive. He told them, "If any of you leave Soviet soil on this day, you will never, never be allowed to return." The three said they had no choice. After leaving Novikov's office, they promised to leave the U.S.S.R, and they showed each other their airline tickets as a display of good faith.
Arledge had earlier made an appointment for a private session with Novikov. He decided to keep the date. "I was bound not to negotiate," says Arledge, "but I didn't think Novikov understood. He said he would make a deal with me right there on the spot. He said the Olympics were mine. I told him I couldn't take the Olympics at that point if he gave them to me for five million."
A few days after the networks left, the Soviets announced that the rights now belonged to a mysterious fourth party, an American trading and manufacturing company called SATRA, which does a lot of business with the U.S.S.R. This move was—and still is—seen by most network men as both a threat and a face-saving move by the Soviets. But SATRA apparently took it seriously and has filed a $275 million suit against NBC for interfering with its agreement with the Soviets.
Back in Manhattan, each network pledged to have no contact of any kind with the Soviets while the Justice Department considered the pool waiver request. However, Bock was still loose in Moscow. When the networks departed, he was shaken. Technically he was not a network employee, but he still had his contract with CBS. Soon Bock got word to Wussler that Novikov was sorry, that the Soviets wanted CBS to please come back. Then Novikov wired Paley, saying, in effect, that the U.S.S.R.-CBS deal was still on. Meanwhile, Bock continued to negotiate.
Was this a breach of the agreement between the networks? Wussler claims Bock was working on his own. "I told him specifically and in person when we left Moscow that he was not to continue any talks with the Russians on our behalf," Wussler says.
Arledge got disturbing news from Moscow in late December. "I heard that Lothar was negotiating for CBS," he says. "I kept hearing it. Then in mid-January I got word of the terms of a new contract. And I said. This has gone too far.' "
Arledge contacted Wussler and told him, "The Russians believe Bock is speaking in your behalf." Wussler said no, he is not. Arledge said that CBS could verify that by sending the Moscow Olympic Committee a wire stating that Bock had no authorization to bargain for CBS. Later, ABC indicated it would be satisfied if CBS sent a letter to Bock telling him he could not act in its behalf or sent a letter to ABC saying the same thing. CBS pondered this move for several days, then out of the blue it announced it was not only dropping out of the pool but also, because of various "imponderables," would have nothing further to do with the 1980 Olympics.
The shocking decision had been made after a series of CBS senior staff meetings, the last a 24-hour marathon. Bock had indeed brought a letter from Moscow that gave the Olympics to CBS for $81 million; he also brought assurances that a reasonable payment schedule could be worked out. It was a very good deal. Why did CBS quit with the battle at last won? Wussler says, "We saw nothing but trouble ahead. We couldn't see living with their deviousness. Their refusal to stick to the deal they made with Mr. Paley was the most telling point. I figured if they'd go back on a deal with him, how could I ever trust them with anything?"
Some people thought this explanation less than complete—especially after CBS had undertaken such an intense, well-organized two-year campaign to land the Games. It was suggested that perhaps a more compelling reason was that Bock's unauthorized work in Moscow on CBS' behalf would be embarrassing if it got out. As one network man says, "They got caught with their hand in the cooky jar."
Bock was stricken. He pleaded his case with Wussler, then took a Lear jet to the Bahamas to plead with Paley. The answer was no, although the network arranged for Bock to be paid a little extra cash for his trouble. Bock asked to be released from his CBS contract so he could contact NBC. It was done.
With the CBS pullout, the attempts to form a pool had disintegrated, and both NBC and ABC were free to operate unilaterally. Bock and Lindemann met for breakfast at the Edwardian Room of Manhattan's Plaza Hotel. Lindemann recalls, "The conversation was remarkably low key, considering its substance. Lothar started telling me his deal. We ordered something to eat. He kept talking. We drank our orange juice, then it dawned on me what he was saying. He was delivering the Olympics to us. We left without eating." Within hours, NBC signed a contract with Bock to pay him $1 million, to buy 15 programs he would produce, to retain him as a special consultant for four years. It was a dazzling package. Bock then delivered his part. A series of phone calls to Moscow clinched the deal that night. A day later Lindemann, Howard and an NBC lawyer were on their way to Moscow for the final negotiating and the formal signing.
NBC had hoped to complete the entire contract in Moscow before ABC learned it was there. It could not be done, even though the Soviets sent a wire telling Arledge not to come to Moscow. ABC was not dissuaded. Arledge says, "I knew the Russians were panicky. Novikov made a terrible mistake in December. Even his peers were accusing him of having bungled the deal with CBS. He was faced with the prospect of no American network at all. And by that time, he figured all Americans were crazy anyway, so when Bock said he had NBC, Novikov jumped at it. NBC was never in the Russian plans until CBS quit.
"And Novikov never understood what we were doing about the pool and why I had never contacted him after we walked out. When I finally saw him, he said, 'You never phoned, you never wrote. I waited and waited, and you never called.' I suppose if I had it to do over, maybe I'd do things differently. But I really felt relieved when it was over. I hated to lose the Games, but I had been wondering way back last summer whether I really wanted to have them."
ABC's presence at the last minute in Moscow did boost the price some. Lord Killanin, president of the previously somnolent IOC (which shares the rights fees with the host country), had heard ABC would go higher, and he had wired the Soviets to be certain they were getting top dollar. The deal wound up at $85 million—but there was no demand this time for the kind of pro-Soviet propaganda old Ignati Novikov had once seemed so determined to have.
Now the question is: Who won this confrontation between the U.S.S.R. and the networks? No one knows. This was just the first skirmish in the conflict. Only late in the summer of 1980, when the Games are over and the NBC cameras and crews have gone home, will we know exactly who sold what, who bought what and who got the better of whom.
THREE ILLUSTRATIONS
FRANKLIN MCMAHON
ILLUSTRATION
FRANKLIN MCMAHON
Lothar Bock was the man in the middle.