The Twilight of the Moguls

If the enemy of my enemy is my friend, as the old chestnut says, then it makes perfect sense that Barry Diller would host a swanky soiree last summer for his former boss Rupert Murdoch. They once had been on the outs: after building the Fox television network for Murdoch in the 1980s, Diller stormed off when Murdoch refused to make him a partner in his News Corp. media empire. But 15 years later, here was Diller—now a full-fledged mogul in his own right after building up the Internet company IAC/InterActive—hosting the crème of Manhattan aboard his yacht to celebrate Murdoch's successful bid for Dow Jones and its iconic Wall Street Journal. When Diller and his wife, fashion designer Diane von Furstenberg, welcomed Murdoch and his wife, Wendi, aboard their yacht, moored on the Hudson near Diller's new Frank Gehry–designed headquarters, the two moguls found themselves in the same boat in more ways than one. They now had a common nemesis: cable titan John Malone, who'd eased his way into each of their companies with big, friendly investments.

The cost of appeasing John Malone—the man Al Gore once called Darth Vader because of his stranglehold on the cable industry—can be steep. Fourteen months ago Murdoch agreed to give Malone control of DirecTV to make peace, a transaction valued at $11 billion. Diller's fee may be even stiffer personally: it may cost him his job as CEO of IAC/InterActive, which owns Match.com, Ticketmaster and Home Shopping Network. Malone, who actually controls IAC, is seeking to oust Diller, accusing him in a lawsuit of maneuvering to dilute Malone's ownership. This follows Diller's own suit to affirm what he says is his right to break up IAC and rid himself of more than a decade of Malone's commanding influence. Diller has called Malone and his fellow executives at Liberty Media "insane." Reached late Friday, a Liberty spokesman declined to comment, saying the company "will leave the colorful language to Barry."

Whatever the outcome—and it's as apt to be a negotiated settlement as anything else—the showdown marks a noteworthy passage in the annals of the media industry. With Diller, Malone is seeking to tame the man considered to be the last great media titan of his era. Over several decades, the reclusive Malone had made himself into a kind of mogul's mogul, investing in the ventures of businessmen like Diller, Murdoch and Ted Turner. Today the mogul mind-set appears to be a casualty of an atomized media culture. Entrepreneurs now seem perfectly content to survive just long enough for the IPO—or for Murdoch to buy them.

Diller and his peers are large-living, sharp-elbowed workaholics who were all born in the early years of television and set out to fundamentally revamp their industry. With an unusual similarity of vision, each embraced bigness and self-sufficiency as the path to success. Hitting their strides from the mid-1980s to the '90s, they transformed their companies into vertically integrated media conglomerates through a series of front-page megadeals. The likes of News Corp., Sumner Redstone's Viacom and Time Warner (owner of the Turner-created CNN) grew to own almost every form of media and distribution—from magazines and books, to cable systems, TV networks and movie studios.

These men became one and the same with their companies, so that News Corp. is Murdoch and Viacom is Redstone (by comparison, the new group of chieftains—men like Jeff Bewkes of Time Warner and Robert Iger of Disney— represent a return of a professional management class to the corner office). Their bigger-than-life personalities made the entertainment industry more entertaining: thrice-married Murdoch, 76, met at least two of his wives at the office, including his current spouse, Wendi, who is almost 40 years his junior and bore him two children who are roughly the age of his grandkids. Not to be outdone, the 84-year-old Redstone, who seems to be in perpetual nuclear war with his children, married a 40-year-old schoolteacher in 2003.

Malone helped most of these moguls along the road to success. But the one who giveth can take away, and he has since clashed with all of them—revealing their vulnerabilities and diminishing their stature while spotlighting his own sway over men widely regarded as some of the most influential in the global economy.