ALL THIS SPRING ALONG THE POTOMAC, government lawyers and economists were trying to decide whether they should let News Corp. join forces with Time Warner and other cable operators to offer satellite transmissions to homes across America. You remember News Corp.: It’s the outfit whose irrepressible New York City tabloid, the Post, slammed Time Warner’s vice chairman last year with a page-one headline that screamed IS TED TURNER NUTS? YOU DECIDE. Of course, that was only after Turner had compared News Corp. Chairman Rupert Murdoch to “the late Führer” in his readiness to use the media for his own ends. And after News Corp., upset because its new Fox News channel had been denied access to Time Warner’s New York City cable systems, had hit Time Warner with a $2 billion antitrust suit. Suddenly, News Corp. wants the feds to let it merge its valuable satellite assets into PrimeStar, the consortium that includes its good buddies over at Time Warner? You can see how a bureaucrat might wonder.

The Justice Depart­ment chewed that one over for months before suing to block the deal in mid-May. But it isn’t just News Corp. and Time Warner that are behaving strangely, and it isn’t just bureau­crats who are won­dering what to make of it. A decade of relent­less con­solida­tion has left a half-dozen global informa­tion and enter­tain­ment companies—News Corp., Time Warner, Walt Disney, Viacom, Sony, and Sea­gram—hope­lessly inter­twined as they battle for the loyalty, or at least the eye­balls, of the world’s six billion people. The com­peti­tion is fiercest in the developing world because that’s where the biggest oppor­tunities lie, but it exists in Europe and North America as well, and it’s being fought on every level—in movies, in broadcasting, in cable, in satellites, in music, in theme parks, in print. And though these companies have plenty of opportunity to pressure one another, they can no more rely on brute force than the U.S. could nuke Vietnam. “Your competitor is also your supplier and your customer,” says Jonathan Dolgen, chairman of the Viacom Entertainment Group. “There’s restraint built into it. It’s the new Cold War—everybody’s got their missiles in their silos, and they’re trying to stay away from the media equivalent of DefCon 1.”

“War cannot be all-out war,” says Tom Pollock, former studio chief at Universal. “Almost the biggest single question being discussed at the top level of executive suites is, How do we fight without going into a nuclear showdown that will kill both of us?”

“Mutual assured destruction,” says Seagram President Edgar Bronfman Jr., contemplating the 415 acres of Universal City from the plate-glass windows of his 15th-floor office, “is probably an apt phrase.”

TEN YEARS AGO IT WASN’T LIKE THIS. Ten years ago the Walt Disney Co. was a $2.9-billion-a-year cartoon and theme-park operation that was breaking into the movie business. Capital Cities/ABC was a $4.4 billion broadcast network and station group; Paramount, a $3.2 billion movie and publishing conglomerate; Viacom, a $0.6 billion TV-syndication and cable outfit; Time Inc., a $4.2 billion publishing company with lucrative cable interests; Warner Communications, the $3.4 billion powerhouse that Steve Ross had assembled in movie and television production, records, and cable systems; News Corp., a $3.5 billion tabloid chain that had picked up a rundown Hollywood studio named Twentieth Century-Fox.

But the mergers kept coming: Time-Warner, Viacom-Paramount-Blockbuster, Disney-ABC, Time Warner-Turner. . . . Murdoch, the dapper and urbane Australian press lord whose papers showed a taste for cleavage and a relish for scandal, won a monopoly on satellite broadcasting in Britain and set about extending his fleet across the planet. His competitors scrambled to keep up, leapfrogging across the globe with all the channels they could muster. The U.S. government relaxed the rules that prohibited broadcast networks from having a financial interest in the shows they aired—and with that wall breached, the movie studios and their TV-production arms all had to have networks of their own. Now digital broadcasting and the potential of the Internet threaten to explode the number of available channels almost into infinity. The screen wars are on for good.

“Ultimately the home becomes a battle­ground,” says Howard Stringer, president of Sony Corp. of America. Of course, some homes are more bitterly con­tested than others: The suburban ranch houses of the U.S. and the teeming apart­ment complexes of China get a lot more attention than the mud huts of Mali. But even there these com­panies have a presence. In the Team Dis­ney build­ing in Bur­bank, Calif., Dis­ney Chair­man Michael Eisner, his dark-blue suit set off with a garish Seven Dwarfs tie, leaps from his seat and heads for a distant book­case. “I’ll show you something I’ve never shown any­body,” he cries, pulling out a framed snap­shot of an African woman wearing a cap that sports the logo of Disney’s Mighty Ducks hockey team. “We made this hat, and a month later somebody came back from Timbuktu with this picture he took. A woman, a native—where she got that hat. . . . Now, that’s the defini­tion of global reach!”

It’s no accident that the six companies that dominate this fight all own Hollywood studios. There are other pow­erful media companies—General Electric, thanks to NBC; TCI, the gatekeeper with its finger in every­body’s cable offerings; the British book and newspaper publisher Pearson; the German television, music, and publishing giant Bertelsmann. But none have the breadth of ambition or the global reach of the studio-based conglomerates.

What makes movie studios central? The official ex­pla­nation is that they serve as the idea factories that drive other, generally more profitable enterprises—TV pro­duction, theme parks, merchandising. True—but they also exert an irresistible pull. “Rupert, Steve, Charlie [Bluhdorn, the conglomerator who bought Paramount Pictures in 1966]—they all started with a drive to the same business,” notes Herbert Allen, the New York investment banker who has represented most of these companies at one time or another. “I think if Rupert had been in tires, he would have bought Fox—not that he saw any synergy there, he just wanted to be in the movie business. Wouldn’t you?”

The studios have been global all along: Paramount even put a globe atop the Times Square headquarters it built in 1927 to symbolize its worldwide reach. They were also vertically integrated, their Hollywood production facilities feeding their distribution apparatus and their nationwide exhibition circuits, until government trustbusters forced them to sell off their theaters in the early 1950s. But now they’ve been rolled into combines that are active in a half-dozen different media and all 24 time zones. And just to make things easy, they’re operating in a world where technology is changing monthly and vertical integration is once again permitted.

So. Do they need to lock in some kind of distribution system before it’s too late? If they do, should they put their faith in broadcast networks? Cable networks? Cable systems? Satellite systems? The Internet? What are their competitors doing? Can they forge alliances of convenience to hedge their bets? “People don’t always know where they’re going; they just know they don’t want to go there alone,” says Howard Stringer. “That’s kind of the key to the digital age.”

That, and the fact that most of them are still trying to untangle the operations they’ve bought. “Through these acquisitions all these relationships have become jumbled,” says Philippe Dauman, deputy chairman and general counsel at Viacom. “Apart from each company sorting out its own acquisitions, it has to sort out all these relationships.”

That can be tough to do, as Dauman and his boss, Viacom Chairman Sumner Redstone, found out when they got into a brawl with Seagram over USA Networks. For years the venture had been co-owned by Paramount and MCA (now known as Universal); then Paramount was swallowed up by Viacom, and MCA was sold to Seagram. When Viacom decided to launch Nick at Nite’s TV Land (which Redstone maintained wasn’t a new network at all, just an extension of Nickelodeon), Seagram sued—but not before hiring Frank Biondi, whom Redstone had just fired as CEO of Viacom, to run MCA.

Companies sue all the time. This case actually went to trial, whereupon people took the stand to say nasty things about their adversaries—and, in Biondi’s case, former employer—under oath. Why did they take it that far—to the media equivalent of DefCon 1? Take a look at the USA agreement: Under the terms that Viacom and Seagram had inherited, neither could terminate the partnership without triggering a draconian charter pro­vision that would allow the abandoned party to decide whether to buy the network or sell it and in essence to choose the price. A breach-of-contract suit was the only way out, and this was no time to be handcuffed to a competitor: Established channels like USA are hot, and though hundreds of new channels will be available when television goes digital, it won’t matter because audiences will be too fragmented for anybody to make real money off them. “The big race is to get analog-channel capacity now so you can get into 50 million or 60 million households,” explains Thomas Dooley, Vi­acom’s other deputy chairman. “That is the beachfront property of the media industry.”

TRUE ENOUGH. But the spectacle of Bronfman and Redstone in a courtroom mud fest proved embarrassing enough to start the caution lights flashing at News Corp. and Time Warner, which by then seemed headed in­exorably toward a showdown of their own. Murdoch’s lieutenants had been pressing on all fronts—holding up the launch of the Warner Channel on BSkyB, threatening to pull the Fox Broadcasting Network, home of The X-Files and the Super Bowl, off Time Warner cable systems in ten cities where they’d just bought TV stations. “It began to be like dominoes,” recalls Time Warner Pres­ident Richard Parsons. The heads of individual bus­iness units at both companies were starting to freak; key investors—like Gordon Crawford of Capital Re­search, which holds about 9% of both News Corp. and Time Warner—were pointing out that this kind of behavior was bad for their image and worse for the stock.

Meanwhile, Murdoch’s hugely ambitious scheme to knock out U.S. cable operators with ASkyB—the final link in his “cosmic armada” of satellites girdling the globe—was coming unglued. With two competing sat­ellite services—Hughes Electronics’ DirecTV and PrimeStar, the partnership involving Time Warner, TCI, and others—already up and beaming, Murdoch’s vaunted “Death Star” was fatally late. Last June he surrendered, agreeing to cede ASkyB’s assets to PrimeStar in exchange for $1.1 billion in nonvoting securities. “We felt there were better places to use our powder, so to speak,” says Peter Chernin, News Corp.’s president and COO.

The following month, at Herbert Allen’s annual conference in Sun Valley, Idaho, Murdoch sat down for lunch with Parsons and Time Warner Chairman Jerry Levin. Not long after that, News Corp. agreed to drop its antitrust suit, and Time Warner agreed to put Fox News on Time Warner Cable in much of the country in exchange for a “launch fee” of perhaps $200 million. “To me it was kind of like Munich,” says Turner, who was not part of the negotiations. “But you do what you have to do.”

Indeed. Shortly after the News Corp.-Time Warner settlement, when the judge in the Seagram-Viacom suit ruled that the two companies would have to decide how to split up USA or he’d do it himself, Dauman got in touch with his opposite number at Seagram, vice chairman Robert Matschullat. Together they could get down to the human issues, like how to resolve this thing without letting the other guy get the upper hand. Sitting in Dauman’s office high above Times Square, Matschullat spied a photo of Dauman on a park bench next to Forrest Gump—actually, next to a superimposed image of Tom Hanks playing Forrest Gump, from the 1994 Paramount movie that grossed $680 million worldwide. As Dauman recalls it, Matschullat wanted a Gump shot of himself to give to his son. “If we settle this, you have to get me that picture,” Matschullat said. “It’s a deal,” Dauman replied.

“That was a good movie,” Dauman muses today. “I’d like to have a few more of those.”

In the end, Seagram paid $1.7 billion for Viacom’s half of USA, only to roll it all together with most of MCA’s lackluster TV-production operation and spin it off to Barry Diller in a deal that confounded the pundits. Meanwhile, News Corp.’s application to join PrimeStar was put on hold while government regulators sifted through a welter of allegations from the competition—that the cable operators who control PrimeStar forced News Corp. into joining as the price for their carrying new Fox channels; that PrimeStar was a “web of incestuous alliances” that’s not intended to compete with cable at all. The FCC has yet to weigh in, but antitrust officials at Justice are scathing in their assessment: “It’s inherently implausible to suggest that these firms are interested in destroying the cable industry,” says Tom Krattenmaker, who headed the PrimeStar investigation. “The argument is as bold as it is ingenuous, and unconvincing on both scores.” PrimeStar’s response, now being laid out in meetings in Washington: What if the cable companies sold enough of their interest in the company to give up control? Stay tuned.

BUT U.S. TELEVISION IS ONLY ONE FRONT in the global screen wars. The really intense compe­tition is in distribution beyond North America (Asia, Latin America) and in programming (kids’, sports, news) that will feed satellite and cable channels in the U.S. and around the world. And as eagerly as these companies are trying to extricate themselves from entanglements on some fronts, they’re building alliances on others. “There are very few people who have the exact same strategy, because their portfolios are different,” says Universal Chairman Frank Biondi. “But I think everybody sees the same two or three things—technology, foreign, demography.”

The demographics point two ways: to markets outside North America and Europe, and to kids. Look for car­nage on the kid front: “It’s a real battlefield,” says News Corp.’s Peter Chernin. Besides Disney, the combatants include Viacom’s Nickelodeon, Time Warner’s Cartoon Network, and News Corp.’s Fox Kids Worldwide, which got a boost last June with Murdoch’s $1.7 billion purchase of the Family Channel from televangelist Pat Robertson. But while cartoon television is almost a no-brainer—who better to babysit the kids?—the com­petition in films will leave blood on the table.

In the wake of Disney’s astonishing success with The Lion King ($767 million worldwide, and that’s just the box office), Fox, Viacom, and DreamWorks have com­mitted megabucks to building their own animation stu­dios. “That’s like saying, ‘I saw Forrest Gump—let’s get into the movie business!’” argues Disney’s Joe Roth. “Kids are a very, very difficult audience to get. The boys want to see Men in Black and the girls want to see My Best Friend’s Wedding. If you do a movie that by its na­ture appeals to young children, you’ve probably killed yourself without knowing it.”

So why make animated movies? “Hubris,” says Fox Film Chairman Bill Mechanic, a former Disney exec. “That’s probably the wrong answer, right? The truth is, there’s no reason Disney should be alone in it. And if you’re afraid of taking chances, probably you should be in a different business.”

The same reasoning applies to Fox’s foray into sports, where Disney rules through ESPN. Sports have become critical in television because they cut through the clutter, aggregating audiences and creating instant brands. Three years after paying $1.58 billion to win broadcast rights to National Football League games from CBS—a move that all but crippled the former Tiffany network—Murdoch now commands a sports empire. First he set up Fox Sports Net, a nationwide network of regional cable channels, in a joint venture with TCI’s Liberty Media; then he outbid Disney for cable rights in Detroit, beat out Disney for a piece of eight regional sports channels owned by Cablevision, and ponied up $350 million to purchase the L.A. Dodgers; now he’s bought into the Lakers and the Kings as well.

“We generally can’t compete with Rupert on costs,” Eisner admits. “He’s a much bigger gambler than we are—and by the way, it’s paid off for him. I’m more a sleep-at-night kind of executive.”

Where Asia and Latin America are concerned, however, there is no sleep. “The U.S. is what it is—a mature market,” says Biondi. “Ninety-nine percent of the success of these companies long term is going to be successful execution offshore.” But it’s a high-risk play: Zenith Media projects the 12-country swath from Japan to Pakistan will have 470 million television households by 2001—but fewer than 95 million of those will be cable-equipped, and only 13 million will have satellite dishes. “You want to establish a presence so you can build brand names and see how it comes out,” says Dauman of Viacom. “But how do you pull real money out? It’s hard. So it makes a hell of a lot of sense to join together so we’re not killing each other splitting a smaller pie.”

That helps explain programming consortiums like Latin America Pay TV (News Corp., Universal, Viacom, MGM), HBO Olé and HBO Brasil (Time Warner, Sony, Disney), and HBO Asia (Time Warner, Sony, Universal, and Viacom, all lined up against News Corp.’s Star TV). But there’s another explanation as well: No one wants to let a competitor get a clear foothold, as HBO did in the States or BSkyB did in Britain.

In the mid-1970s, when HBO—then the only national cable channel in the U.S.—was losing millions of dollars every year, the Hollywood studios were only too happy to pick up some extra change by licensing their movies to it. But by the early ’90s, when HBO started to expand overseas, it was a big success. What’s more, the gun had just gone off on a global land grab: CNN’s performance in the Gulf war had demonstrated cable’s power, and governments around the world were loosening their restrictions on foreign channel ownership. Most of the contracts HBO had with the studios were for U.S. rights only—and this time the studios wanted a piece of the action. “They said, ‘We’re willing to license, but only to something we have ownership in,’ ” says Jeffrey Bewkes, HBO’s chairman.

IF THE STUDIOS SAW HBO AS AN OPPORTUNITY to muscle in, they saw BSkyB as a threat—as what could happen worldwide if a single company won control. As a monopoly gatekeeper, BSkyB was able to demand half-ownership of Nickelodeon U.K. and a quarter of the Paramount Channel, Sumner Redstone’s objections notwithstanding. ASkyB didn’t work in the U.S., but News Corp. is nonetheless trying to replicate that model across Asia: It has invested millions in Japan’s SkyPerfecTV and at least $2 billion in Hong Kong-based Star TV, which faces daunting language barriers and political obstacles and is running at a burn rate of nearly $100 million a year. Still, as Gordon Crawford of Capital Research points out, “the upside is tremendous. If you zoom out 20 years from now and look back, you’ll be very happy you own Star.”

“Murdoch’s going for the sky strategy—get a stranglehold on distribution and emerging technologies direct to the home,” says Biondi. “Instead of having HBO and Nickelodeon and CNN and ESPN as his principal products, he’s trying to lay in Sky Films, Fox News, Fox Kids, Fox Sports. It’s a great strategy if it works. His problem is, the whole world’s on to this strategy. But if he’s successful, the value of everybody’s library is going down.”

In this equation and most others, technology is the X factor, throwing a final level of uncertainty into the mix. From talkies to the VCR, new inventions have created opportunities that required audacious bets. The big bet now is cable vs. satellite. News Corp. has put its money on birds; Time Warner is big on wire, though it has hedged its bet with PrimeStar. Which will win? “The real answer is, Who the hell knows?” says Chase Carey, News Corp.’s co-COO. “That being said, you have to deal with it country by country. Where neither exists, satellites have the advantage in cost, in speed to market, in ease of distribution—you don’t have to dig ditches or run poles. And you have a window here where satellites have more capacity than cable—but as cable rebuilds, it will have more capacity than satellites.” Which is one reason cable, in the doghouse little more than a year ago, is hot these days: Not only can it deliver local channels, but with fiber optics—already available in more than 70% of the major U.S. markets—it also holds out the promise of interactivity. But how many people really want to go interactive? “If you’re satisfying 80% of the market demand,” Carey continues, “it’s inefficient to build cable to satisfy the other 20%.”

All this helps explain why other companies—Disney, Viacom, Seagram—have chosen to sit it out. “We’re not going to be with News Corp., owning satellites,” says Bronfman. “We’ll rent. There are those who say there will come a day when you cannot rent. I don’t believe that. And I think the capital costs of being in the exhibition business, particularly the television exhibition business, are prohibitive.” Across the continent at Via­com, Dauman agrees. “You can’t own everything,” he laughs, formulating one of the hardest lessons of the digital age. “You try, but you can’t own everything.”

What happens when you try anyway? Take television, where Disney, Time Warner, News Corp., and Viacom all own multiple broadcast and cable networks and massive production facilities: They depend on one an­other for programming, even though the accepted ra­tionale for their owning networks in the first place was to guarantee an outlet for their own productions. Sure, they’ve reaped some benefits: “ABC has been very un­derstanding about how we wanted to be on the air,” says Eisner. “They weren’t quite as understanding when we didn’t own them.” But these companies are also dis­covering there’s a limit.

“THERE ARE SOME HARD LESSONS OF VERTICAL INTEGRATION,” says Kerry McCluggage, chairman of Paramount Television, “No. 1 being, sometimes you lose twice. If you force a bad show onto a network you own, vertical integration does not guarantee that the audience is going to like it. So we continue to supply all the networks, and we want UPN to be able to access all the suppliers.”

And why not? Each studio has invested tens of millions of dollars in deals with television writer-producers; to maximize their return, they want to make the best deals possible. Of the 14 series Fox produces, for example, only six appear on Fox Broadcasting; the others help build the competition. “We have three shows right now on ABC,” says Peter Chernin. “To the degree that any of those are hits, I won’t be thrilled from a network perspective, but then they’ll go into my library, and I’ll have the opportunity to play them on my platforms around the world. That’s the way we look at it.”

What happens if a supplier-competitor threatens to pull a hit show from your network, or if a hot network demands a percentage of a new show you’re producing as the price for putting it on the air? That’s where brinkmanship comes in. “You want to use your leverage,” says Jeff Sagansky, former co-president of Sony Pictures Entertainment, “but if it blows up and causes all your businesses to be harmed, that’s what you want to avoid at all costs.”

So forget about having a captive outlet; what owning a network actually gets you, in this view, is more leverage. “It’s really more about the perception of having an outlet than the reality,” says McCluggage of Paramount. “These things are worth having, if only for the threat,” concurs Tom Dooley, his boss at Viacom. “A bold, bold move would be if Warner Bros. took E.R. off the air and put it on their own network. The earth would shake, both in New York and California.”

Still, some would argue that earthquakes aren’t necessarily bad. “The name of the game” in cable, says Turner Broadcasting System Chairman Terry McGuirk, “is, Who can create a built-in output deal for their product?” As he sees it, vertical integration could bring “a symmetry to the business”—and with Time Warner now holding the largest library of news and entertainment programming in the world, symmetry looks mighty attractive. TNT recently picked up syndication rights to E.R. McGuirk has his eye on original programming as well. Already the Turner channels are outbidding the big broadcast networks for major movies—As Good As It Gets, L.A. Confidential. “First-run itself is something we’re starting to get into,” he says, “and Warner Bros. stands ready to do that for us.” Does McGuirk foresee the day when Warner Bros. might yank a hit show like E.R. to sell it to a Time Warner network? “Sure,” he replies evenly. “Very much so.”

SO WHAT HAVE TEN YEARS OF MEGAMERGERS WROUGHT? Entertainment, long described as a business of relationships, is now a business of entanglements, and its leaders are still trying to cope. Flying solo remains the ideal: “The more we go it alone, the better I feel,” says Eisner, whose company is nonetheless partnered with Time Warner and Sony in HBO Olé and HBO Brasil, GE in the A&E Network, TCI in E! Entertainment, and News Corp. in ESPN Star Sports (in Asia). “Fighting and suing each other and making love—to me that’s too schizophrenic. Either you love somebody or you hate somebody. I can’t quite deal with this idea that you love them on Monday and hate them on Tuesday. But that is the business.”

The irony is that the more intense the fighting, the greater the need to partner up. “You’re marching off into the unknown, your time­tables are very unclear; so in order to off­set some of your costs and achieve economies of scale, you need to estab­lish part­nerships,” says Stringer. “That means every­body is forced to talk to each other.” But it doesn’t mean they have to like it.

“Fundamentally,” says Bronf­man, “none of these people believe they could shake each other’s hand and the agree­ment they’d just struck would last more than the time it took to get to the elevator.”

This can make for some rather fraught partnerships. Fortunately, most joint ventures are forged and main­tained not at the corporate level but by the heads of their various business units, who work out the details and send them upstairs for approval. It’s hardly unusual for the heads of competing film studios or cable operations to know one another socially, and if they like each other, why not make the most of it? So you find companies clustering together. In television, Sony aligned itself with Canal Plus, the dominant pay-TV company in France, and stuck with it when it set up satellite platforms over Italy and Spain. In movies, Paramount frequently splits costs with studios like Miramax, the Disney-owned “independent,” and div­vies up the proceeds—sometimes to cut its risk, some­times to avert a bidding war. Sliding Doors, for example, a recently released co-production with Gwyneth Paltrow: “I got on the phone to Harvey [Weinstein, co-chairman of Miramax] and said, ‘Harvey, this is silly!’ ” recalls Paramount Pictures Chairman Sher­ry Lansing. ” ‘You and I are really good friends—why are we killing each other?’ We did the deal in five minutes.”

Because so many different units of these companies are in business together, a division chief who’s having trouble on a key deal will often call in the heavyweights—or discover they’ve moved in on their own. “We keep a list of open issues with our companies,” says one longtime media exec, “and when there’s an opportunity to resolve a couple of issues at once, we use it. They’ll be very diverse—one international, another domestic re­lating to a licensing-fee negotiation. There’s also a lot of horse-trading—you do this for me, I’ll do that for you. It happens a lot.”

Usually these exchanges are amicable enough; even if one party feels cheated, most confrontations—unlike the Time Warner-News Corp. showdown—never see daylight. Three years ago, Viacom went on red alert when Sony announced that its TriStar motion picture arm, which had been supplying movies to Showtime, was signing with HBO as soon as its licensing agreement expired. Furious, Redstone and Biondi reminded Sony that Viacom’s TV stations were major buyers of Sony broadcasting equipment—and as for Sony Music getting its videos on MTV. . . . When the Sony people made some noises in response, Viacom suggested they come into a Blockbuster store and see how many of their B and C video titles they could find. After a couple of weeks of this, Sony proposed a compromise: Viacom could get product from Mike Medavoy, the former TriStar chief, who’d just been given an independent production deal at the studio. Which is how The Mirror Has Two Faces came to be aired on Showtime.

In the interest of avoiding such make-my-day scenarios, or at least keeping them to a minimum, the No. 2 ex­ecutives at some conglomerates have made a point of cul­tivating one another. At Viacom, Philippe Dauman scheduled a get-acquainted lunch a couple of years back with Richard Parsons of Time Warner. Now they meet for dinner with their wives, and when a skirmish breaks out in some remote region of their empires—like the one that kept Showtime from renewing its affiliation agreement with Time Warner Cable for a year—they work it out. “It’s crazy for companies like ours to fight with each other,” says Dauman. “We have a lot more in common than we have differences.”

So is this the American keiretsu that Ken Auletta de­scribed in The New Yorker—a weblike cartel of mutu­ally interdependent companies that seek to shroud the earth? In fact, vertical integration has been accompanied by what Krattenmaker, the Justice Department’s antitrust expert, calls “a remarkable de­concentration of the in­dustry”: Thanks largely to the FCC’s deregulation of television, Americans who once had three net­works to choose from now face an exploding array of channel offerings. That doesn’t mean there are no antitrust issues—but if the global media conglomerates really want to act as a cartel, their leaders will need hormone therapy first.

“The societal worry is that what used to be called the military-industrial complex will become the infor­ma­tion-entertainment complex—that seven guys will own everything,” says Tom Pollock. “But these seven guys can never agree on anything. The idea is laughable.” Or as Sanford Litvack, Disney’s chief of corporate op­er­ations, puts it, “We’re so damn com­petitive, the only time we joint-venture is to make our­selves more com­pet­itive.”

That’s the real problem with the keiretsu scenario: the personalities involved. The people who build media giants are not your average corporate Joes. “There are two or three of us who started with nothing,” says Redstone, a white-haired figure who seems wispy and wan—until you notice the furiously drumming fingers of his right hand, scarred from the night 19 years ago when his Boston hotel room caught fire and he hung from a window ledge as his body was engulfed in flames. “Think back. Ted Turner started with a half-bankrupt billboard company. Rupert Murdoch started with a little newspaper someplace in Australia. I was born in a tenement, my father became reasonably successful, and I started with two drive-in theaters before people knew what a drive-in theater was. But as I like to say to my critics, if you want to believe I started with two drive-ins and got here by luck—if that’s what you want to believe, be my guest.” A chuckle emerges from his throat and hangs in the air like a threat. “So I do share that sort of background with Rupert. But people say I want to emulate him.” The drumming stops and he leans forward, eyes aglint. “I don’t want to emulate him. I’d like to beat him!”

IS IT PERSONAL, THIS COMPETITIVENESS? “Completely personal,” says Eisner. “I mean, it’s not really personal, but—I always felt from the time I was trying to fix Tuesday nights at ABC in the ’70s that it was personal. I gotta win, I gotta get the best programs on the air. My problem is, I like them and I’ve known them forever. Jerry Levin, when he started HBO—I’ve had my share of disagreements with him, but I’ve always liked him. Rupert is totally charming. Sumner Redstone—we’ve been in battles with him forever. But any guy who hung outside his hotel room by his fingertips—it only shows you what resolve he has. These people didn’t get where they are by accident.”

So it’s good they’re buying sports teams: Athletics could serve as a healthy vent, maybe even keep them from going nuclear. Turner probably won’t get to strap on boxing gloves and have a go at Murdoch, as he proposed last summer; but with News Corp. owning the Los Angeles Dodgers and Disney holding 25% of the Anaheim Angels, maybe Murdoch and Eisner could face off? “Well, he and I won’t unless he improves his batting average,” Eisner retorts. “But I hope the Angels end up in the National League—then we’ll kick Rupert’s butt, right there in Chavez Ravine.” ♦