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The Callahan no one knows

Disney's ABC Broadcast Group president is the quiet one in the Mouse House 2/04/2001 07:00:00 PM Eastern

Who is this guy? Robert F. Callahan Jr., president of Disney's ABC Broadcast Group since last April, fits well as a top manager in the Disney mold. He's highly ambitious and loves flying under the radar, out of the glare of the media spotlight that is constantly focused on the business he runs.

People who have worked with Callahan over the years say he's a master at dealing with corporate politics, which no doubt propelled his rise within the Mouse House.

Though each of the networks is structured a little differently, you tend to know the names, and the top brass tend to get ink. But, for example, a Lexis-Nexis search of newspaper and trade-magazine articles published between June 1 of last year and the end of last month shows that Les Moonves, president and CEO of CBS Television, pops up prominently in 335 stories. Callahan? He was in all of eight, and each one of those was about his own appointment or his appointment of others.

For Callahan, tending his knitting is not a rule he needed to learn; it comes instinctively. Callahan grew up in the Capital Cities/ABC corporate culture, where even the top executives-Tom Murphy and Dan Burke-rarely sought publicity. "There was nothing in it for them; it's just ego gratification," says a company veteran who knows the culture well.

As for Callahan, says a longtime colleague, "Bob doesn't like to be that visible. He'll do what he has to do but no more." Since joining ABC at its radio division a decade ago, Callahan has been more apt to issue a quick quote in a press release than sit and do interviews.

But people who know him say that he works a room like nobody's business and is both charming and personable when he wants to be.

Quietly political, too

And very ambitious. "Bob's always running for office," says a longtime Capital Cities/ ABC executive who knows Callahan well and who purports to like and respect him, "but not at the expense of the job. In an environment like Disney's, you have to be very politically astute because it's a very politicized company. Some of it's good and some of it isn't, like all bureaucracies."

Callahan can be a kidder. Asked about his parents' backgrounds, he replies, "My mom was a professional wrestler, and my dad was an opera singer." There's a moment of silence as the reporter lets that information sink in. Then Callahan adds, "Just kidding. It would have been great color for the story, though."

Actually, Callahan's dad, now retired, was a marketing executive for North American Phillips. The 49-year-old Callahan, the oldest of seven children, was reared in suburban New York but moved to the Kansas City area in the mid-1960s when his dad was transferred. He attended a Jesuit high school and earned a journalism degree at the University of Kansas.

Journalism per se was never part of Callahan's career strategy, however. "The whole idea was, I would go to New York and make a bucket of money in advertising and then make films," he says.

He did go to New York, where he spent five years toiling in the ad-agency trenches at McCann Erickson and then at Wells Rich Greene.

Somewhere along the line, he realized that he wasn't going to be the next Steven Spielberg. Instead, he went into publishing.

He joined Fairchild Publications, a subsidiary of Capital Cities Publishing, as Eastern sales manager for Multichannel News
(now co-owned with BROADCASTING

CABLE ) and gets some credit for making Multichannel
a force in the cable industry.

Throughout the 1980s, Callahan moved up the ranks of CapCities/ABC's publishing division, where he was made group publisher at Fairchild and, finally, senior vice president, Diversified Publishing Group, Capital Cities/ABC.

And he has worked for some kidders over the years. At the publishing division, he reported to John Sias, a notorious practical joker, who at various times ran publishing and broadcasting for CapCities/ ABC. Sias was once the cover-story subject of a trade magazine that billed him as the media industry's "executive clown."

Don't call him Chip

James Arcara, the retired president of the ABC Radio group, was the one who plucked Callahan from the world of publishing-when he was still known as "Chip," a carryover from his childhood years-and made him head of the ABC Radio Networks without any prior experience with the medium.

Publishing sources remember Callahan's very purposefully trying to rid himself of the Chip moniker. After one false start, he settled on Bob. In between was Rob. "We used to call him Chip-Rob-Bob," recalls one mischievous wag who worked for him.

But not to his face. "He really hated 'Chip.'"

Arcara hired him in 1990. Asked what he saw in Callahan that he didn't see in some of ABC's own top radio executives, he replies, "He'd gotten over his drinking problem and put the drugs away so I was satisfied that he was clean."

Again, just kidding.

But in all seriousness, Arcara says he "took a lot of criticism" for hiring someone outside the radio industry. He didn't know Callahan until he interviewed him for the job. And it was Callahan who sought Arcara out, having seen an internal posting for the position.

Callahan had a lot of competition for that post from radio executives both inside and outside ABC, Arcara says. "But I felt most compatible with him. We were on the same page about where we wanted to go. He was high energy, very focused and aggressive in the best sense of the word."

A master delegator

The more frequently mentioned adjectives used to describe Callahan are smart, focused, ambitious, political. "I'd say all those things describe him well," says David Kantor. Kantor worked for Callahan for seven years in the radio division before jumping ship to create a competing radio network (AMFM) for Chancellor Media, recently acquired by Clear Channel Communications. "Look at his movement within the organization. Clearly, he has been able to manage both up and down very well. He's hired very good people, let them do their jobs, and he has a significant record of success."

Kantor describes Callahan as "a great manager in the typical CapCities mold, where you push for revenues and keep costs low."

Callahan is a delegator, not a micro-manager. Under Callahan, Kantor says, "you have lot of freedom, but he's clearly the boss." The expectations are high, and he insists on being kept up to date on all developments, good or bad. "If a project was ahead of or behind plan, he wanted to know as soon as you did."

But as far as programming is concerned, says Kantor, "Bob is a business man first and a programmer second. He's less involved in the intricate programming details and more involved in the budget process. If the program idea makes sense from a business prospective, he's interested, but I don't think he's a programmer where he's going to say out of his gut, hey, we should be doing this show."

Callahan says such assessments about him are basically accurate. "There are a lot of creative cooks in the [Disney/ABC] kitchen," he says. "My focus is not to try to outguess them. They are pros at what they do, and I want to see them score. That is their world, and they live it and breathe it." That goes for all the ABC divisions that he oversees, including the TV and radio networks and stations.

Where Callahan does get involved, he says, "is on the big deals. Whether it is program acquisition or a startup that is a significant driver, I will get involved. My [creative] focus is on driving value to all these operations and driving growth."

Growing the business

One example: the recently concluded renewal for The Practice, which will now remain on ABC through 2004. "The renewals are always spicy because, with success, the price tags jump dramatically," he says; one analyst says ABC will pay Fox $6 million per episode, up from $1.5 million previously. Negotiations with Fox, where David Kelley produces the show, were "tough but straight. It's our Sunday-night anchor so we were thrilled to wrap it up."

He also led the recent negotiations with USA Networks to form a joint venture with USA's broadcast group, which would have given ABC a major-market duopoly play. But at the last minute, Univision crashed the party and made Barry Diller an offer he couldn't refuse: $2.1 billion cash for the group.

That left ABC out of that picture but still in the hunt for larger-market TV stations. The TV group has not acquired a station since 1995, the year before Disney bought ABC. But that's not for want of looking, says Callahan.

"We've knocked on a lot of doors. These are big-ticket items, and when we make a deal, we want to make a smart one." More recently, ABC and Scripps talked briefly, but nothing came of it. Callahan won't confirm or deny specific talks about any deal.

Clearly, the company is interested both in expanding its national coverage, now at 23.9%, and in forming duopolies. But the latter, Callahan believes, is still very much an industrywide "experiment. It's not early significant cash flow, but it has the potential to develop into meaningful business."

On the radio side, some observers believe ABC essentially sat on the sidelines after radio was deregulated in 1996 and didn't expand dramatically.

But Callahan disputes that notion. And for those who are wondering, he says that ABC will remain in the radio business for the long term. "Radio is a core asset for us. It's low capital, high margin, great cash flow, and we have terrific management."

Perhaps one reason ABC didn't expand like Clear Channel or Infinity was that Michael Eisner didn't want to spend billions more after just plunking down $19 billion to buy Capital Cities/ABC.

But ABC did spend hundreds of millions after deregulation to buy more stations. Callahan says the radio-stations group doubled its size between 1996 and the present to about 50 stations. "We will continue to buy," he says. "It's a terrific franchise, and we will not sell. We are the third-largest radio company in the country."

Bart Catalane, CFO at TMP Worldwide, New York, who worked for Callahan at ABC Radio for almost 10 years-as executive vice president and chief financial officer-says revenues and profits at the radio networks and the radio stations grew at a compound annual rate of 15% under Callahan's supervision. "The race doesn't always go to the swift [acquirers]," says Catalane, a big admirer of Callahan's. "Ultimately, it's the guy standing at the end with the most profits that wins."

Callahan's track record is impressive. He doubled the value of the radio division, to about $5 billion, while it was under his control. The TV station group was worth $8 billion when he first gained oversight of it in early 1999. Now it's worth almost $11 billion, Disney insiders say. For fiscal 2000, revenues and profits for the ABC Broadcast Group were at record levels.

Where does he fit?

But Callahan's greatest challenges probably are just ahead. A year ago, ABC was the top-rated network in households and across most of the key demographics. Now the network is second in many of those key demos. The network's hit show, Who Wants to Be a Millionaire?
isn't commanding the monster ratings it once did and is skewing older.

What happened? Callahan responds, "We're No. 1 in total reach; we're No. 1 in households and kids. In 18-49, we're No. 2. We're very hopeful that the midseason will bring strong results for us." He has high hopes for both The Mole, a new reality show, and The Job, a sitcom with Denis Leary.

As for Millionaire, says Callahan, it's still a huge hit that reaches 80 million people a week. "It's appointment viewing. [Not all the same people] are sitting down every night, but we know there are new people coming to it all the time. We think it has legs for many years to come."

Affiliates worry about the future of their relationship with the network; some even wonder whether ABC will have a fully national over-the-air network in five years.

Most of the affiliates contacted for this story say Callahan is capable enough for the job. Some, however, question just how much autonomy he has, particularly over the TV network. "There's always an issue there about how much space Eisner and [Robert] Iger give the network personnel there," says the head of a major TV group affiliated with ABC.

Others wonder about the strong friendship between Iger and Alex Wallau, president of the ABC Television Network, and its impact on Callahan's leadership. Wallau reports to Callahan "but is as close to Iger personally as anyone in the world," says someone who knows all three.

Wallau and Iger rose together through the ABC ranks starting at ABC Sports. "Alex is the godfather of Iger's son," a friend says. "They're close pals and you get the sense that Alex doesn't make many moves without first using Iger as a sounding board. That puts him in a position where he bypasses Callahan a little bit, just naturally so."

Callahan says he's the man in the hot seat, making lots of decisions daily. "There are so many decisions that are made across the network, the stations and radio that there is no way Michael [Eisner] or Bob [Iger] can get involved with all the decision making," he points out.

But they are involved. "Their involvement comes from my keeping them abreast of progress in significant deals," Callahan says, "the same way I'm apprised of what's going on. That's the only smart way to do it."

In the late 1990s, the network-affiliate relationship became very strained, particularly over a set of negotiations (that took years to conclude) concerning station contributions to help pay for the NFL rights, program exclusivity for stations, network program-repurposing rights, as well station program-clearance obligations among other issues.

Since that deal was struck two years ago, affiliates say, the relationship has improved. "It's better but still arm's length" is the way one station executive describes it. "It's been better in the past."

And guess what? That three-year agreement, so long in the making, now has just one more year to run. Callahan says renewal talks on that deal will start "in the not too distant future."

Thinking about digital

Callahan acknowledges that the network and the affiliates have "a lot of tough issues in front of us," including how to use the digital spectrum. But he also thinks the two sides will continue to work out their differences: "I think there will be long-term growth on both sides."

Callahan has always been geared up for the next career challenge. The current job is no different in that respect. But, he admits, with a smile, "it's not easy."