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Glenn Beck Bets Big on GBTV


As the sun sets over Jerusalem’s Old City and a performer plays a mystical solo on a curved ram’s horn, Glenn Beck appears before an audience near the southern wall of the Temple Mount, a sacred site for both Jews and Muslims that they have battled over for centuries.

The jocular, baby-faced former Fox News (NWSA) personality, who once blithely referred to President Obama as “a racist,” looks like a preacher in his dark suit, purple tie, and wire-framed glasses as he delivers a fear-mongering speech at his Restoring Courage rally on Aug. 24. The global economy is collapsing, Beck warns; the U.S. and Europe are descending into anarchy, and Islamic terrorists are on the verge of achieving their ultimate goal: the annihilation of Israel. “The world is burning,” Beck says, his voice shaking with emotion. “Whatever we’ve thought would never change, whatever we’ve grown to think is solid and strong and durable, is under siege. You don’t have to be a prophet to know that things aren’t going so well in the world. The threats are mounting. Evil is growing. And darkness is falling.”

Outside the Old City’s walls, several dozen Israeli protesters can be heard chanting, “One, two, three, four, Glenn Beck no more! Five, six, seven, eight, Israel doesn’t need your hate!” Beck ignores them. “God is with me,” he shouts. “I fear not!” As he leaves the stage, an Israeli singer serenades the crowd with a rendition of the song Sabbath Prayer from Fiddler on the Roof.

Many of those in the audience, who grant Beck repeated standing ovations, are American evangelicals who paid almost $5,000 to one of several Beck-endorsed travel agencies to attend. Some shelled out an additional $500 to make the trip with long-shot Republican Presidential candidate Herman Cain. Anybody who’d been listening to Beck’s syndicated radio show—heard weekly by more than 9 million listeners in the U.S.—knows that he has been using Restoring Courage to promote more than just tenuous doomsday predictions. Beck frequently reminded his fans that if they couldn’t make it to the Holy Land, they could watch the “planet-course-altering” rally by subscribing to GBTV, his new Internet channel, for $4.95 a month, or a premium $9.95 monthly rate.

This is where Beck’s television show will resurface on Sept. 12 after its tumultuous 2½-year run on Fox News ended three months ago. While he says that Restoring Courage wasn’t conceived as a promotional event for GBTV—he says it was a genuine effort to increase support for the embattled Jewish state—one might be forgiven for coming away with a different impression.

Beck, 47, has made a fortune by preaching that we are living in cataclysmic times, that politicians shouldn’t be trusted (especially liberals), and that humanity’s salvation lies in buying gold, hoarding food, putting faith in traditional conservative values—and paying him. Beck is the sole investor in Mercury Radio Arts, the Manhattan-based company that produces his radio, television, book publishing, Internet, and live event projects. According to someone familiar with the company who was not authorized to speak publicly about its finances, it brought in $40 million in 2010, $2.5 million of it from Beck’s now-defunct Fox television show and the rest from the other diverse arms of Glenn Beck Inc. “He has monetized every possible platform,” says Michael Harrison, publisher of Talkers, an industry trade publication, who describes Beck as a “brilliant businessman.”

After his bitter break with Fox, the network that made him a known quantity in every household in America, Beck is leaving the mainstream television world behind and embarking on an audacious new business venture. He is pouring resources into GBTV, which he promises will grow into a 24-hour, Internet-based network with scripted and unscripted shows. He is moving from Manhattan to Dallas, where he plans to build a broadcasting studio to house his radio and television programs; he hopes it will become a tourist attraction and powerful symbol of his brand, not unlike NBC’s Today show studio in Rockefeller Center. And he is bankrolling all of it himself. “I’m not going to risk anybody else’s money but mine,” he says in an interview in his Manhattan office. Beck has similarly grand plans for The Blaze, his year-old news website named after the Biblical burning bush, which he hopes to turn into a conservative rival to the Huffington Post. According to comScore, The Blaze attracted 2 million visitors in July.

As Beck launches himself into the diffuse, untested realm of Internet broadcasting—a medium still in search of a successful business model—his acumen and his brand appeal will be tested as they haven’t been before. Are finicky viewers, who have thus far proved reluctant to pay for news or entertainment online, going to shell out to see him? Is it possible to make money even if they do? And given these obvious questions about GBTV, why is Beck putting so much of his own money at risk when he could just sit back and enjoy the millions he makes doing what he does best: radio?

 

The idea that a popular media personality like Beck can frictionlessly redirect his audience to a less traditional platform has been challenged of late. Howard Stern went from ubiquity to relative obscurity in 2005 when he left terrestrial radio for the subscription satellite kind. Oprah Winfrey is struggling to retain viewers after ending her ABC talk show and launching her OWN cable network. And former MSNBC host Keith Olbermann is having similar difficulties at independent broadcaster CurrentTV. Along with the inevitable audience dropoffs, all three have found themselves struggling to inject their personalities into the culture and conversation the way they did when media conglomerates were blasting their messages out into the world.

At Fox, Beck enjoyed widespread popular attention, not all of it positive. In addition to tossing bouquets to conservatives and urging listeners to stockpile gold, he sought out controversy like a canny shockjock. He made statements that he would later retract—like his claim that Obama harbored a “deep-seated hatred for white people,” and validated Internet rumors that FEMA might be building “concentration camps” by repeating and then “debunking” them. Beck frequently reminds his fans and his critics not to take him too seriously. “I’m a rodeo clown,” he has often said.

That did not prevent him from connecting deeply with people who were confused and angry in the aftermath of America’s economic collapse. Standing at his signature on-set chalkboard and diagramming how the country was heading down a socialist rabbit hole, Beck became the voice of the forces that would metastasize into the country’s newest political movement. “He was there as a ready-made, sympathetic, information-providing messenger for the concerns and frustrations that were fueling the Tea Party,” says Republican pollster Kellyanne Conway. “You could come home at 5 p.m., turn on Fox, and there was Glenn Beck talking about all the things that were keeping you awake at night.” His influence grew so much that Beck was able to mobilize an estimated 300,000 followers to attend an Aug. 28, 2010, rally at the Lincoln Memorial. “America today begins to turn back to God,” he proclaimed. It was an unusual assertion from a self-described comedian.

By then, however, The Glenn Beck Show was in decline. Ultimately, it lost a million viewers from its 2.7 million peak as the host became embroiled in controversy after controversy. Advertisers abandoned him, though he continued to beat MSNBC and CNN in his time slot. Finally, last April, Beck and Fox News chief Roger Ailes announced that the show would end in June. Ailes made it clear that he wasn’t displeased with Beck’s pending departure: “Half the headlines say he’s been canceled,” he told the Associated Press. “The other half say he quit. We’re pretty happy with both of them.” (Fox News and Mercury Radio Arts declined to discuss their relationship for this story.)

Beck seems to think that he knows something about the strength of his own appeal that Ailes doesn’t. He’s by no means a digital novice. In March 2010, he introduced Insider Extreme, a $9.99 subscription service enabling customers to watch a video stream of his three-hour radio show and other “exclusive content” like The 4th Hour, a segment by Beck’s longtime sidekicks Pat Gray and Stu Burguiere that is perhaps best savored by the most fervent of the host’s admirers. Some 80,000 people signed up—a fraction of the nearly 2 million who watched him on Fox each night in his final days on the air. It’s also expensive to go from installing cameras in a radio studio to creating a full-blown network, on top of the fact that very few people have figured out how to do it profitably online.

“He can still drive people to GBTV through his radio program,” says Stephen Battaglio, business editor of TV Guide. “But Fox News really is what kept him in the national consciousness almost every day.”

 

Early one afternoon in July, Beck strides through the Mercury Radio office near Times Square, in New York, where the talk radio star will operate until his Dallas move. A young female assistant trails him. Suddenly, he spins around. “Find your passion. Follow your passion. Write that down,” he commands. Beck’s assistant looks startled and rushes off to do as she is told.

Several minutes later, Beck is seated in his office. The room is decorated with vintage radios. Behind the door hangs a Revolutionary War costume that Beck sometimes donned for his televised lectures about the founding fathers and how horrified they would be by Barack Obama’s America. A statue of one ofhis idols, Walt Disney, sits on his desk,a few feet away from a portrait of Winston Churchill.

Beck explains that he had been batting around ideas for a GBTV slogan for nearly a week when “find your passion” popped into his head in the hallway. “It just kind of cemented in my mind,” Beck chuckles. “Write it down. There it is. Let’s go!”

He says that subscribers will be able to access GBTV on any device, from an iPad to a television connected to a Roku box. Traditional media companies have been pushing the same idea, with mixed results, for some time. It’s difficult to imagine the vast majority of Beck’s AM radio listeners hooking their computers up to their television sets to catch Beck anytime soon. “Watching streaming video on a computer is more prevalent with college kids and young adults, not older folks who typically listen to talk radio,” says Brad Adgate, research director at Horizon Media, a New York ad-buying firm.

Still, Beck is certain he’s part of a vanguard that will replace the industry’s blinkered incumbents. “I believe that the networks of the past, in time, are going to have to evolve or burn themselves out,” he explains. “What we are developing is a nonlinear network.”

Beck also insists that GBTV will enable him to pursue goals he wasn’t able to at Fox. He says he is tired of pointing out the world’s problems. This might be an understandable position to take when people like his former boss Ailes have suggested he lost viewers because he dwelled too much on America’s downfall. Now, Beck says he wants to recruit a volunteer army that will stand ready in case of disaster. “My vision is to create a situation where if, God forbid, there is another Joplin [tornado] or a Great Depression, we don’t need the federal government,” Beck says. “We’ll help each other.”

In the meantime, he is struggling to design the perfect set for his webcast. There will be a chalkboard, though it won’t be the typical kind. This one will be three-sided. His staff wants him to decorate the set with iconic American symbols like the Statue of Liberty. Beck would prefer a large Bob’s Big Boy figure.

It sounds like he is already testing the patience of his co-workers. It wouldn’t be the first time. “I mean, I changed the set on Fox,” Beck says. “Poor Fox. God bless ’em. They were troupers. What was it? Three times, I think I changed sets on them? That’s damn near nuts.”

If you listen to Beck for any length of time, you find that he has one of the great voices in radio, one that he uses to create a feeling of intimacy with his listeners. He can be very funny. It’s difficult to discern exactly where he stands politically. He excoriates Obama and gushes over ultraconservative Republican Presidential candidates like Michelle Bachmann and Rick Perry. He describes himself as libertarian and expresses contempt for Republicans along with Democrats. “I think they are all taking us to hell,” Beck scoffs. “You look at the regulations. You look at the spending on both sides. You look at their absolute unwillingness to speak straight to the American people and say that what is coming is bad.”

Beck was something a radio prodigy. Growing up in Mount Vernon, Wash., he fell in love with Orson Welles’s panic-inducing radio broadcast of H.G. Wells’s The War of the Worlds. During high school, he got himself a job as a disk jockey on KUBE 93, an FM station in nearby Seattle. After graduating in 1982, he bounced around the country on the Morning Zoo circuit, where he became known for his zany stunts. In 1988, he hired Jessica Hahn, the one-time consort of televangelist Jim Bakker, as his sidekick at a Phoenix station. A year later in Houston, Beck urged his listeners to mail him raw eggs, enraging the U.S. Postal Service.

As Beck frequently reminds his audience in the more confessional moments of his show, his career was eventually undermined by his cocaine and alcohol abuse. In 1994, he went straight. He later married his second wife, Tania, with whom he joined the Mormon church. The sober Beck was tired of telling jokes and spinning Britney Spears records. He started injecting more and more politics into his routine.

In 2000, he moved to Tampa to become a full-time talk radio show host at WFLA-AM. The transition wasn’t smooth. “Very early on, I said: ‘Glenn, can you stop crying on the air?’ ” recalls Gabe Hobbs, then head of news, talk, and sports for Clear Channel (CCMO), the station’s owner.

Then came 9/11, inadvertent maker of countless careers. Clear Channel offered Beck to radio stations that were carrying Dr. Laura Schlessinger’s show and wanted someone who spoke more directly to the nation’s dark mood. In January 2002, Beck’s syndicated show officially debuted on 47 stations, and the rising star began thinking about how he could capitalize on his fame.

He called Chris Balfe, a rabid fan who had designed a website for him six years earlier in Connecticut and was now a management consultant. “ ‘Chris, people don’t understand how powerful radio is,’ ” Balfe recalls Beck saying. “ ‘They think talk radio is boring and old. They don’t really understand the power that it gives you to connect with people. I really feel I can have a multimedia company with radio at the center of it.’ ”

Before the end of 2002, Balfe, now president of Mercury Radio Arts, had created a paid subscription business on Beck’s website. “Even to stream the show, you had to pay a $6.99 monthly fee,” he says. The following year, Beck published a book, The Real America, which became the first of seven best-sellers. In it, he praised then-President George W. Bush and defended his decision to invade Iraq.

Two years later, Beck hired Balfe’s brother, Kevin, to launch Fusion, a monthly magazine featuring cover stories like “Glenn’s Interview with Condi Rice” and “Are You Raising a Prostitot?” He charged $35 for a year’s subscription. “From the first issue, it was profitable,” says Kevin Balfe, now Mercury’s senior vice-president of publishing.

In 2006, Beck’s growing popularity won him a 7 p.m. show on CNN Headline News. He distinguished himself by asking Keith Ellison, the first Muslim member of the U.S. Congress: “Sir, prove to me you are not working for our enemies.” On The Daily Show, Jon Stewart observed: “Finally, a guy who says what people who aren’t thinking are thinking.”

Despite Stewart’s continued critiques—or perhaps because of them—Beck increased the audience in his time slot by 300 percent. Fox hired him on the eve of Obama’s election in 2008. “He smashed the competition at CNN and MSNBC,” says Adgate of Horizon Media. “He got bigger numbers than Bill O’Reilly.”

What received somewhat less attention was what Beck’s newfound notoriety must have done for the cash flow at Mercury. In 2009, he published two more books (Glenn Beck’s Common Sense and Arguing with Idiots), an audio book (America’s March to Socialism) and a children’s version of his novel The Christmas Sweater. There was also Glenn Beck’s Common Sense Comedy Tour, in which he wore his Revolutionary War outfit and entertained his fans with his pretend history lessons. The numbers of stations carrying his radio program rose from 300 to 400 during his time at Fox.

But as the economy showed signs of improvement, viewers and advertisers on Fox tired of Beck’s darkness. After he called Obama a racist in July 2009, ColorOfChange.org, an African American political advocacy group, had little trouble convincing 100 companies such as Wal-Mart Stores (WMT), Procter & Gamble (PG), and Progressive Insurance (PGR) to pull their ads from the show. “We watched his last show to see who the advertisers were,” says Rashad Robinson, executive director of the Color of Change. “It was the company that says it will melt down your gold if you mail it in, and one that sells home plastic surgeries. It wasn’t P&G.” There were reports in the Washington Post and the New York Times that even Beck’s Fox colleagues felt he was tarnishing the network. Beck’s departure was all but certain when there were reports last March that a top Fox executive, Joel Cheatwood, would be leaving the News Corp. subsidiary to join Mercury Radio Arts. By then, Beck was ready to try going it alone on the Internet. “When I joined, there were a number of options on the table,” says Cheatwood, now GBTV’s head of programming. “Certainly, Glenn and Chris had been talking about this one.”

 

Beck calls Cheatwood and Balfe into his office in late August to discuss GBTV business. The session flows a bit like Beck’s radio show, with Beck cracking jokes and leaping from one topic to the next. His underlings are his dutiful straight men.

Cheatwood has found a potential site for Beck’s Dallas studio: a downtown building that currently houses a health club. Beck gets excited when he learns that the lease has a 30-day vacate clause. “Grab what you can and run,” Beck says. “You’re healthy. Those treadmills? You can carry those yourselves.”

Everybody laughs. Beck is only partly kidding. He says he would like to make a decision before he leaves for Israel later in the week.

He’s still fussing over his set. He’s given up trying to get the owners of Bob’s Big Boy Restaurants to let him use their iconic image. “I’m pissed,” Beck grumbles. He tells Balfe that he wishes he could purchase the trademark. Balfe, a heavyset guy who wears a dark suit and sips Coke Zero, lets him know this is not possible.

Next the three men talk about the difficulty of turning GBTV into a real network. It will launch with six hours of programming a day. Beck’s new show will be two hours long. The rest will basically be Insider Extreme fare—the telecast of Beck’s morning radio show and The 4th Hour with Gray and Burguiere. Beck needs more programming.

Unfortunately for him, it won’t come cheap. Cheatwood warns that Mercury may have to pay as much as $25,000 an episode for nearly forgotten ’70s television shows to air. Beck grows restless. “I really want to talk about finding investors to produce shows with us,” he says.

Cheatwood reminds his boss that this, too, could be expensive. “I know. So let’s find someone who is as insane as we are,” says Beck. “We are providing material.I have two stories that I want to produce. Everybody I talk to about them says:‘Gar! Incredible.’ ”

Before the meeting breaks up, the three men talk about Restoring Courage, the first big event to air on GBTV. “The good news,” Beck says sarcastically, “is we are still $1.4 million away from reaching our goal of funding this thing.”

Restoring Courage illustrates the challenges Beck faces after Fox. Unlike last year’s Washington rally, his mission to Israel isn’t treated as a major news event by the national media. “I don’t believe Fox was there,” Beck complains on his radio show. He reassures his listeners, and perhaps himself, though, that “everybody else under the sun was there.” However, the Wall Street Journal, News Corp.’s flagship American newspaper, ignored Restoring Courage, too. This can only be troubling for Beck. The Wall Street types who might invest in future GBTV shows probably don’t listen to Beck’s radio show. But it’s fairly certain that they read the Wall Street Journal and watch Fox News.

Despite his protestations to the contrary, Restoring Courage seems to have been an effective promotion for GBTV. Beck allowed devotees around the country to show his Jerusalem speech for free at Restoring Courage Viewing Parties. About 50 members of the New Jersey Tea Party Coalition and their friends watch it at a Harley-Davidson (HOG) dealership in Rochelle Park, just across the George Washington Bridge from New York. Most have signed up for GBTV or are planning to. “My son, who is 30 years old, he paid for me and him,” says Pedro Cabrera, an affable Cuban immigrant. “I’m very proud of him. He is very conservative.”

There are a few holdouts, like Ron DuBois, who carries a copy of the Koran and doesn’t understand why more people aren’t “outraged” by Obama’s supposed connections to the Weather Underground, which Beck highlighted on Fox News. “I liked him when he was more political,” DuBois gripes.

The former Fox News star appears on the flatscreen TV hooked up to a PC running Windows Vista. As he works through his usual repertoire of attacks against the U.N., European diplomats, journalists, and Islamic terrorists, the Jersey Tea Partiers clap as if they are in Jerusalem with him. When he finishes, Michele Talamo, a Tea Party activist and human resources consultant, is almost ready to hand over her credit-card number. “I’m thinking about it,” she says.

Balfe says Mercury’s goal is to have 250,000 GBTV subscribers by the end of September. This seems like a convenient number given that it would generate roughly the same amount of revenue in a single month that Beck made on Fox News last year. But nearly a third of those projected GBTV subscribers are former Insider Extreme customers who are willing to pay $9.99 a month to watch Beck do his radio show, which they could have listened to for free. The ones who signed up expecting a real network may be less easily satisfied.

Beck will have to reach deeper into his own pocket to fill out GBTV’s schedule, unless he can find outside investors. You have to wonder what the hedge fund guys might say the next time Beck calls someone a racist. No wonder he would prefer to remain independent.

This much is certain: He needs a more compelling marketing gimmick for his new venture than “Find Your Passion.” As the summer dragged on, Beck seemed to have come up with a better idea. “I said to Stu, ‘I got a new slogan for GBTV, ’” he said on the radio. “You say, too crazy for Fox? I’ll show you too crazy for Fox.” Perhaps he was joking, but with Glenn Beck you never know.

With Calev Ben-David and Sommer Saadi
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Leonard is a staff writer for Bloomberg Businessweek in New York.

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