The two entities have one thing in common: Steve Bannon, who became the CEO of Donald Trump’s campaign on Wednesday, August 17.
It would be easy to paint Bannon as a conservative news site sensationalist, the way many young adults see his current boss as an outrageous reality show star.
The truth is very different, however. Bannon had a number of personal epiphanies which took him through the Navy, Democrat affinity and Goldman Sachs to considered conservativism, running his own media company and succeeding Andrew Breitbart.
Joshua Green’s article, ‘This Man Is The Most Dangerous Political Operative In America’ — referring to Bannon — is a must-read. Citations and summaries below come from his eye-opener.
Navy a natural choice
Bannon grew up in a pro-Democrat, pro-union, pro-Kennedy working class household in Norfolk, Virginia.
The Bannons could see the local naval base from their house. Therefore, it was a natural choice for Bannon to finish college then sign up for a tour in the Navy in the 1970s.
Over the course of the next four years, he served at sea on a destroyer, as an auxiliary engineer in the Pacific then in the north Arabian Sea as a navigator during the Iran Hostage Crisis, Jimmy Carter’s diplomatic and political debacle which saw his resounding defeat to Ronald Reagan in 1980:
By the time he arrived in the Persian Gulf in 1979, the U.S. was preparing its ill-fated assault on Tehran, and Bannon’s faith in his commander in chief had dimmed: “You could tell it was going to be a [disaster].” His battle group rotated out just before Carter’s Desert One debacle.
After his tour of duty, Bannon worked at the Pentagon as special assistant to the chief of Naval operations. At night, he attended Georgetown University where he earned a master’s degree in national security studies.
By then, Ronald Reagan was in his first term of office. The atmosphere in the United States was changing.
The lure of Wall Street
Stephen Bannon is a few years older than I.
I graduated from university when Reagan won his first election. There was a real step change in mood among my classmates between the moment we left for Christmas break in 1979 and our return in January 1980.
Suddenly, my classmates turned from being fun-loving and curious to serious and closed minded. Tolerance for different points of view died out. Men spoke of Reagan and the necessity for conservatism. Women listened to them intently. One told me, ‘I’m educating myself. They say Reagan will be the head of the most important movement this century.’
As someone who wanted Jimmy Carter to win re-election, I was completely bemused, to say the least. At a drinks party before graduation, one male classmate told me in all seriousness to get on the ‘right side’ of things or be ‘left behind’. It was sickening.
Money also became a popular topic of conversation. Once the milk round arrived, formerly laid-back partiers turned humourless and intense, especially those who were picked up by accounting and consulting firms. They could speak only of new cars and their future lifestyle, which always included cable television. One New Yorker told me, ‘I’ll soon be able to get 100+ channels. I can’t wait’.
I describe my own experience to set the backdrop for Bannon’s change of course, which was similar to that of my classmates:
The siren of Reagan-era Wall Street capitalism drained the military life of its luster, so he resolved to make the leap. “Somebody told me,” he says, “if you want to go to Wall Street, you have to go to Harvard Business School.” HBS accepted him, and Bannon, at 29, matriculated in 1983.
Well, Bannon and all my classmates were right. The 1980s belonged to the likes of Gordon Gekko and his imitators in a variety of industry sectors. It was the decade when a proper lunch break went out the window.
For arts majors like me, it was an eternal turn-off.
However, Bannon was assessing his future. Despite his hard work at Harvard Business School which propelled him into first-year honours, he was having problems finding a summer associateship. His more successful classmates told him his age and naval service went against him. Even worse, they told him he hadn’t gone to the right schools.
He received an invitation to a Goldman Sachs recruiting event on campus. Entering a tent teeming with several hundred fellow students did not fill him with confidence. He stood on the sidelines, had a drink and started talking with the two men standing next to him:
We have the greatest conversation about baseball, and I find out after half an hour it was John Weinberg Jr., whose dad runs the firm, and a guy named Rob Kaplan, who became a senior partner.
That night the Goldman Sachs people gathered to discuss potential hires:
“They said, ‘Well, Bannon, I guess we’re gonna reject him. He’s too old for a summer job,’ ” Bannon says. “And these guys say, ‘Oh no, we talked to him. He’s terrific.’ Literally, a complete [gamble]. But I got a job.”
The Goldman Sachs years
Bannon started working at Goldman Sachs in the second half of the 1980s.
By then, Americans were divided about Wall Street. They either loved it or hated it. Regardless of what side they took, corporate raider and ‘junk bond king’ Michael Milken was a household name. He later served time in prison for securities and reporting violations. Since his release, he has devoted his efforts full time to philanthropy.
Bannon told Bloomberg’s Joshua Green:
“Everything in the Midwest was being raided by Milken,” he says. “It was like a firestorm.”
Goldman Sachs wanted no direct involvement in hostile corporate acquisitions. Instead, the firm defended targets of hostile acquisitions.
The other thing they did was never to lead, but to follow other companies into a particular market segment. That way, they avoided the flak from other Wall Street firms and the general public.
Bannon was in his element at Goldman, even though the only day off he took was Christmas. He told Green:
The camaraderie was amazing. It was like being in the Navy, in the wardroom of a ship.
Goldman in the ’80s was like a priesthood, a monastic experience where you worked all the time but were incredibly dedicated to client services, to building and growing companies.
He later went into leveraged buyouts, one of which involved Mitt Romney and Bain Capital.
By the end of the decade, global scope began to shape world markets and:
size suddenly mattered. Everyone realized that the firm, then a private partnership, would have to go public. Bankers also could see that the Glass-Steagall Act separating commercial and investment banking was going to fall, setting off a flurry of acquisitions. Specialists would command a premium.
With a speciality in mind, Bannon represented the firm in Los Angeles. He went into the media and entertainment, a new sector which brought in companies one normally did not connect with those fields. General Electric and Westinghouse come to mind:
“A lot of people were coming from outside buying media companies,” he says. “There was huge consolidation.”
Eventually, with the change in Goldman’s ethos and the acquisitions market [added link and emphases mine]:
He underwent a conversion like the one Michael Lewis has described, watching with horror as staid private partnerships such as Goldman Sachs became highly leveraged, publicly traded companies operating like casinos. “I turned on Wall Street for the same reason everybody else did: The American taxpayer was forced to cut mook deals to bail out guys who didn’t deserve it.”
Bannon & Co. and Seinfeld
Bannon and a few of his Goldman colleagues left to set up Bannon & Co., a boutique investment bank which specialised in media and entertainment.
This involved not only media company acquisition but the new and risky valuation of assets such as film libraries:
At the time, investors preferred hard assets—manufacturing companies, real estate—and avoided things like movie studios and film libraries, which were harder to price. Bannon’s group, drawing on data such as VHS cassette sales and TV ratings, devised a model to value intellectual property in the same way as tangible assets. “We got a ton of business,” he says.
They were so successful that MGM and Polygram Records were among their clients. When Crédit Lyonnais, a major financier of independent Hollywood studios, was in danger of going bankrupt, Bannon & Co. began lending to media companies.
The firm’s sale of Castle Rock Entertainment in the mid-1990s was a turning point for Stephen Bannon.
If you are a student of title and credit sequences, Castle Rock Entertainment should jump out at you. It was the production company behind a number of successful films and television series, from Billy Crystal to Seinfeld.
At that time Westinghouse Electric owned the production company. They wanted to sell it in 1992, when Seinfeld was in its third season. The ‘show about nothing’ was still a cult classic, even though it aired during prime time on NBC.
Westinghouse asked Bannon’s company to find them a buyer for Castle Rock. Bannon approached Ted Turner:
“Turner was going to build this huge studio,” he says, “so we were negotiating the deal at the St. Regis hotel in New York.
Everything was going well until:
when it came time to actually close the deal, Ted was short of cash. … Westinghouse just wanted out. We told them, ‘You ought to take this deal. It’s a great deal.’ And they go, ‘If this is such a great deal, why don’t you defer some of your cash fee and keep an ownership stake in a package of TV rights?’
After working through the present and anticipated future numbers, Bannon accepted:
a stake in five shows, including one in its third season regarded as the runt of the litter: Seinfeld. “We calculated what it would get us if it made it to syndication,” says Bannon. “We were wrong by a factor of five.”
Financial independence followed a few years later when Société Générale bought Bannon & Co. in 1998.
Not having to work led Bannon to pursue what he really wanted to do: finance films and make them.
Although he had been living in Los Angeles for several years, Bannon was now able to live the Hollywood life in terms of how he spent his time.
In 1999, he was executive producer of Titus, an Oscar-nominated film starring Anthony Hopkins.
He also made the acquaintance of Jeff Kwatinetz, a talent agent who had just launched his own company called the Firm. Kwatinetz invited Bannon to become a partner.
The Firm’s biggest achievement was the acquisition of former Disney chief Michael Ovitz’s company, Artists Management Group. Ovitz, a household name in Hollywood, had visions of creating a media monolith with his company. Unfortunately, he was losing money hand over fist. Selling Artists Management Group to the Firm in 2002 was a sad necessity:
as Vanity Fair recounted, Bannon was dispatched to Ovitz’s Beverly Hills mansion to deliver the final humiliation in person, an offer for AMG of $5 million, less than the value of Ovitz’s home.
Ovitz went on to become a private investor, advisor to film luminaries and a philanthropist. Although he is still married to his wife Judy, in 2015, he became engaged to Tamara Mellon, the co-founder of shoe company Jimmy Choo and ex-wife of Matthew Mellon, of the banking family. Mellon describes her fiancé’s marital situation as ‘complicated’.
9/11, politics and Breitbart
Although he had always admired Ronald Reagan, the events of September 11, 2001 shifted Bannon’s interest from entertainment to politics.
Since 2004, he has made 15 socio-political documentaries on various subjects, including Reagan, border control, the Tea Party and America’s future.
His first film, In the Face of Evil, was modelled on a book called Reagan’s War. The author of the book was none other than Peter Schweizer, a Cold War expert. Bannon went on to found the non-profit Government Accountability Institute (GAI), of which Schweizer is president. As I explained yesterday, the GAI’s research feeds into Breitbart, which Bannon heads, although he has taken a leave of absence to work on Donald Trump’s campaign.
When In the Face of Evil was screened in 2004, one audience member became quite excitable:
“We screened the film at a festival in Beverly Hills,” Bannon recalls, “and out of the crowd comes this, like, bear who’s squeezing me like my head’s going to blow up and saying how we’ve gotta take back the culture.”
That ‘bear’ was none other than Andrew Breitbart.
Breitbart also lived in Los Angeles. Interested in new media, he had worked for Matt Drudge before helping Arianna Huffington launch her Huffington Post. When he and Bannon met, he was in the process of launching his own eponymous site.
When Breitbart was working on the Drudge Report, he developed a feel for the news cycle: anticipating big stories, breaking them and following them. When you read Matt Drudge, you are looking at Breitbart’s legacy.
Bannon found this fascinating. He gave Breitbart financial advice and found him office space.
It was the beginning of a faithful friendship and involvement in Breitbart:
“Our vision—Andrew’s vision—was always to build a global, center-right, populist, anti-establishment news site.” With this in mind, he set out to line up investors.
Bannon continued making his not-so-subtle documentaries:
big, crashing, opinionated films with Wagner scores and arresting imagery … In the Bannon repertoire, no metaphor is too direct. His films are peppered with footage of lions attacking helpless gazelles, seedlings bursting from the ground into glorious bloom.
Sarah Palin loves them, especially one about her, The Undefeated:
Palin, for one, ate it up and traveled to Iowa, trailed by hundreds of reporters, to appear with him at a 2011 screening in Pella that the press thought might signal her entrance into the 2012 presidential race. (No such luck.) Breitbart came along as promoter and ringmaster. When I spoke with him afterward, he described Bannon, with sincere admiration, as the Leni Riefenstahl of the Tea Party movement.
In 2010, Bannon was instrumental in financing Breitbart‘s relaunch. Unfortunately, he had problems as one of their big stories had gone very wrong:
The site published video, furnished by a conservative activist, of a speech to the NAACP by a Department of Agriculture official named Shirley Sherrod, in which she appeared to advocate anti-white racism. Within hours, she was fired, as the story blanketed cable news. It soon became clear that the Breitbart News video was misleadingly edited—that Sherrod’s point was the opposite of what was portrayed Fox News, which aggressively promoted the video, banned Andrew Breitbart as an on-air guest.
However, as Breitbart, Bannon and the other employees know, it isn’t long before redemption comes. And Breitbart’s came in the form of Huma Abedin’s husband and then-congressman, Anthony Weiner, with his salacious selfies. Breitbart wasted no time in publishing the sorry story in 2011 and, with that, he was allowed back on Fox News.
Breitbart was due to relaunch in March 2012. Breitbart was ebullient. Then, he collapsed during a walk in his Brentwood neighbourhood on March 1, dying shortly afterwards of heart failure at the age of 43. Many still find this suspicious.
Bannon became executive chairman and went ahead with the website’s relaunch.
By then, he fully understood Breitbart’s take on the news. People want to understand it as a series of ongoing stories, whether drama or farce, with names, faces, events, climaxes and pivots.
Alex Marlow, the site’s editor-in-chief, told Bloomberg’s Green:
“Our whole mindset is looking for these rolling narratives.” He rattles off the most popular ones, which Breitbart News covers intensively from a posture of aggrieved persecution. “The big ones won’t surprise you,” he says. “Immigration, ISIS, race riots, and what we call ‘the collapse of traditional values.’ But I’d say Hillary Clinton is tops.”
And, adopting the Goldman Sachs dictum of never leading, only following, Bannon brings in their big, investigative exposés from the GAI. Clinton Cash is one of them.
Breitbart News gets 21m unique hits every month. Big Media, in the US and abroad, are paying attention. This fits into Bannon’s strategy of making these stories irresistible to Fox News and The New York Times, among others.
Politicians, in turn, have to read it, too:
“They have an incredible eye for an important story, particular ones that are important to conservatives and Republicans,” says Senator Jeff Sessions, an Alabama Republican. “They’ve become extraordinarily influential. Radio talk show hosts are reading Breitbart every day. You can feel it when they interview you.”
Breitbart is promoting Donald Trump. During his leave of absence, Bannon is beavering away in Trump Tower for the GOP candidate.
It will be fascinating to see what results their efforts will produce on Tuesday, November 8.