Profile: Remote king of cable who flies by wire: John Malone: As America's latest multimedia mogul plugs into the QVC takeover, Phil Reeves tracks his stealthy empire-building

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The Independent Online
GIVEN the fear and respect he inspires in his rivals, you would expect more people to have heard of John Malone. Yet until recently his name rang few bells outside Wall Street and the boardrooms of American television companies. He was a figure behind the scenes, a businessman acquiring power by stealth rather than sound-bites.

In the past few months, all that has changed. Malone, 55, the chief executive of Tele-Communications Inc (TCI), America's largest cable TV operator, has become as much of a media mogul as Disney's Michael Eisner or Rupert Murdoch. In the frantic scramble to form multimedia alliances, few deals are forged in which he is not involved. When Barry Diller tried to buy Paramount earlier this year but was thwarted by Viacom, Malone was his behind-scenes partner. When Diller then sought to merge his cable shopping channel, QVC, with CBS, Malone - one of QVC's principal shareholders - was looking forward to a slice of the influential US television network. And when the CBS deal was scuppered by Comcast's bid for QVC . . . who should eventually join Comcast as a partner, with a successful joint bid?

John Malone presides over a formidable kingdom. TCI, based in Colorado, is wired to one in every four of the 60 million American homes with cable television. He also has stakes in a plethora of other media-related interests, from movies and computers to Ted Turner's Turner Broadcasting Systems, suppliers of CNN. In Britain TCI is also a partner in Telewest, the large cable group, and controls the fast-growing cable operator Flextech.

Yet Malone makes an uneasy media baron. Far from being flamboyant, like others of his calling, he is a private man who shuns the Hollywood and Washington cocktail party circuit, preferring to garden at home or to go sailing from his East Coast summer residence. His average day at TCI's headquarters is only five-and-a-half hours. Usually, he drives home for lunch with his wife, Leslie.

Although his fortune is estimated at more than dollars 1bn, the couple live relatively modestly, without a cook or chauffeur. They take long summer holidays, driving 2,000 miles across the United States in a large recreational vehicle, the size of a Greyhound coach, which they bought because Leslie won't fly. Often Malone works from his summer residence, communicating by video-telephone with his office. It's said his staff know when he's getting bored 'video-conferencing' because they can see the camera lens wandering, guided by their boss's remote-control joystick. In a sense, deal-making from afar is Malone's ideal working environment. He is, as he once put it himself, 'basically an introvert'.

Yet this retiring individual also has a reputation for being one of America's most ruthless businessmen. For years his enemies have accused him of monopolistic practices and bullying tactics. When the US Vice-President, Al Gore, was crusading as a senator against cable monopolies, he called Malone the 'Darth Vader' of cable TV. 'Nothing happens in this industry without his blessing,' one entertainment heavyweight told Esquire recently, 'Everyone has to kiss his ring.'

Certainly, Malone knows how to fight rough. Stories about TCI's hardball tactics are two a penny. The most notorious incident was in 1973 at Vail, Colorado, when city officials refused to agree TCI's proposed cable rates. The company scrapped programmes and broadcast the names and telephone numbers of the offending officials. They quickly gave in.

The dominance of TCI, and also of Malone's cable programme company, Liberty Media (in the process of becoming a wholly-owned TCI subsidiary), gives him great clout. When Malone thought ESPN, a popular US cable sports channel, was charging excessive rates, he delivered an ultimatum: drop your prices by midnight, or you're off the TCI systems.

His own rates have not gone unnoticed. After the industry was deregulated five years ago, some cable bills rose by 60 per cent, prompting Congress to pass the Cable Act. Malone was not pleased. He was even less happy when the US government ordered a 10 per cent roll-back on cable rates last year, and a further 7 per cent cut this year - helping to scuttle his dollars 33bn merger with Bell Atlantic and with it (for the time being) his dreams of a telephone-cable multimedia monolith.

The rise to power of John Charles Custer Malone, an engineer's son from Connecticut, owes as much to his unusual talents as his commercial aggression. He reportedly has a near-photographic memory, an extraordinary aptitude for maths, and intense business acumen. His ascendancy would not have come about, however, had it not been for a part- time cattle rancher and cottonseed salesman called Bob Magness.

In 1972, Magness offered Malone the presidency of a struggling cable company which he had set up in Denver, Colorado, four years earlier, in the hope of improving television reception for farmers in remote areas. The company had a system that reached into 23 states. But it was in a dismal financial condition, with dollars 130m of debt and only dollars 19m in revenues. Malone, then 30, a highly qualified engineer with a Ph D and three other degrees, already had a good job: president of the General Instrument Corporation's fledgling cable division. But anxious to move to the rural West, he took a 50 per cent pay cut and joined Magness. In two decades, TCI was transformed into the industry leader, with revenues of nearly dollars 4bn. By 1989, a dollar invested in 1975 was worth dollars 800.

Once the cash was rolling in, Malone went on a deal-making spree, consolidating his empire by buying or investing in scores of different companies. During the 1980s he was doing an average of one deal every two weeks. When Turner Broadcasting Systems ran into trouble, he helped to bail it out, acquiring a 23 per cent stake. In all, he has holdings in 29 cable services - from America's Discovery Channel to Court TV, the popular purveyor of big criminal trials.

More recently, he has turned his attentions to forging new strategic links with the information highwaymen of the age - Bill Gates of Microsoft (whom he meets twice a month to discuss interactive television projects), Sumner Redstone of Viacom (a former enemy), and Murdoch.

Rumours abound that he wants to build a fifth US television network and buy stakes in several Hollywood studios. Recently he has been restructuring TCI around four strengthened divisions, claiming that this will allow him to disengage himself from the day-to-day running of the company and enjoy more time on his yacht.

His rivals should not take heart. TCI is busy laying down a fibre-optic network allowing its systems to carry 500 channels, including interactive shopping, video games and movies. And Malone is, by all accounts, a restless fellow. From his boat, the King of Cable's roving lens may well be searching out fresh shores to seize.

(Photograph omitted)