John Malone: The man who shook up Murdoch

Click to follow
The Independent Online

If John Malone were a man who craved attention, he would be sitting today in his office at his Denver-based holding company, Liberty Media, wearing a very big smile indeed. Even though he has a career as a television cable and programming mogul that spans three decades, the spotlight on him is surely brighter now than ever before.

If John Malone were a man who craved attention, he would be sitting today in his office at his Denver-based holding company, Liberty Media, wearing a very big smile indeed. Even though he has a career as a television cable and programming mogul that spans three decades, the spotlight on him is surely brighter now than ever before.

The man whom Al Gore once unflatteringly described as the Darth Vader of the cable industry has just pulled a stunt that has set eyebrows gyrating all the way from Beverly Hills to Beijing. He has parked his tanks on the lawn of Rupert Murdoch, their cannons aimed squarely at Murdoch's own media empire, News Corporation.

That, at least, is what it looked like when news of the Malone manoeuvre became public last week. Officials at Liberty, owner of the QVC shopping channel and a major stakeholder in multiple channels ranging from Starz to Discovery, confirmed that it had purchased the right almost to double its voting stake in News Corp, from 9 per cent today to 17 per cent. It is not a match to the 29.5 per cent controlling stake held by Murdoch and his family in News Corp, but it is a significant and threatening chunk.

So what exactly is 63-year-old Malone up to? This is a man whose global ambitions are well known - he has been heard to liken himself to the cinematic fantasy of a media baron, Citizen Kane. It is not unreasonable to wonder if he is in the first phase of an all-out campaign to acquire News Corp, owner of The Times, BSkyB, Fox Television and countless other assets for himself. If so, give him full marks for chutzpah.

Even if it is a friendly merger that Malone has in mind, it threatens to scramble Murdoch's script for the succession at News Corp. As anyone who follows media matters even from afar knows, Rupert's crown, at the moment of his retirement or sudden demise, is meant to pass quietly to one or other or both of his sons - James and Lachlan, the new chief executive at BSkyB. Malone, you begin to think, may see things differently.

Some in the business, it is true, hold a less dramatic view of what is happening. They point out that Malone and Murdoch are meant to be the best of friends, at least in a business context. They argue that Malone is simply taking advantage of a recent release of available shares in News Corp resulting from the shift of its base and primary stock listings from Australia to the United States. It is possible, indeed, that Malone's move was not an act of aggression, but rather a benign acquisition of shares in a promising company and his buying spree will end there.

Murdoch himself, who is 10 years Malone's senior, has presented a face of utter calm. Asked by reporters last week whether he was worried by what had happened, he replied, "No, not at all. I think it's an endorsement of the company. I say that quite sincerely. I'm not losing any sleep over it. We are quite relaxed." Yet yesterday he cancelled a news conference in order to avoid press questions on the subject.

For now, we just don't know what is going on. Because Malone does not like attention. Instead, he prefers to keep a public profile that is flatter than a Kansas wheat field. He almost never gives interviews to the press, steers clear of Washington politics and eschews any kind of event where cameras may be lurking. What we do know is this. When it comes to doing business Malone is tough and ruthless. Emotions never get in the way of his core mission of growing the value of his holdings and reaping profits. Nor - note to Murdoch - do friendships.

"Malone knows everyone in the industry, but he is a personal friend of no one," wrote Ken Auletta, the New Yorker media writer who has studied the rise of Malone's career, as well as those of all the main media moguls, over many years. "It is all business. An ally in one region or business is a competitor in another."

Murdoch and Malone are alike and not alike. The former cuts a more traditional figure of a media tycoon, with well-known political views that he likes to project through his holdings, especially his newspapers which also include scrappier conservative titles like The Sun and the New York Post. In that sense he is the one more like Citizen Kane, who was modelled on the real-life William Randolph Hearst. And while Murdoch travels the globe, Malone almost never ventures abroad and speaks no foreign languages. As predators, they are as deadly as each other, if with different styles. Murdoch, wrote media commentator David Elstein, is "a shark, always dangerous, always on the move. By contrast, Malone is a swamp alligator, content to lie secreted in the mud, to let the prey come to him".

But Malone's private life beyond the corporate battlefields suggests a more mellow personality. He is married to his childhood sweetheart, Leslie, with whom he lives on a ranch of 42,000 acres outside Denver. When he can, he will leave Liberty's headquarters at 12.30pm to drive himself home for an hour's lunch with his wife before returning to work. They have two grown-up children, Tracy and Evan, as well as grandchildren.

Meanwhile, twice a year, he and Leslie travel to their second home, a 200-acre spread on a hill overlooking picturesque Boothbay Harbor in Maine, where Malone indulges in his other passion - piloting his 80ft private motor yacht, which is also called Liberty. Famously, they make the journey each time by road in a specially equipped motorhome. Legend has it that they spend nights at truck stops along the way, and if people start to ask questions about the luxurious-looking vehicle outside, he will suggest that it belongs to country and western star Garth Brooks. Of course they could afford to fly, even by private jet. But driving is easier on the dogs. There are eight of them, all prize pugs.

While Malone, with square-jawed good looks, seems perfectly to fit the profile of a Denver cowboy made good, he is in fact very much a product of the waspy North East. He was born on 7 March 1941 in Milford, Connecticut, about an hour and a half from New York City, and his father was a well-to-do engineer with General Electric and an inventor. He was dispatched to the posh Hopkins Grammar School in New Haven, where he excelled in everything from calculus to chemistry. His eye for making money surfaced when he was still a boy, when he would buy broken-down radios for one dollar, fix them and sell them on the street for seven. By the age of 26, Malone had acquired a bachelor's degree from Yale, a master's in industrial management from New York University and a PhD from Johns Hopkins University in Baltimore in operations research. "He has an IQ that starts with a three," commented an old friend, Leo Hindery, who used to work with Malone at Liberty and now runs a New York baseball channel.

Done with academia, the still young Malone took a first job with the management consulting firm McKinsey and Co before moving to a subsidiary of General Instruments that made television cable boxes. It was in that job that he met a Texas rancher named Bob Magness, who had founded a not very successful cable distribution company in Colorado called Telecommunications Inc, or TCI, serving tiny towns in the American West. In 1973, Magness entrusted then 29-year-old Malone with rescuing the company from oceans of debt. "We were lower than whale shit," Malone once said of the condition of TCI when he first arrived there.

But, slowly, he righted the ship. More than that, he began knitting together a network of small and struggling cable providers to transform TCI which eventually became the biggest single cable television operator in the United States. And from the start, he displayed his aptitude and love for making a deal, sometimes negotiating at the rate of two a week. And he showed he could play the game hard. During an early run-in with officials in the ski-resort of Vail, Malone retaliated by yanking all programmes off its cable system and showing the telephone number of the mayor for outraged viewers to dial. Whatever the fight was about, Malone won it.

For most of the 1980s ad 90s, TCI was a darling of Wall Street and Malone became one of the most important brokers in the entire television industry. It was his unchallenged power that prompted former Senator Gore to compare him to the nemesis of the Jedi, Darth Vader. That is not to say he has not suffered some bumps.

A planned merger with the old Bell Atlantic telephone giant came unstuck in 1994, a failure that famously infuriated Malone. But his greatest coup came with the sale of TCI to AT&T in 1999 for a stunning $48bn - a deal that made him a billionaire several times over. He was left in control of the division, but having to answer to higher-ups in AT&T hardly suited Malone and within months he had persuaded them to spin off the television content arm of his original holdings. Liberty Media was born and so began the second act of Malone's career.

Without pause, Malone began a rash of acquisitions, some more successful than others. Among his blunders was purchasing internet-related stakes which began to bomb almost the moment he had a foot in its doors. His efforts to become a power in the British cable market came to an end when, last September, he bailed out of his 25 per cent stake in Telewest. He has met resistance trying to get a foothold elsewhere in Europe, although he has assembled important cable holdings in Germany, France and Italy.

The influence of Liberty Media on the American landscape is considerable, however. The company owns all of QVC and half of all the Discovery assets, including Animal Planet and The Learning Channel. As for News Corp, in terms of pure equity - as against voting shares - Liberty already has a 17 per cent holding, compared to the Murdoch family's 14 per cent.

Malone has told Wall Street that Liberty is shifting its focus away from holding small, strategic stakes in a variety of media companies towards acquiring much larger chunks of shares that give the promise of controlling the companies. It is this new attitude that must be giving Murdoch pause for concern.

Yet, Malone, more than anyone, knows not to underestimate the father of News Corp. Asked by Mr Auletta in a recent forum what he fears most when sitting across a negotiating table from another CEO, he replied: "What you really are afraid of is that you're competing against somebody who is rich and irrational. I mean, it used to be a given, a saying in the industry: Don't ever bid against Rupert Murdoch for anything Rupert wants, because if you win you lose. You will have paid way too much."


Born: 7 March 1941 in Milford, Connecticut. His father was an engineer and inventor.

Family: Married to Leslie Malone; two children.

Education: Hopkins Grammar School, New Haven; Yale University, degree in electrical engineering; New York University, master's in industrial management; Johns Hopkins University, PhD in operations research.

Career: President and chief executive officer of Telecommunications, Inc. (TCI) from 1973 to 1996, when he became chair and CEO; chaired Liberty Media since 1990.

He says...: "I have earned so much money that money doesn't interest me. Now it is only the love of the game that drives me."

They say...: "Every move Malone makes is calculated in advance, every angle is worked out. He is a deal machine." - Stephen King, writer and friend