John Malone

"Branding is a personal passion of mine, dating back all the way to the Bravo venture in St Petersburg, and it felt exciting and invigorating to be essentially building a start-up again. But what should we call our new baby? After discarding an initial notion to use the Play brand, we looked for a similarly dynamic name behind which to build a challenger, customer-centric culture and asked half a dozen marketing agencies to pitch their best ideas. None of them came up with anything that we liked, but another firm which had not been invited to pitch came up with a left-of-field suggestion that resonated with us straight away. Its concept was to brand the challenger around the ‘word-of-mouth’, viral way that we wanted to grow through personal recommendations offering great value and customer-centred service. ‘Word of mouth’ was shortened to WOM and that became our brand. My idea was to build a new Latin American challenger mobile telecoms brand using the playbook of Play in Poland and Nova in Iceland. I could use the same management team and external consultants who worked on both. The partners at Novator responsible for telecoms, who had worked with me since 2010, focused on financing the new venture and acquiring the necessary spectrum and telecoms licences. Chris Bannister, a personable Brit who became Play’s first chief executive in 2005 and had already lived and worked in nine countries, was brought back into the fold as chief executive. And the Icelandic chief technology officer oversaw the technical build-out design, along with his Swedish colleague. Members of our trusted teams from both countries helped in the beginning to transform a failed old-school US telecoms operator into a state-of-the-art ‘kick-ass’ mobile challenger. None of us spoke Spanish and most had never set foot in Latin America before, let alone Chile. It didn’t seem to matter. When we launched, Chile was the most expensive country in the Latin American region in mobile telecommunication, so we saw a market that was fertile for a new approach. Conventional new entrants like Nextel and a venture headed by US telecoms billionaire John Malone had failed to crack the nation. We needed to do things very differently. To achieve the maximum impact and truly disrupt the market, we knew that a key differentiator had to be price. Indeed, we priced our services so aggressively that Chile immediately became the cheapest country in South America for consumer mobile telephony. Alongside this value offer, we promoted WOM as an independent challenger offering honesty and integrity. We set out to be brave, innovative, bold and passionate."

""Rupert Murdoch holds 15% of the shares of News Corp., but 39% of the voting rights; even better, John Malone, with only 3% of the shares of Liberty Media, can rely on 28% of the voting rights; and it goes up to 53% for Facebook, of which Mark Zuckerberg [the founder] has only 15% of the shares.""

"“John Malone is not the kind of guy that walks through the halls of Liberty and puts his head down when people are coming towards him. He’s a very approachable guy, just like John is. Very charismatic.”"

"HPS, our long term lender, an offshoot of JP Morgan has a security interest in all our assets. We owe them [$ 150 million]. The relationship is a very good one and they allow us to move our assets around.... They also allow us to take enough money out of CFFI to pay all our obligations, dividends to me so I can pay Mum [Judi], Sarah and Michael their salaries/ allowances etc. Moving [$ 10 million] out from under their security blanket would be a problem and not something they would agree to absent some event [such as selling part of ClearBank to John Malone]. There is speculation I am using money to build a new yacht and my new house, money that could be directed to Mum. In fact that is not the case. I am financing the house with a mortgage and my deal with the shipyard allows me to pay in 3 years time, on delivery. So I hope this description of circumstances is helpful to you in appreciating why it is not possible for me to say on June 30th I will pay x. I am more than willing to transfer the Montana house or anything else which might give Mum better comfort that I intend to honour my obligations."

"They haven’t repealed the laws of arithmetic . . . yet, anyway. —John Malone Luck is the residue of design. —Branch Rickey"

"“When the opportunity to buy Energizer came up, a small group of us met at 1:00 PM and got the seller’s books. We performed a back of the envelope LBO model, met again at 4:00 PM and decided to bid $1.4 billion. Simple as that. We knew what we needed to focus on. No massive studies and no bankers.”5 Again, Stiritz’s approach (similar to those of Tom Murphy, John Malone, Katharine Graham, and others) featured a single sheet of paper and an intense focus on key assumptions, not a forty-page set of projections."

"Buffett, after a long period of relative inactivity stretching back to the immediate aftermath of 9/11, has had one of the most active periods of his long career. Since the fourth quarter of 2008, he has deployed over $80 billion (over $15 billion of it in the first twenty-five days after the Lehman collapse) in a wide variety of investing activities: • Purchased $8 billion of convertible preferred stock from Goldman Sachs and General Electric • Made a number of common stock purchases (including Constellation Energy): $9 billion • Provided mezzanine financing to Mars/Wrigley ($6.5 billion) and Dow Chemical ($3 billion) • Bought various distressed debt securities in the open market: $8.9 billion • In Berkshire’s largest deal ever by dollar value, bought the 77.5 percent of Burlington Northern that he didn’t already own for $26.5 billion • Acquired Lubrizol, a leading, publicly traded lubricant company for $8.7 billion • Announced a sizable ($10.9 billion) new investment in IBM stock Over the same period, John Malone has been quietly conducting an extended experiment in aggressive capital allocation across the disparate entities that were spun out of TCI’s original programming arm, Liberty Media. In the depths of the financial crisis, Malone: • Implemented a “leveraged equity growth” strategy at satellite programming giant DIRECTV—increasing debt and aggressively repurchasing stock (over 40 percent of shares outstanding in the last twenty-four months). • Initiated a series of moves across the former Liberty entities, including the spin-off of cable programmer Starz/Encore and a debt-for-equity swap between Liberty Capital (owner of Malone’s polyglot collection of public and private assets) and Liberty Interactive (home of the QVC shopping network and other online entities)."

"A Crocodile-Like Temperament That Mixes Patience . . . Armed with their return calculations, all (with the notable exception of John Malone, who was constantly buying cable companies in pursuit of scale) were willing to wait long periods of time (in the case of Dick Smith at General Cinema, an entire decade) for the right opportunity to emerge."

"As the Nobel Prize–winning chemist Louis Pasteur once observed, “Chance favors . . . the prepared mind,” and speaking of prepared minds, let’s conclude by looking at how the two remaining active outsider CEOs, Warren Buffett and John Malone, navigated the financial meltdown that followed the September 2008 collapse of Lehman Brothers. As you would expect, both pursued dramatically different courses from their peers’. At a time when virtually all of corporate America was sitting on the sidelines, shepherding cash, and nursing ailing balance sheets, these two lions in winter were actively on the prowl."

"This single-minded cash focus was the foundation of their iconoclasm, and it invariably led to a laser-like focus on a few select variables that shaped each firm’s strategy, usually in entirely different directions from those of industry peers. For Henry Singleton in the 1970s and 1980s, it was stock buybacks; for John Malone, it was the relentless pursuit of cable subscribers; for Bill Anders, it was divesting noncore businesses; for Warren Buffett, it was the generation and deployment of insurance float."

"To the standard menu of five capital allocation alternatives, Malone added a sixth: investment in joint ventures. No CEO has ever used joint ventures as actively, or created as much value for his shareholders through them, as John Malone. Malone realized early on that he could leverage the company’s scale into equity interests in programmers and other cable companies, and that these interests could add significant value for shareholders, with very little incremental investment."

"By one tally, we had spent $3 billion by 1987 for more than 150 cable companies, giving TCI reach into nearly 20 percent of U.S. homes. We had a sufficient lead—nearly twice as large as the number two player, Time Inc.’s ATC. A year later, we had no earnings but posted cash flow of $850 million—more than the cash flow of ABC, CBS, and NBC combined."

"• ⁠ To accomplish these goals, I sketched out a second list: • Retire from TCI. • Reduce outside public board memberships from 11 to 4. • Remain chairman and controlling shareholder in Liberty. • Remain chairman of CableLabs. • Stay on the Turner board. • Get the government off TCI’s back. • Generate predictable income by deferring TCI compensation payments with stock dividends, which should produce sufficient cash to maintain our lifestyle. • Say nothing publicly about the contemplated change until Bob Magness is comfortable."

"Satellite technology would solve this problem with efficiency and simplicity. A geostationary communications satellite moved in orbit at the exact same speed as the rotation of the earth, while appearing to “hover” in one spot, thereby reaching every antenna in a given area. Cable-TV networks could for the first time transmit high-quality signals to cable operators nationwide, bypassing the limitations of microwave or even terrestrial broadcasting. We had gotten our first peak at a live demonstration of satellite TV at the 1973 cable show in Anaheim, California. What really convinced everyone was the commercial demonstration in September 1975, when HBO aired the “Thrilla in Manilla” fight between champion Muhammad Ali and Joe Frazier, live from around the world, to a handful of cable systems who had agreed to buy and install big dish earth stations. Driven by a young executive named Gerald Levin, Time Life’s HBO struck a deal with RCA Americom to lease a transponder on Satcom I—which was to launch at the end of 1975."

"I navigate by rational analysis of the hard data, but also by my sense of the people who are sitting at the table in front of me. I have come to appreciate those relationships more. As far back as I can remember, I have always perceived myself as different because I was such an introvert. And for much of my life, I thought of that as an impediment. I regarded myself as mismatched to the world to some degree, handicapped by an absence of social skills or the drive to socialize, and envious of the people who felt at ease in crowds and parties. Even the people I think I am close to sometimes see me as cold and aloof. I have come to realize later in life that, like other members of my family, I am a high-functioning autistic."

"It is a rather astonishing business tale. One of the most sophisticated networks in the history of humankind was first laid out by a ragtag group of risk-takers, idealists, and “cable cowboys.” They strung wire across the country, driven by their own aspirations for a better life and fueled by vivid dreams of success in a free market."

"After a thirty-minute meeting, I promised to give him half a million dollars for his idea. TCI agreed to give Bob $180,000 for a 20 percent stake in Black Entertainment Television (BET) and loan the remaining $320,000."

"Milken was made the poster boy for Wall Street excesses after the Crash of 1987. In a plea bargain deal in 1990, he pleaded guilty to six felony counts, including securities fraud, mail fraud, and tax evasion, and served twenty-two months of a ten-year sentence after cooperating with authorities and getting time off for good behavior. He was fined $200 million and ordered to pay $400 million in restitution to investors."

"Sometimes in business, a strategy doesn’t appear to work at first, but the knowledge you gain is more valuable because it informs decisions down the road. In late 1988, Rupert called with a very particular request. “John, you know about computers and networks and so on, and there’s a company called Prodigy…” We had been closely watching the “computer information services,” as they were called back then. Rupert wanted to explore joint acquisitions using TCI’s networking and News Corp.’s programming. “There must be something here for us,” he said."

"There was a sort of Pax Romana after the franchise wars. Franchises were largely claimed, so a period of relative peace and stability followed, with nearly 60 percent of the country subscribing to cable-TV service. When Nick and I agreed on a deal, the rest of the players understood that they were lucky to get in on it. Certainly we had to be fair—not unlike a family sitting at a meal—and everyone bought in."

"Now, in a lot of those deals, we focused hard on one measure: cash flow, or specifically, EBITDA (earnings before interest, taxes, depreciation, and amortization). It gives a clearer picture of operating performance and a firm’s ability to borrow or invest. Some people say I all but invented the term. I can’t swear to it, though it is true that I helped make it a whole new form of currency on Wall Street."

"In November 1993, I made a speech about the impact of these new technologies to business graduate students at Yale. The topic was “The Broadband Revolution: How Technology and Entrepreneurship Will Override Boundaries in Telecommunications.” The speech would become my internal manifesto, and, aside from the title, it was probably the most lucid explanation I ever had given about what I was thinking back then, and what I still believe today."

"My father reveled in the joy of figuring things out, especially anything mechanical. He could hold his own with the smartest person at the party but preferred to be in the quiet of his shop; he was an intellectual in white sports socks."

"By 1970, two years after joining the firm, I knew I had to move. One of my last clients at McKinsey connected me to was someone who would change my thinking forever. A company called General Instrument had started as a sleepy electronics firm in New York in 1923 and had evolved into being the owner of assorted electronics businesses. GI had just bought a Philadelphia-based company called Jerrold Electronics; it was a massive acquisition for a company that size, roughly 40 percent of its value at the time."

"GI was one of the first companies to market with UHF tuners, introduced in the 1950s and ’60s to allow TVs to receive ultra high frequency (UHF) channels (13 through 48) beyond the original very high frequency (VHF) band (channels 1 through 13). GI had stock that was overvalued at the time, and the company wanted to use it to buy something. Jerrold, it was discovered later, had some financial irregularities, always to the upside, of course, since accounting “errors” rarely make a firm’s finances look worse rather than better. So GI had used inflated paper to buy an inflated business. Less than a year after the Jerrold acquisition, GI was in trouble. It had bought a series of businesses, which wasn’t working, and, worse, now General Instrument was struggling to stay current on its loan payments."

"These were the golden years of R&D: the first laser was invented at Bell Labs, and the transistor, and the Unix computer operating system, among many other advances. I was in heaven. In my early years there, I was working in economic planning and R&D under the tutelage of Doug Barnes, who became a mentor to me."

"The workload felt light since most of my classes were in engineering—all clean lines and logic, the kind of structure my mathematical mind felt at home in. I was driving a Jaguar, flush with freedom, and head over heels in love. Time felt elastic then—and there was a sense that everything good was still ahead. It was one of those rare stretches in life when everything clicked."

"But in my constitution, if the financial numbers fail to support the big bet, it is time to make a smaller one instead. This cautious, but calculated mindset would define my dealmaking for the next thirty years or more. We started building out TCI when I went there in 1973 and vastly accelerated our expansion efforts in 1979. We grew mainly through acquisitions, and by 1982, nearly ten years after I arrived, TCI was the largest cable provider in the U.S., with 2.5 million subscriber homes. And that was just the start, though I am unsure we knew this at the time. By one count, we acquired 482 companies from 1973 to 1989: a rate of one new deal every two weeks."

"As I was finishing my coursework for my PhD, I was assigned to work on some large-scale models of the Bell System for AT&T. Many of the projects allowed me to study ways to make significant improvements not just in operations, but finance as well: debt leverage, depreciation schedules, taxation—the big-picture stuff I loved to contemplate and calculate. This gave me the opportunity to build a mathematical model of the Bell System itself."

"Well into the 1980s, cable-TV operators still had few females or people of color as executives, due in part to ingrained biases, but also the industry’s roots in technical and operational fields, which were traditionally male-dominated. Our spartan crew was mostly all white guys from the West. Bob was our leader, a contemplative cowboy with the wits of a business tycoon and the quiet stability of a ranch boss. He had the final word on big decisions, and I looked to him for advice and approval."

"In pursuit of market research, I joined the board of the newly formed trade association for cable TV, and right away I became aware of a new product opportunity. Cable TV was about to catch a big break from the government. The trade association was pushing the government to loosen restrictions on cable, promising to create two-way interactive services with downstream and upstream signals. So I directed the folks in our R&D labs to start working on two-way amplifiers. When the government finally agreed to loosen restrictions and deemed that all systems built after 1972 had to be two-way, everyone in cable TV wanted a two-way amplifier. And guess who was the only company with a practical, deployable two-way system? General Instrument’s Jerrold division. Orders took off, and our market share in cable-TV equipment exploded, shooting from around 40 percent to 80 percent. Our margins went from 20 percent to 70 percent, and profitability followed. I started to pile up cash at Jerrold."

"I loved operations research. It seemed to fit my view of the world and business: applying math and science to maximize profit, minimize cost, build wealth. It was a way to think about business, and I loved the efficiency of it. Though some of its tools are obsolete now decades later, its way of thinking still resonates."

"What we needed more than anything was to convince banks of our creditworthiness by delivering consistent financials. So JC and I began creating key targets based on the performance of our leanest and most profitable systems. After comparing results and noting basic measures such as cash flow, down to how many installers needed per mile, or marketing people per city, we set benchmarks for each new franchise we bought. JC was notoriously demanding. “If you’re off by even one percentage point, don’t even wonder—know you’ll be in my office to explain,” he told teams. He enforced the financial benchmarks with military precision, always setting a realistic but aggressive budget, then beating it. Poor performers were not tolerated."

"Some companies went bankrupt during this period. TCI was damn close—our stock had gone from around $16 at the IPO to a high of $37, but bottomed out at around 75 cents in 1974. The market capitalization—the value of all the shares at the time—was $3.9 million. We had halted hiring, cut back hours to meet payroll, and I was personally approving any expense in the company over $500. It wasn’t much different at home."

"It was a bold idea, and I was sure it could help the company. In fact, this big idea would play a role in driving the strategies, mergers, and financial alchemy that would come to define the rest of my career. It’s the strategy I used to help grow the cable industry by focusing Wall Street and bank lenders on cash flow instead of taxable earnings."

"After so many negotiations, a funny thing started to happen for me personally: a lot of the awkwardness that I had initially felt began to dissolve. We were doing so many deals, I began to relax more, and I actually started to embrace the uncertainty of each one as another problem to solve. Like the baseball player in batting practice, you finally get so many pitches you relax enough to start “seeing” a fastball. And when you start hitting the ball enough, you know it is within you to knock it out of the park. I began to polish my skills as a negotiator, as a money raiser, as a manager of an executive team made up of mostly cowboys, and each of these roles began to feel more comfortable as time went by, and I learned something new in every deal. I found that I was learning, growing, and happier. I saw more possibilities, and that fed into itself and *created* more possibilities."

"Maybe he was too naive or simply too focused on mechanics, and not enough on finances. Throughout his career, my father was considered an extremely good problem-solving engineer, but the people who were controlling the business, whether his employer or his partners, focused on the money side. This left him with a lingering belief that he had been taken advantage of, and that, in turn, left him feeling less than competent. I vowed to avoid ending up like that, with no control, no sense of the business-finance side, and no partner I could trust."

"TCI was decentralized to the point that decisions were delegated to six different regions, each with their own accounting, engineering, and maintenance teams. Layered on the owned systems, we were operating systems through more than fifty partnerships, most of which were with the original operators we trusted to keep running more systems. If you buy a property and find a manager motivated by ownership in the company, keep them in power and trust them."

"Like most cable operators, we invested a great deal of profit in upgrading our wired networks. By doing so, we could make more off the wires: more robust, reliable networks cut down on truck rolls, saved money on amplifiers, and allowed more channels on a system. Not to mention, it was immediately depreciated for tax purposes. This means the investment in the infrastructure was deducted from earnings right away, reducing our taxes on any profit, even though the benefits of the investment would last for years. It thereby provided a great incentive to keep investing in our own systems to make them better."

"I may have neglected to appreciate this at the time, when we were down in the fray. Now that I am a bit older and slowing down, just a little, I have realized that, all along, the most important element was *who* was involved, not what. The people whom I befriended, learned from, and fought against—rather than the deals or the payoff—gave me the most satisfaction. And the right people produced the highest upside—giving my journey meaning and enriching my knowledge of the world."

"I have learned an awful lot about business over the last sixty-plus years by asking dumb questions and then keeping my mouth shut, more than I ever learned by saying something. Sitting down with major executives across a desk or at lunch, asking them questions, and listening hard to comprehend their most critical issues provided me with the answers I sought—and more insight that I expected."

"JC and his lieutenants—Larry Carleton, Art Lee, and Marion Nowack—were nice but could have easily passed as modern Vikings when taking over a cable system in those years, cutting cost and enforcing the TCI way. Once, JC drove from the Newport Beach, California, system to Denver in a fairly new Oldsmobile Ninety-Eight, previously driven by the head of the cable company we had just acquired. To the victor go the spoils."

"Our skill sets were strategically complementary. Over time, for me, the acquisition strategy became one of mine. For JC Sparkman, TCI’s chief of operations, the integration of the acquired cable systems became the specialty. And for Gary and Donne, managing the financials became their expertise. So we were all learning together, in a company that was struggling, in an industry that was changing."

"I almost hung a poster that said, “We listen to all ideas for networks.” Our rationale at TCI was that if your network comes to us to be carried, we’ll pay you like everyone else, but we will expect a meaningful volume discount as in any other business. So then if someone had a good idea, and they were looking for an equity holder, why not strike a deal for TCI to own 20 percent of that company instead? We reached roughly 20 percent of the industry’s subscribers. Over time, that became a model for several such deals."

"Demand for cable service was compounding, spreading from its rural roots as an antenna service and into some of the largest urban centers, from New York City on down as a source of new and unique programming. It had taken the young industry thirty years to sign up 13 million subscribing homes by 1978. Just four years later, that number had doubled to 27 million subscribers. And the total had doubled again to 54 million six years later, up fourfold in a decade."

"We started rolling up small and regional cable companies, cashing out first-generation owners, and at least initially, avoiding big cities where other big companies were fighting for franchises. JC and his team would go in, slash overhead, integrate management, and most times, increase revenue by 15 percent each year."

"The term “junk bonds” is a misnomer because they can be a company’s treasure, too—as they were for TCI. Typically issued by a company with a lower credit rating, a junk bond has a bigger risk of defaulting compared with bonds issued by a blue-chip company. To reward the investor for taking on this higher risk of default, a junk bond pays a higher interest rate."

"We would ultimately merge QVC with HSN more than twenty years later. And even with the rise of Amazon and online shopping, TV shopping remains a valuable business, with QVC, HSN, and online retailer Zulily delivering nearly $11 billion through the QVC Group. Yielding to a better, smaller competitor taught me that when you lack a special expertise, it is better to own a small piece of a thriving enterprise rather than to own 100 percent of a struggling one you don’t know how to run."

"All too often, big companies eager to lock in a ten-year franchise would gladly abide. One popular tactic to get an edge was a ruse called “rent-a-citizen,” in which cable operators offered local politicians a chance to become investors in the new cable franchise. No money? No problem—we’ll loan the money to you! When the franchise was approved, the “investors” were bought out at a profit."

"While we were figuring what to buy, we also were figuring out how to pay for it, so I was learning a lot about managing—and even harder, leading. I had become the main spokesperson for our “road shows,” to raise capital with banks and finance companies. I was learning to come out of my shell, motivated by the desire to get in front of a field of fast-moving companies."

"The press portrayed him as a lucky daredevil in business, but Ted wasn’t so much reckless as he was fearless—there’s a difference. He was the same in sailing. At the helm, Ted would steer the speeding boat directly into the rocks before he would tack at precisely the right moment, shaving seconds off his run time. Behind the playboy image, Ted was a hard worker and a smart businessperson who saw things on the horizon that others could not: how technology, public policy, and consumer interest were shifting and aligning to create new opportunities in this new industry."

"When it came my time to speak, I conceded that after the Cable Act of 1984, cable companies had raised their rates, but instead of generating large profits, the increased cash flow was reinvested into the business, funding upgrades to cable systems and new programming. Based on our cash-flow metrics, the cable-TV industry had the lowest return on invested capital of any media or communications industry. “Years ago, we had some of the largest industrial companies in America in the business—General Electric, Westinghouse, American Express, Capital Cities—they all exited the industry over the last five or six years, and all of them cited low return on investment below their corporate objectives as their reason to exit.”"

"We raised money from everywhere—banks, insurance companies, publishers, Wall Street, anyone with capital—to fuel TCI’s growth, because I knew the advantage would go to the biggest company. Scale economics drove every decision."

"Amused at first, I became inordinately impressed by how Ted had bucked the odds in business and government. The more business I did with him, the more convinced I became that he possessed some preternatural sense of timing, a phenomenon I still marvel at so many years later. Like a cartoon character on one of his networks, Ted would start walking directly off a cliff—and a path suddenly would appear beneath his feet, as if he’d known it would materialize."

"By 1979, he captained the winning boat in the Fastnet race, considered the most dangerous race in the history of sailing. In seas as high as fifty feet, fifteen people died in the 650-mile race, and of the 303 boats that started the race, only 86 finished. In driving sheets of rain and violent waves, Ted was so obsessed with competing and winning that he was unaware of the death and trauma behind him as he crossed the finish line."

"We first met in 1983 at a media conference in Sun Valley, Idaho, run by Allen & Company’s namesake founder, Herbert Allen. One of the few get-togethers I looked forward to attending, it was private, with no press, so it gave a me a chance to learn from CEOs outside the cable-TV industry. Mostly, the setting was undeniably peaceful: hiking trails, horseback riding, and fly-fishing against an endless horizon of grassy peaks and picture-perfect valleys."

"I would rather tap dance in a minefield than speak in a crowded room to a dais of senators eager to pepper me with trapdoor questions—all while cameras are rolling for people to parse my words."

"By the late 1970s, we knew instinctively that the key to victory at TCI was in our ability to gain scale and grow ever larger through acquisition. We had three key goals in the 1980s: accumulate cable systems as fast as possible, aggregate them into contiguous clusters, and refinance the debt terms based on our bigger size and bigger cash flow."

"Still, the threat Bob and I feared most was a corporate raider pouncing with a hostile takeover. If we didn’t get the stock in friendly hands, we would be toast."

"As president of the nation’s largest cable operator, I gave an informal presentation about our simple strategy: (1) continue to grow by acquisition, while at the same time (2) invest in new programming ventures, and all the while (3) test new theories about what we could do over our many miles of networks."

"Addressing our ownership of cable networks, I tried to paint a picture: It was necessary to own networks as a hedge on price gouging from other networks. “We are a purchasing agent primarily for our subscribers. And if we don’t have some market power to perform that function right now, we are very vulnerable to just being nothing more than a collection agency as we have very little ability to resist price increases.”"

"⁠ I started writing out a list, “John and Leslie’s goals”: • To reduce stress. • To have more fun. • To ensure a safe and liquid personal investment portfolio. • To generate predictable income to support our lifestyle. • To reduce government, media, and legal exposure by removing myself from the public eye. • To honor commitments and moral obligations to family and business associates."

"TCI, by contrast, posted *cash flow* of $1.86 billion, had grown annual revenue to more than $4 billion, and never had posted after-tax net income in twenty-five years of business, much less paid dividends to shareholders. And TCI was managing nearly $15 billion in debt. We were solely focused on long-term growth in the value of our stock."

"An order that large would be unprecedented and would require enormous amounts of arm-twisting with each one of the big cable operators, and in a hurry. It would be easier to train monkeys to play chess. “I have an idea,” I said. “We can give you a bigger order than that. We just need to sweeten the pot.” “I’m listening,” Ed said. “Why don’t we do a deal where General Instrument gives warrants for GI stock for every box that a cable operator buys?” I explained that if GI got a big order, for say, millions of boxes, it was safe to assume the stock price of General Instrument would go up significantly, and that way, Wall Street would essentially pay for the upgrade. We figured this would motivate people to participate. And boy did it."

"It was another big swing to try to force a play. I applied every bit of my diagnostic skill to solve for these issues of consolidation, convergence, and the conversion to digital with actual products, down to the silicon chip—that’s how deeply we were thinking. I was desperate to get the answer I was looking for."

"For me the creation of Liberty was capital allocation, but more simply, creative problem-solving. Sometimes a complex problem deserves a complex answer. In many ways, Liberty represented a clean canvas to draw on and freedom from regulators poring over TCI. Liberty would become a vehicle to build personal wealth and the progenitor of everything we run today."

"JC and I had an early meeting at the convention center, and we walked the show floor before. What we saw opened our sleepy eyes—workers setting up booth after booth for new channels, including HBO, Showtime, ESPN, Nickelodeon, and MTV—more than we had ever seen before and nothing like we had expected. No longer would cable TV be a community antenna service merely bringing in the Big Three broadcast networks (ABC, CBS, and NBC). These companies were coalescing into a completely different business, an unprecedented platform for networks of all kinds: movies, music, news, history, education, food, and so much more. Millions of TV homes in America would want more choice in the channels they watched."

"So I reached out to my cable brethren—CEOs of the largest companies—and tried my best to persuade as many of them as I could to join @Home, by bringing them all in on the action. Under the structure we sketched out, 35 percent of the revenue would go to the central entity for developing the technology and providing the networking. And the cable operators would control 65 percent—which was an easy sell to the CEOs of big cable operators in North America, including two of Canada’s largest cable operators, Rogers Communications, led by an enthusiastic Ted Rogers, and Shaw Communications."

"Eventually, the ordering system was replaced, and sales grew. But we were still not up to par with the Home Shopping Network. And over in Philadelphia, a fellow by the name of Joseph Segel was doing a much more elegant job of selling merchandise on a network call QVC. Joe was a polished businessperson who had founded the Franklin Mint, which ran sophisticated ads in magazines to sell commemorative coins, medallions, figurines, and other collectibles. He, too, had seen HSN and launched QVC as the Saks Fifth Avenue to HSN’s Walmart. QVC’s hosts were smoother, and its merchandise comprised of more high-margin products. So TCI took an equity stake in QVC, along with Comcast and others. Literally dozens of companies announced new shopping networks, far too many for the market to support. And the market quickly thinned out. The Fashion Channel, in which TCI owned a stake, would go bankrupt and be folded into CVN. Many retailers saw the vision, but few could make it work in time. Still, there was opportunity for the right player."

"One lesson I learned from Monty that would save me time and again in the future, even to this day, was to ask on every big deal, a simple three-word question: What if not? What if this doesn’t work? What if this venture or idea falls apart completely?"

"Government tax laws gave cable companies a big advantage over phone companies: they could “depreciate” their systems quickly over a shorter life, treating the gradual loss of value in their equipment as an expense, even though it wasn’t an actual cash cost, with greater tax advantages. This accounting method reduced their reported earnings and, in turn, their taxes. On top of that, they could also deduct real cash expenses like interest payments before calculating taxable income, cutting their tax bills even more. So, when investors pointed out that TCI had high interest payments, big cable equipment budgets, and no earnings, I would point out that these accounting-based losses resulted in TCI hardly paying any taxes to the government. And as long as cable operators collected predictable “rent” in the form of monthly fees from customers, and they met interest payments and grew from acquisitions, the value of the company’s stock would increase."

"Although the unrelenting fear of bankruptcy in the early 1970s scared me, it also forced me to quantify risk with precision, weigh every deal with a clear head, and make bold moves without ever putting everything on the line again."

"When we returned to Denver from the CableLabs trip to the West Coast, while Bill was in talks to invest $1 billion with Brian, I called an old friend at GI, Ed Breen, who had worked on digital technology at the GI VideoCipher division. Ed got his start at GI selling converter boxes and rose fast to be SVP of worldwide sales; less than ten years later, he would be running the company as CEO. “Gates can make these boxes for three hundred dollars,” I blurted out to Ed almost as soon as he answered the phone. Of course, he raised the specter that Gates would simply subsidize the cost until the industry was in his stranglehold. I knew that GI needed a hit as badly as we did. Even though GI discovered the breakthrough for digital compression, business was hurting because cable operators, TCI among them, had put off costly upgrades in the rounds of rate cuts following the 1992 Cable Act, which had crimped cash flow. GI had about 60 percent market share in TV set-top boxes but wanted the new digital business. Ed said that the best price on the box at the time was $400, more than double the cost of a typical analog box. “Okay, let’s get serious about it,” I said. “How many do you have to be buying for and by when, to get your price down to a three-hundred-dollar price?” Ed knew the specs and pricing of the box better than anyone, and I trusted him. “You know, if you ordered ten million of these things, we could get the ball rolling, because that would be a three-billion-dollar purchase order.”"

"If business is war, and it certainly feels like it sometimes, I was thrilled we had a new weapon in digital compression, but it was not ours alone. Soon others would exploit its power, too. And as I looked at the broader North American battle map, our flank was exposed. The most immediate threat was the satellite companies—not the makers of the big ten-foot C-band dishes, but a new generation of smaller dishes and powerful satellites that could leverage digital compression from space—without the need for wires. One early gambit, called Sky Cable, promised 108 channels, twice as many channels as most cable systems back then, to a dish a mere eighteen inches in diameter—about the size of a pizza pan. The venture drew deep-pocketed backers, including General Motors’ Hughes Communications; General Electric’s NBC; News Corp., owner of 20th Century Fox Studios; and Cablevision Systems Corporation. Lucky for us, just a year later, the high-cost Sky Cable partnership imploded."

"Despite healthy revenue gains and operating margins of 40 percent, our debt was closing in fast, and for the first time in my career, I was scared. To consolidate the loans he had already accumulated, Bob had drawn a $77.5 million bank line of credit in 1972, just before I joined. And we had borrowed $76.5 million of it. A week earlier, I had called a loan officer to arrange the meeting where we would ask to borrow the final $1 million. Before I could even get the words out, he cut me off. His tone on the other end of the line struck me as a little rude: “By the way, don’t ask for that other million. If you don’t want the house of cards to come down, don’t ask.”"

"Now the banks were balking at any more lending, yet we already had pledged TCI to pour half a billion dollars into new construction to win cable franchises from local governments in Tennessee, Washington, and elsewhere. On top of that, in return for franchise agreements to operate there, we had inherited promises made by systems TCI bought to build community centers and parks."

"Plus, in our loan accord with the banks, they were allowed to boost the interest rate on our debt only with our approval. So I told them straight-out: “You can put us in the tank, you can put us into bankruptcy, and you can call a default, but you can’t raise the interest rate unless we agree to it… and we’re not going to agree to it because I think it’s the wrong thing to do at this time.”"

"I was at a cotton gin one evening, and two gentlemen came walking in. They had lost a rod in a pickup down on the Four Sixes Ranch. We were down kind of in the middle of nowhere, where the Pitchfork and the Four Sixes and Wagner and the Matador all kind of comes together. … It was 30−35 miles to a village from there. They were afoot and I thought, I’ve got a flat tire in my trunk and I could be afoot too, so I took these guys back to Paducah, Texas, and stayed on the highway. During the time we were going back, they were talking about this new community antenna system they just put into their town. So I listened and thought a little bit about it. About a week later… I went down and looked them up and talked to them some more. The gentlemen were very kind to help me and show me everything they were doing, tell me where you buy these things, where you learn how to do this and so forth. So about thirty days later, we were stringing wire."

"I could see what was coming: once Warner got everyone hooked on free content with MTV, it was going to increase the price down the road. So I needed to throw a monkey wrench into their IPO plans for MTV. So I wrote a letter to Warner that stipulated that, absent a mutually acceptable agreement, we were dropping MTV from all of our systems. I knew this would interrupt the MTV prospectus (the offering document for the IPO), because it would be considered a material change if the largest distributor planned to discontinue carriage. Drew, whom I liked, was on the plane and sitting in my office the next day, and Warner and TCI struck a long-term deal that protected us against the increase in rates. Quality content would become much more valuable. Already cable was outgrowing its amateur-hour status compared with the broadcast networks. CNN was now in 26 million homes, with a George Peabody Award in journalism. HBO would win its first Emmy in 1988 with a documentary."

"On the day Netscape went public in 1995, I watched as the value of a company that existed mainly in the digital ether soared to nearly $3 billion on the first trading day. It was the start of the dot-com boom (or bubble, depending on your timeline). Netscape’s new browser had suddenly made text-based websites accessible and fun to read for the first time, giving home computers a new purpose."

"And there were no standards. Most consumer electronics work no matter where you buy them, but if you bought a cable modem in New York, there was no guarantee it would work in New Jersey, because each cable operator’s architecture was different, and each cable modem sent different amounts of data upstream and downstream. Just as MPEG-2 was the language for digital compression of video, this new platform begged for a similar standard that every supplier could build on. At the CableLabs board meeting on November 30, 1995, although the agenda was packed, I had only one thing on my mind: high-speed cable modems. Urgency was needed because cable operators, working on their own, could not possibly scale this new service quickly enough. Already the local phone companies were preparing to roll out a new ADSL (asymmetric digital subscriber line) service at 10 Mbps data transmission on the existing copper wire telephone lines to homes—but almost all of it downstream."

"By 1982, cable-TV was big business, and TCI had become the biggest cable operator in the U.S. With cities handing out exclusive, long-term franchises, given the high building costs, cable had become a natural monopoly: win the rights, and you owned the market. Once the dust settled on a franchise fight, operators rarely competed for customers. What started as a scrappy local business was now a strategic chessboard. We kept growing, often teaming up with former rivals on acquisitions. If you could find a way to buy together, you avoided bidding wars—and everyone came out ahead."

"The company accepted promissory notes from customers, a legal promise to pay the bill—and sold the notes to financial institutions at a discount. Most banks wouldn’t touch loans for such a risky business. When a lot of those early entrepreneurs overextended themselves and faced financial trouble, Jerrold took over their systems. Consequently, Jerrold became one of the largest “community antennae TV” operators in the country."

"The lawnmower was assembled from spare parts, with precious few safety features, by my father, a born inventor who loved to build and repair things in the cavernous, white wooden building behind the house that he called simply “the barn.” But it never held a farm animal that I know of, and there was no hay. A more appropriate name would have been the laboratory, a place where he could repair—or invent—virtually anything. It was one of innumerable mechanical projects started by my father, many of which lay half-completed on the work benches in the barn, including some of the first models of working TV sets. Embedded in the things he built, or the motors that he repaired, were lessons for solving complex issues that lay ahead. My father was a soft-spoken man, but his expectations were clear, and I yearned for his approval. No matter his mood, he remained stone-faced and unflappable."

"With the post–World War II economy roaring, Americans craved entertainment and connection. Facing a flood of applications for broadcast stations and technical challenges to map them, the FCC imposed a “freeze” on new TV licenses from 1948 to 1952—leaving millions of Americans in a television void. Into that vacuum stepped plucky pioneers who devised a bold solution: hoist towering antennas atop the highest peaks to capture faint transmissions from distant stations. From there, they strung wire, pole by pole, down into the shadowed towns below."

"Bob and I had known Heritage chairman Jim Hoak for years, so we flew out to Des Moines, Iowa, to check his temperature. Bob and I had doubled up in a single room at the local Holiday Inn, and the night before we met Jim, we made a beeline for the hotel bar after dinner, still chewing over the issues of control. “What if we did this with two classes of stock?” I asked Bob. “TCI can split its stock, then issue a class B share for every share that exists.” Bob looked at me, his empty face begging for an explanation for this unprecedented maneuver."

"People like Monty Shapiro, my first business mentor, when I was in my twenties, who told me, “Son, always ask, ‘What if not?’ What if things do *not* go as planned?” He taught me to assess the worst that could happen and ensure that we could live to fight another day, advice that I hear in my head thinking over every big deal."

"We put together hundreds of deals that made millionaires of dozens of cable-system owners, often family businesses whose owners had worked most of their lives to build what they built. The motivation to sell is different for every person. For some it’s the money. For some, it’s a family thing. Most are just retiring, sapped from juggling all the headaches of a small business. We believed our stock was undervalued, and I avoided using cheap currency to buy assets—a mistake many start-ups make by giving up too much equity early, instead of waiting to raise capital when their value is higher. And we didn’t mind cash deals because the step-up in basis gave us larger depreciation deductions, which helped offset future taxes. At TCI, we thought we were just scaling up for efficiency and cash flow—but in chasing margins, we unknowingly laid the fiber backbone for the internet itself, paving the future for broadband before we knew what it would become."

"Most of the boats I have owned over the years—*Liberty, Ragtime, Leslie Ann*, and others—passed for a traveling boardroom of sorts. Peter, Paul Gould, Gordon Crawford, Gerry Lenfest, or some different cadre of investors would set sail on a long trip, from the Bahamas up to Maine, or back down to Florida. You get to know people pretty well on a long boat ride. There was freedom to explore new ideas about the future of programming, potential combinations, or threats on the horizon."

"On a typical deal, we’d pay off the owner/CEO of the systems, who was typically thrilled to get out of a game that was increasingly corporate. Then we would turn to the next person in charge at the company: Do you want to be the new boss? Often they did. Then we would go down the list of questions: “Okay, how many on the team are good workers worth keeping? Can you match the targets we’ve set here? How much more can you cut the overhead?”"

"Contrary to the clichéd image of a rapacious business titan, I never sought to build a conglomerate, or family empire, and I can just as easily be a seller or a buyer. I believe in creating value while you own the assets you build or buy, and doing it in the most efficient way. All the stakes that I have owned in a wide array of cable channels, overseas cable systems, and other assets are less an empire than a mutual fund with a desirable portfolio of properties."

"We borrowed every penny, and within two years—thanks to JC’s crew and regional manager Marion Nowak—we had it running on its own cash. Leverage dropped fast—we had essentially bought the cable system with its own cash flow. We would do the same thing buying the Dallas franchise from Warner-Amex."

"When we started to grow and finance that growth, predictability was what gave banks the confidence to lend more money for bigger purchases. We saw patterns, which led to some simple rules at times: for example, never pay more than five times the annual cash flow generated by a cable system, figuring in the savings from synergies. This helped us decide instantly if a property was worth the asking price. It was all quite simple—a virtuous circle that would help us gain the advantages of scale economics. Buying more cable systems would bring in more paying subscribers. More paying customers meant higher cash flow and lower costs in the form of bulk discounts for networks. Increased cash flow allowed TCI to borrow more money and pay the higher total interest costs on it, which we used to buy still more cable systems."

"There were few items we couldn’t take apart and put back together. When he got his ’47 Fleetwood, we dropped the oil pan and changed the main bearings. Just going and buying bearings for his Cadillac was too easy. He was convinced a new quasi-exotic metal was better for bearings than the usual metal coating, and that’s how the bearings got to be too tight: he electroplated them with just a touch too much metal. One family vacation we spent hours sitting by the side of the road waiting for the Cadillac to cool. My parents would never fight in front of us, but you could almost see the smoke coming out of my mother’s ears. My dad was only mildly embarrassed. That was Dad."

"My first entrepreneurial opportunity came when I was around twelve years old. GE’s small appliance division in Bridgeport was unloading hundreds of small, broken radios that had been returned for various reasons. The price couldn’t be beat: $1 apiece. Using money from the paper route, I bought the surplus radios. Using Dad’s equipment in the barn, I repaired the radios on nights and weekends and sold almost all of them for $4 apiece—a 300 percent profit!"

"I was never a fast learner, but I was diligent and focused, and I had the intellectual grit to stick with a problem. So, by the second year at Yale, I was pretty competitive with the smarter kids in class, and by the third year I was outrunning them. It was my persistence more than anything. I stayed with it, and by the end of the term, I had the answers before most others in class."

"Only about a third of the TCI investors swapped their shares for Liberty stock. After my talk with Ted, I bought as much of Liberty Media as I could, swapping in a third of my TCI shares for what amounted to nearly 9 percent of Liberty shares in return. After borrowing $25.6 million to exercise the options I was given, I would come to control 20 percent of Liberty’s class B stock, which was allowed ten votes per share. And using rights Bob transferred to me, I would control close to 40 percent of the shareholder votes at Liberty."

"The conversation was always the same: What is your programming service worth? If the answer was, say, $20 million, we’d say, “Okay, we’ll pay you $5 million for a 20 percent stake, and we’ll pay you 5 cents per subscriber home per month—but we want to freeze that rate flat for the next fifteen years.” An implicit part of this discussion was TCI’s reach as the biggest cable operator in the country. By signing on with our cable systems, new channels instantly could reach 20 percent of the nation from the get-go. I personally wanted to encourage the programming companies and entrepreneurs to create content exclusively for cable TV. The industry had been feeding on leftovers from the broadcasters for nearly twenty years; in the early 1980s, the top-rated cable programs included ancient reruns of *The Andy Griffith Show* from the sixties. I knew if the new cable networks had access to the same scale and financing as we did, they could exceed the quality of what the broadcasters were producing."

"I never responded to it. We were discussing the price of MTV, not the end of the planet. Bob Magness said it best: you cannot win a pissing contest with a skunk, so there’s no point in defending yourself or saying anything."

"While the short-term threat was from satellite companies, the more dangerous menace was the telephone companies. As far as bandwidth goes, their twisted pair of copper lines was a drinking straw compared to the firehose of hybrid fiber-coax. But they were putting more fiber into their networks, overlaying their thin twisted copper. And they could do it easily, with plenty of capital and deep experience in switched, two-way communications."

"While I don’t socialize much with most business colleagues, Ted and I became fast friends, and over the years we’ve hiked, hunted, fished, and flown together. And here’s the funny part: Ted Turner and I are as different as two people could possibly be. I am an introvert, and I am quiet—for the most part—at meetings. Public speaking for me can be a mild form of punishment. But Ted has the intensity of a revival preacher when he believes in something, pacing the room and occasionally quoting Shakespeare or Alexander the Great to annunciate his points."

"At one point Ted stopped mid-stride and declared, “I promise you I’m gonna take this superstation and I’m gonna put it up on that satellite and beam it back down!” His voice rose as he added: “All the cable companies are gonna carry it. We’re all gonna get rich together. It’s gonna be wonderful!” Like any good salesperson, he emphasized the hope more than the hurdles."

"We were Presbyterian in name mostly; my father had no patience for the small talk and handshakes that came with Sunday mornings. Instead, our religion was practiced quietly at home, anchored in his strict, simple code: You are responsible for your life. Do your best. No shortcuts. No loafing. No cheating. Catholics had it easier, he’d tell me—they could sin, confess, and be forgiven with a fresh start. But for my sister and me, there were no excuses. The pressure to get it right the first time lingers still. I learned to forgive others easily, but forgiving myself was always a silent negotiation with the ghost of my father’s expectations."

"I built this portfolio with one clear goal—the same one that I believe anyone who is an active member of the management of a public company should share: to maximize the value of the shares of the company over a medium term. Because that is why you were hired—to maximize shareholder returns. The recent fad of “stakeholder capitalism” relegates shareholders to merely one of myriad groups a company is obligated to serve, and it is simply impractical to serve multiple masters and remain productive. You have to honor your obligations to your employees, yes, and you must honor your obligations to your lenders. But you must *maximize* the value for your shareholders."

"By 1982, TCI had built itself into the nation’s largest cable company, but the biggest deals were yet to come. More scale equals more savings, which gave us more buying power to buy more systems and build more scale, which equaled more savings—a virtuous growth cycle. When I wasn’t raising money in the 1980s, I was flying from city to city, making promises to politicians where we owned cable-TV franchises, or where we were trying to buy them. Big established media companies were now elbowing in to buy or build cable systems—not in the rural towns where the industry was born but in the big cities where urbanites were eager to explore the new national networks like HBO and TBS."

"There is such a thing as a Cowboy Code, and they had it: you finish what you start, stand up for what’s right, and take pride in your work. It appealed to me. The one thing they didn’t have at all was any of my kind of training or background. They were people I liked, but it was a challenge."

"Moments later, I looked in the rearview mirror to see George, having recovered his composure, smirking at me. That is how I remember my friend decades later: smiling mischievously, always ready for our next adventure. George and others taught me that the friends you make are the measure of your life. And even the people you leave behind, you never really lose, because those moments are preserved in memory, and they fortify the bonds of friendship over time and space."

"At the beginning, the one skill I lacked was the one I needed most: mergers and acquisitions. I was an introvert, an engineer, a problem-solver who preferred the quiet company of another builder, rather than a rainmaker, backslapping and jawboning my way through deals. So, I listened."

"And in retail, cable TV offered something called “home shopping.” While it’s hard to imagine what life was like before websites like Amazon, the only way back then that you could get a product you could not buy in person at a physical store was to order it from a paper catalog, either by mail order or by telephone (one connected to the wall with a cord). The notion that you could now see on TV a necklace on a live model, or watch a power saw buzz through a board, and order it up sparked the imagination of retailers, and literally dozens of shopping networks jumped into the race within months. As we sat in the Helmsley, Irwin said all the right things, claiming he had plenty of inventory, big warehouses, and “everything we need to make it happen fast.”"

"Soon I fell into a simple philosophy that helped me deal with Rupert. The way I saw it, sometimes he was playing on my team. A lot of times he was playing for a different team but not opposing us. And in certain games he and his team were playing against us—and hard."

"We were so successful that during my second year there, the Federal Trade Commission opened an investigation into charges (made by a competitor, Magnavox) that we were selling below cost to monopolize the market. The FTC investigated, and we showed them our cost information and product strategy, arguing we had simply outmaneuvered our rivals. The agency seemed to agree: the investigation ended."

"Bell Labs was building a discipline in a new field they called operations research, a new way of applying scientific modeling to complex problems in business, engineering, and other fields. First, break the problem into manageable parts, then apply relevant disciplines—mathematical modeling, data analysis, and computer simulations, all while considering real-world constraints like time and money. The result: firms make smarter, faster, and more cost-effective decisions."

"The deal grew our subscriber base by 20 percent. And we made overhead expenses disappear. Gone were the luxury offices, corporate dining rooms, and company cars. And while we inherited regional employees and managers in each acquisition, we didn’t add a single person to corporate HQ. Aside from the cable systems that were wholly owned, TCI was a minority partner in more than thirty-five cable companies, all of which got the same price breaks in programming that TCI got."

"I flew to Tulsa, drove to Gene’s house, drank brandy, and shot pool. That was the sales pitch. And then Gene would say, “Let’s go get some steaks for dinner. You can stay over, we’ve got a spare bedroom.” Soon, I was selling Gene cable boxes and whole systems, turnkey, with an ironclad promise to stand behind our word. One-on-one worked well for me. Jerrold was booming."

"To really get inside the business, I launched a key account system—each top client had a Jerrold exec on point. I took the top five myself."

"I missed him then as I miss him now. The unfulfilled need for his approval, maybe more than anything, is a major element of what drives me, and over a lifetime, with male mentors, bosses, and friends, I’ve tried to prove my worth."

"I relied on creative problem-solving skills I had honed at Jerrold and in my days at Bell Labs and McKinsey. Some days I felt energized by the challenge, like a young mechanic back home piecing together parts on the garage floor and trying to get a dead engine to come sputtering back to life."

"Something about this collection of entrepreneurs drew me in. They all were part of the communities they were serving. They all faced similar obstacles. They were also dealing with unfair regulation coming out of Washington, D.C., and it seemed to strengthen their camaraderie. There was a pioneering, entrepreneurial spirit, and I began to identify more and more with it."

"Just as my future looked brighter than ever, Monty called me into his office and told me the board wanted him to retire soon because of his age. The only smart move for him to do, in my humble view, was to make me the CEO of the company. Monty had other plans. “John, you are too young to run the entire company no matter how successful you’ve been here.”"

"By the end of 1974, our debt was around $150 million, and our interest payments had doubled to $12 million a year. TCI’s annual revenue was less than $35 million. The debt ate at me, sure, but it literally raised Bob’s blood pressure and his tolerance for whiskey. He took it personally when bankers pressed us, feeling umbrage at the inference that we weren’t good for the money."

"The real value, we recognized, would lie in assembling a whole bunch of local-monopoly cable systems and growing them enough to create scale efficiencies, even as they were being managed by a crew of independent, iron-willed cable cowboys. Happily, in the ensuing years, we would make scores of family owners wealthy beyond their giddiest expectations."

"Ted also cultivated the attitude of the screen hero he so admired, Rhett Butler in *Gone with the Wind*, right down to the character’s pencil-thin mustache. And frankly, my dear, Ted didn’t give a damn about what other people said about him. Like me, Ted could get lost mid-thought—he’d take these epic pauses, let out a long “aaaaaaaaaaaahhhhhhh,” like he was buffering, then suddenly drop a one-liner so sharp you couldn’t help but laugh."

"Each moment was classic Ted Turner: total transparency, not a single emotion or thought held back. This man shared everything in real time, and then some. And he did it regardless of whether you were looking to hear his thoughts. This made me admire Ted’s daring escapades even more. There was no stopping him."

"I had always looked at the cable-TV business as being fundamentally different from other industries, and more akin to the real estate business, where you buy property and collect rent or lease payments in the form of monthly fees. It was obvious to me that if we were going to be measured on earnings, it would be real tough to stay in the cable industry and grow. We needed to promote a different metric to get investors interested."

"The public loved the novelty of cable TV, but many customers were justifiably upset about customer service: long wait times on the phone and for service calls. There was a good reason for the disconnect: Cable-TV operators were in the distribution industry, but up until that point, TCI and most other cable operators could only think of themselves as being in the"

"I started to rely on a single powerful metric, almost like blood pressure in a human, that I thought could instantly, accurately reflect the health of a cable operator: cash flow. The shorthand for this metric would become known as EBITDA—“earnings before interest, taxes, depreciation, and amortization” (and pronounced “ee-bit-dah”). That is, earnings before we deducted all those expenses to lower our tax bill. Robust, tax-sheltered cash flow became the lifeblood for early cable operators, enabling them to manage big upfront capital and operating costs, service their debt, and invest in growth despite the long timelines often required to achieve profitability."

"After five or so years of growing without a single new bank loan, we began to get access to capital. The stock price started to edge up, and we could afford to buy more systems and give people raises. Most importantly, we were beginning to discover cost advantages from economies of scale."

"I could always count on a good laugh at shareholder meetings when an investor would ask a question about the prospects for earnings. I would listen, then deliver the politest of punchlines: “I think you’re in the wrong meeting.”"

"I’d like to think I played an important role in helping Ted Turner build a fledgling local TV station into a media juggernaut worth nearly $8 billion, but the fact is Ted played just as large a role in my own career and life. Of the hundreds of people I have done business with, Ted Turner stands out as one of the most driven, iconoclastic, irrepressible, hilarious, unrelenting, and visionary leaders I ever have encountered."

"Just getting warmed up, Ted started pacing back and forth as he spoke, like a tiger in a cage, a recurring behavior that I came to recognize as a sign that his synapses were firing in overdrive."

"Even before I could find my way around the squat one-story office in Denver and settle into the financial problems at TCI, I stumbled into a political showdown in November 1973. The city council of Vail, Colorado, a tourist town built on ski resorts and condos a couple hours west of Denver, had refused to renew TCI’s contract unless we met certain demands. TCI had then failed to meet deadlines to rewire the system. So the council called a meeting, and with no public hearing or due process, canceled our franchise agreement with the city. I felt like the town was playing hardball, which many cities were willing to do when it came to the cable franchise, so we played hardball, too. Since we couldn’t legally operate a franchise, we opted to pull the plug on the system after 6 p.m. on November 2, 1973, about ten minutes into *Bullitt*, an action flick with Steve McQueen. In its place, we ran a scrolling text of the names of the mayor and the city manager, with their phone numbers. The blackout continued Friday through Monday, eclipsing a Denver Broncos game. It didn’t take long for the phone lines to spur the politicians. By Tuesday, we had hammered out an agreement with the council. We were also putting cities on notice if they were mulling franchise renewals for TCI: don’t threaten our livelihood and expect TCI to simply roll over."

". I have an engineer’s mentality that compels me to plan crucial details, fully calculating every possible outcome so that all risks are known ahead of time. Ted’s life seemed to be a string of risky bets, based on the instinct and impulse of a mad, creative genius."

"Investing in networks would turn out to be a smart investment, which the price of all programming stocks reflected, including Liberty. Liberty initially traded at $256 a share and more than tripled to $770 in less than a year of trading. By the summer of 1993, the shares would be worth $3,700 unadjusted for splits. My own investment of $42.1 million, most of it borrowed, grew to more than $600 million in the tax-free stock trade."

"And as I look back on it more than thirty years later, my words were scarily accurate. I spoke of how fiber optics, high-speed microprocessors, and new operating software were combining to enable “just about everything in the communications business” to be done in “a digital format that is much cheaper and has greater capacity than ever before.” I told them: “Everyone is going digital. It is the thing to do. It also works. Cellular is going digital. Cable is going digital. Telephony has to go digital, especially as it goes broadband, because it is a more robust transmission scheme. “Breakthroughs in digital compression of video materials now allow movies to be treated just as another stream of digital information, just as telephone calls and the internet would be treated, at higher quality and at lower cost than before, and the cost differences are fairly dramatic. “As a result of these technological changes, the traditional industry structures in this country and overseas are going to break down. The telephone industry can no longer be a complacent, separate entity based on a technology that was invented about a hundred and twenty years ago. And the cable industry can no longer be a complacent entity based on a technology that was invented about thirty years ago. They are converging into each other.”"

"As we were talking through the troubles at Jerrold one day, Monty asked me straight-out if I’d like to run GI’s Jerrold myself. I was getting tired of being a consultant and never seeing my family. If Leslie and I moved to a nice neighborhood in Philadelphia, maybe we could build a more stable home life without all the traveling. I could be president of Jerrold, the third-largest U.S. cable operator and one of the largest divisions in GI. I’d be the one making the decisions, rather than simply whispering in the CEO’s ear."

"⁠When you run a technology company you have to take your shots, and sometimes that means losing hundreds of millions of dollars. I call it tuition. You either adapt to new technology, disruptive or not, or die with “this is the way we’ve always done it.”⁠"

"The solution, as I saw it, was to create strategic business units that could operate independently in terms of decisions and budgets within the conglomerate. GE previously had defined departments and divisions based on size, and they were bloated."

"My financial gamble on him paid off handsomely. He was also the first person to introduce me to the idea of ownership in something versus just drawing a paycheck. This advice helped inspire me to form Liberty Media, the holding company for many of the channel ownership stakes TCI was accumulating. Since I now had skin in the game, my wealth grew alongside the rising value of the company, benefitting thousands of our shareholders, as well; this is the way it is supposed to work, and for us, it has worked wonderfully."

"Was I a tough negotiator? Damn right I was. The cable company down in Slippery Rock who’s got only one thousand customers will pay you 25 cents, and it will take you years to build up critical mass. How much does that help you? But you’re asking me for real money and a real commitment and this really launches you into orbit, and has real value. What is it worth to you in start-up losses, if it takes three years or so, whereas TCI can launch tomorrow? What is that worth to you?"

"We did not have the skill to run channels on our own, but we could be an investor and justify our investment with vast distribution. We needed to protect TCI’s interests—and, by extension, those of our customers—by limiting the ability of networks to raise prices. We would do this by demanding a volume discount and/or long-term price guarantees on a carriage contract. We wanted a “Most Favored Nation” clause, a guarantee that we would get the lowest prices a programmer was charging to any cable operator. This simple tactic could give us a real edge."

"I even had taken out a $60,000 loan from the Bank of Denver to buy TCI stock at $7 a share when I joined—a year later, the stock had fallen to $3, weighed down by high interest rates, wild inflation, and an unrelated industry scandal, briefly bottoming out at 78 cents. My start date at the company should have been my first clue: April Fool’s Day."

"As chairman of the new company, I needed someone fast on their feet as president because I was still running TCI. Peter Barton had proven himself by launching CVN, negotiating with cities over tough franchise renewals, and adding levity in the awkward moments of deal discussions. He was a helluva salesperson, too, but he was terrible with numbers. How he got through Harvard Business School I have no idea. Nonetheless, I named Peter the CEO of Liberty Media under one condition: Robert “Dob” Bennett would be vice president and principal financial officer, and he would handle all financial details. Dob and Peter are about as different as people can be. Peter had the risk tolerance to think big, then move aggressively on a target acquisition. Dob, who had been director of finance at TCI since 1987 after leaving the Bank of New York, assiduously weighed the probability of success against the downside risks. But Dob and Peter worked together like they were brothers, occasionally bickering but silently complementing each other’s strengths. Sometimes one person can do two jobs. Other times, you need two people to do one. We tried to explain to investors that the Liberty spin-off would simplify the balance sheet, giving investors more choice on which part of the TCI empire they thought held more promise—pure distribution with TCI or more content with Liberty."

"“And the only difference after this two-for-one stock split,” I told him, “is that the class B shares would have ten votes per share, giving holders of that stock ten-to-one voting power over regular class A shares.” If we could redeem Hatch’s B shares and buy enough class B shares on the open market, we could safeguard control. So TCI split the stock, and Bob swapped all his class A shares for Hatch’s super-voting B shares, and then exchanged as many class A shares as we could on the open market. Hatch then used his shares in TCI to acquire the 25 percent stake in KSN from the Heritage company in Des Moines. To facilitate the trade, TCI bought an interest in Heritage, whose stock shot up when it sold its KSN position. Eventually we would acquire all of Heritage."

"The idea for two classes of stock was a seminal solution for TCI and one of my prouder moments. Magness was able to double his 20 percent voting control of TCI at the time to around 40 percent, Hatch got out of TCI. And TCI ended up with a profitable stake in Heritage—all tax-free because the deals were stock swaps."

"This turn to digital would end up unleashing billions of dollars in new capital spending, subscription revenue, and stock market value. This wellspring began even before the mainstream arrival of HDTV sets themselves. Only later did I realize the odd truth of this: The race was to produce a prettier picture, sharper in resolution, and able to show lifelike images. But in reaching for this goal, my industry ended up producing something of far greater value: the capability to deliver hundreds of extra channels of programming, new on-demand shows, internet access, and even phone calls to U.S. homes. Right away. Using digital technology, engineers could convert the continuous waves of video, audio, or data signals into strings of ones and zeroes, which could be compressed, transmitted, modulated, decoded, and stored for later retrieval. It also solved an urgent problem for TCI and the cable-TV industry: the ablity to offer the public dozens of new channels and movies on demand, increase revenue, and get us out of the hole the government had dug with the 1992 Cable Act."

"A year after he bought the Braves in 1976, Major League Baseball commissioner Bowe Kuhn suspended Ted for a year for trying to sign a free agent before his contract was up. Ted protested, pleading ignorance. The very next day, Ted acquired the Atlanta Hawks franchise of the NBA for the same reason he’d bought the Braves—programming."

"I can appear to be distant and unapproachable at times. But my autism, wherever it is on the spectrum, has gifted me with the ability to hyper-focus on intricate challenges and pursue a goal with dogged determination. From a young age, I saw patterns, connections, and solutions others overlooked, and this attention to detail helped me identify opportunities early and gave me a competitive edge. With a virtually photographic memory at the time, I could recall verbatim entire sections of books. Little by little, the contradictions in my life stopped feeling like mistakes and started to feel like information. I didn’t “overcome” my thoughts—I learned to understand them, to use them. In time, what once felt like disorder became direction."

"“We’ve got to get a lot bigger,” I told Bob and others the next morning in his office. We needed to get bigger because the bigger we were, the more cheaply we could buy everything: parts, debt, and programming. Economies of scale bring costs down. And if we didn’t get big fast, someone else would—scale economics was going to determine who was going to survive. “If you can buy ’em and finance ’em, I can drive synergies,” said JC, instantly reminding me why I was grateful he was with us. From that day forward, we made a goal of rapidly growing through acquisition and organic growth."

"In some ways the mental tasks in class were like the ones that occupied my weekends in the barn, fixing a radio. To this day, I can get lost in thought while figuring out a problem and be completely content. My wife says I overthink and extrapolate for everything, from menu choices to movie night. I was a loner in my teen years, and I could bury myself in books while isolating myself from the high school social scene."

"After his performance at TCI’s home office, by the time we saw Ted again, in just a matter of months, many of the rules I had cited to him had, almost magically, changed in his favor. With concerted lobbying by the industry, the government dropped the license and size requirement for the expensive satellite receivers, for example."

"When it comes to emotions, I am more of a stoic like my father. Happiness seems to me a relative measure, because it must be juxtaposed to expectation. If you walk through life expecting everything to be wonderful and trouble-free, you will never be what most people consider happy."

"By late 1999, with GI trading above $80, Motorola bought the company for $11 billion. Thanks to our stock and warrants, TCI briefly became a controlling shareholder in Motorola, with a stake worth nearly $5 billion. GI’s ownership would shift again, but for a moment, I held the reins of the company I’d once dreamed of working for. What would Monty say now?"

"He had exhausted even the financially elastic mind of Mike Milken to find another acquisition for TBS. With the takeover threats from Kirk Kerkorian and others still fresh in his mind, and consolidation and vertical integration going on around him, Ted felt it was time to think seriously about joining forces with somebody."

"The goal was smart capital allocation, looking for the best way to increase our efficiency, maximize our cash flow, and ultimately increase shareholder value. “We have been in business twenty years as a public company. We have never paid a cash dividend to our shareholders. We have invested every dollar that we’ve been able to scrape together through equity sales or borrowing back in the cable business. Our cumulative retained earnings in that time has been zero. We have plowed everything back into growth and renewing our technology. Cable companies are cash-capital alligators. Our technology is evolving so rapidly we can’t wait the fifteen-year franchise renewal cycle. We have to constantly reinvest, expand channel capacity…”"

"To his credit, Bill conceded he had been blindsided by the government’s onerous restrictions and overconfident about the Microsoft Network in the early days of online. “Yeah, John, you know, I’m really sorry about that. Why don’t I just return your Liberty shares?” And that’s exactly what he did, returning the shares in Liberty in 1996, even though Liberty shares over the same two-year period had increased dramatically as well. Bill saw past the profit and saw more in the gesture. He was fair, which is one of the highest compliments one CEO can give another in the blood sport of dealmaking."

"“Tom,” I said quietly, “I was afraid you were going to say that. I’ve got every knob in this company turned down as tight as they’ll go.” Then my voice started to get louder. “We’ve got people working sixty-hour weeks and getting paid for thirty. We’re working overtime to just get over this hump. And that’s all it is—a hump. dWe can get over it.” I sounded like a gambler with a hot tip. “But if you do this now, it will kill us,” I continued. “It’ll so demoralize everyone. I just can’t continue to run the company if you’re going to do that!” “And so if *you* think *you* can extract this little bit more juice out of the company… here’s the keys to everything.” I pulled my ring of office keys out of my front pants pocket and threw it down on the table in my office. “You run it and let me know how you make out.”"

"Without saying it aloud, Bob and I knew the bankers saw us as just numbers on a balance sheet—and they would never understand what drove us. Bootstrapping the business over the past two years had forged a strong bond between us all at TCI. This was our life’s work, something built on grit, optimism, and a trust that ran deeper than any balance sheet could reflect."

"When I first accepted the offer to come work for Bob, the pitch was solid: Come out West and run one of the largest cable operators in this new industry! Long-term contracts to wire big cities were worth millions of dollars. This set off a land grab across the country, and TCI had taken on crushing debt to finance furious growth. Around this time, TCI reached more than 621,000 subscribers through 151 systems in 33 states, with annual revenue around $34 million a year—and $84.8 million in debt."

"John saw, as we did, the cable industry’s massive opportunity with broadband as a conduit linking computers via cable modems. What if we could assemble an alliance of North American cable operators that would offer a nationwide high-speed internet service at speeds unmatched by the telephone industry? With standards already set by CableLabs and the largest operators working in concert, we agreed this new alliance could dominate the field."

"Word spread quickly. Early users saw web pages and videos load instantly—no more waiting, no more screeching noises, and no more tying up the phone line. Always on. Cable modems weren’t just faster than dial-up; they were better in every way. CableLabs’ DOCSIS data transmission standard made it possible. The first version delivered 40 Mbps; today, it supports speeds up to 10 gigabits per second—250 times faster."

"It made me realize that the adage is true: in every crisis lurks opportunity. So if I could learn something from a near-death experience, maybe the whole thing was worth it. That day, now fifty years ago, I made a promise to myself that I never have broken: *If we get out of this alive, I will never bet the whole farm… on anything. No deal is ever worth doing that.*"

"I have spent my career negotiating deals in telecommunications, music, sports, horses, land, media, and more. I have been a buyer and a seller, depending on the deal and the moment. Altogether, over a lifetime, I figure I have had a hand in hundreds of transactions, maybe thousands."

"I then called Larry Tisch. “Congratulations, Barry—you just made a lot of money,” he bellowed at me with his booming voice (the QVC stock I had bought for $25 million was now worth $125 million). He must have gotten their proposal over the wire a few minutes before. Now I was doubly stunned. I quickly said we could easily compete with the Comcast offer and I was sure John Malone and Liberty would back our deal instead of just selling out. Tisch interrupted me, saying, “If you think I’m going to overbid them, you’re smoking something. I’m going to the board dinner right now and I’m going to tell them we should authorize a one-point-five-billion-dollar dividend instead of doing this deal because we’re not going to get caught up in some bidding contest for a home-shopping company.”"

"It was kind of pathetic that this little toad of a company was all that seemed to fit my minimum conditions. Hoping he wouldn’t laugh at the idea, I told John Malone I’d take Silver King, but only if I could also get control of HSN itself (Malone’s Liberty Media owned a controlling stake in it, too). I still believed home shopping was the entrance to e-commerce. QVC had steadily taken market share from HSN, which had been mismanaged for many years and was losing money, but I knew enough about the category to be sure I could turn it around. The problem was that HSN had been accused of various fraudulent practices and was in a legal mess with the Justice Department. That asset was frozen for now, so my only option, pitiful as it was, was to take Silver King and await HSN’s unfreezing."

"The prerequisite for my agreeing was that John Malone would give me a bulletproof lifetime proxy on Liberty’s controlling interest in Silver King as well as a large ownership stake in it and eventually HSN. Control, my hard-ass mantra, would be hardwired, but it sure was small beer."

"I’d told Ralph and Brian that I’d promised myself to never again sign an employment agreement and that I’d report to a board, but not to an individual. QVC was a public company, and the other major owner was John Malone’s Liberty Media. Malone had become the overlord of cable media. He controlled the largest cable network, and with Liberty, he owned most of the programming. He was known both as the Cable Cowboy and, in a swipe from then–vice president Al Gore, as the Darth Vader of media. He was and always has been the smartest person in media, with an extraordinarily subtle and ingenious mind in the body of an outdoorsman conservationist libertarian who’s never met a tax he wanted to pay. I didn’t want to ever be stuck between them and would only agree to a three-way partnership where any two members could decide an issue, as long as I was one of the two. This made them more than uncomfortable, but I was adamant—I’d never do anything again where I wasn’t in some position of control."

"I was close to hopeless as I neared the end of my meandering up the Intracoastal. Could I end my career with such a whimper? Where could I find the match that would light my next move? I was down to less than a matchstick when I spoke with John Malone early in 1995. I told him the trouble I was having finding something to get me off zero. Joking and dismissive, he said, “Well, I control Silver King. You can have that if you want.” Silver King? What the hell is that? It turned out to be a string of UHF television stations that didn’t actually broadcast anything; they were repeater stations for the programming of the Home Shopping Network. HSN was the forerunner to QVC. It actually invented the interactive-shopping category. Silver King had revenues of only $40 million a year with no prospects other than its income from the Home Shopping Network."