MALONE, JOHN C.

U.S. Telecommunication Executive/Entrepreneur

John C. Malone is the Chief Executive Officer of TeleCommunications, Inc. (TCI), the largest operator of cable systems in the United States. Malone has overseen TCI's phenomenal growth from the time of his arrival at the company in 1972, and in the process has come to be regarded as among the most powerful people in the television industry. He has been praised by many for his outstanding business acumen and his technological foresight, but at the same time, he has also acquired a less flattering reputation for his hardball style of business practice. Among those who have been openly critical of Malone in this latter vein was then Tennessee Senator Albert Gore, who dubbed Malone the "Darth Vader" of the cable industry.

Malone began his career at AT and T Bell Labs in the mid-1960s, before moving on to become a management consultant for McKinsey & Company in 1968. He received his Ph.D. in Industrial Engineering from Johns Hopkins in 1969, and soon joined the General Instrument Corporation, where he became president of its Jerrold cable equipment division. It was here that he first established ties to many of the cable industry's pioneers. In 1972, he turned down an offer from Steve Ross of Warner Communications to head its fledgling cable division, opting instead to leave the East Coast to accept an offer from TCI founder Bob Magness to run the small cable company from its Denver headquarters.

Malone joined TCI just before it fell into very difficult times. Malone's first major success at TCI was in negotiating a restructuring of the company's heavy debt load. Once freed from the burden of this debt, Malone embarked on a conservative growth strategy for TCI. Rather than attempting to expand its holdings by building large urban cable systems at great expense, as many other cable companies did in the late 1970s, Malone focused TCI's growth efforts on gaining franchise rights in smaller communities, where the costs to build the systems would be far less onerous. The wisdom of Malone's strategy soon became evident. TCI was able to grow without encountering the exceedingly high costs associated with building capital intensive urban cable systems, and in the early 1980s, it was able to purchase several existing large market systems, such as those in Pittsburgh and St. Louis, at bargain prices from companies that had financially overextended themselves in the construction process.

As TCI grew throughout the 1980s, so did its power within the television industry. The company invested heavily in programming services, and currently holds stakes in more than 25 different cable networks. But TCI's success has been sometimes overshadowed by the public's perception of it as a heavy-handed company that occasionally resorts to bullying tactics to achieve its desired ends. For instance, in TCI's earlier days, some of its systems were known to replace entire channels of programming for days at a time, leaving these channels blank except for the names and home phone numbers of local franchising officials. The strategy aimed to gain leverage in franchise negotiations. Fairly or not, Malone came to personify TCI and its negative public image.

But despite its poor public relations record, few would deny that Malone and TCI are among the most powerful forces shaping the television industry as it moves into the next century. Like Paley and Sarnoff of an earlier era, Malone exercises great control over what America's television viewers will or will not see. Nearly one in four cable subscribers in the United States is served by a TCI system, and these viewers are directly affected by the decisions Malone makes. Even those who are not TCI subscribers feel Malone's influence, because access to the critical mass of viewers represented by TCI's cable systems is crucial to any programmer's success. Programmers often must seek to gain positions on TCI systems in order to gather the audience numbers that provide solid financial status. John Malone is therefore in the position of a gatekeeper who wields enormous influence over the entire television marketplace, which helps to explain another nickname sometimes applied to him--"The Godfather" of cable television.

Malone's most ambitious undertaking was an attempted merger between TCI and regional telephone company Bell Atlantic. Announced in October 1993, the deal was scuttled four months later after financial and philosophical concerns left the two companies unable to reach a final accord. Despite the merger's failure, the venture is indicative of Malone's vision and resolve to secure TCI's place in the future television marketplace. TCI continues to expand its empire by purchasing more cable systems, forging alliances with other cable companies and telephone service providers, and strengthening its non-U.S. holdings in cable and telecommunications. These connections position the company for a central role in an emerging full-service communications marketplace. But whatever the future holds for TCI, John Malone already has cemented his place as one of the key shapers of the American television landscape over the last quarter of the 20th century.

-David Gunzerath

 


John Malone
Photo courtesy of TCI

JOHN MALONE. Born in Milford, Connecticut, U.S.A., 7 March 1941. Attended Yale University, New Haven, Connecticut, Phi Beta Kappa, B.S. in Electrical Engineering and Economics 1963, and M.S. in Industrial Management 1964; Johns Hopkins University, Baltimore, Maryland, Ph.D. in Industrial Engineering 1969. Married: Leslie; two children. Began professional career in economic planning and research and development with Bell Telephone Laboratories/AT and T, 1963; worked as management consultant for McKinsey & Co., 1968; group vice president, General Instrument Corporation; former president, cable equipment division, Jerrold Electronics Corporation (a General Instrument Corporation subsidiary); president and chief executive officer, Tele-Communications Inc., Denver, since 1973; chair of board for Cable Television Laboratories, Inc.; director, National Cable Television Association (NCTA), 1974-77 and 1980-93, and treasurer, 1977-78; serves on board of directors for TCI, Bank of New York, Turner Broadcasting System, Inc., and Discovery Communications, Inc. Recipient: TVC Magazine Man of the Year Award, 1981; Wall Street Transcript's Gold Award for the cable industry's best chief executive officer, 1982, 1985, 1986, and 1987; NCTA Vanguard Award, 1983; Wall Street's Transcript Silver Award, 1984 and 1989; named as Women in Cable's Betsy Magness Fellowship Honoree; University of Pennsylvania Wharton School Sol C. Snider Entrepreneurial Center Award of Merit for Distinguished Entrepreneurship; American Jewish Committee Sherrill C. Corwin Human Relations Award; Communications Technology Magazine Service and Technology Award; Financial World CEO of the Year Competition, 1993; Johns Hopkins University Distinguished Alumnus Award, 1994. Honorary degree: Doctor of Humane Letters, Denver University, 1992. Address: Tele-Communications, Inc., Denver, Colorado, U.S.A.

FURTHER READING

"Another TBS Network Envisioned by Malone." Broadcasting (Washington, D.C.), 11 May 1987.

"Malone Looks to the Future with Cable Labs." Broadcasting (Washington, D.C.), 5 June 1989.

"Malone Paints Rosy Picture for IRTS." Broadcasting (Washington, D.C.), 20 March 1989.

"Malone Urges Creation of Bandwidth Manager; TCI Wants Vendors to Come up with a Residential Communications Gateway Unit." Broadcasting & Cable (Washington, D.C.), 15 August 1994.

Moshavi, Sharon D. "TCI's Malone: Cable Nearing Compression Revolution." Broadcasting (Washington, D.C.), 18 March 1991.

Roberts, Johnnie L. "Time's Uneasy Pieces." Newsweek (New York), 2 October 1995.

Samuels, Gary. "You Gotta Consolidate, You Gotta Swap" (interview). Forbes (New York), 19 December 1994.

 

See also Cable Networks; United States: Cable Television