Monopolist. Bully. Cowboy. John Malone has heard it all before. As he dominated the U.S. cable-TV industry for much of the past three decades, the CEO of Denver-based TeleCommunications Inc. (TCI) was called plenty of names, including some that can't be printed here.
Skeptics said he was naive to think that Americans would shell out $10 to $20 a month for extra channels when they were happy with the ones they pulled in with rabbit ears. And when Malone ended up controlling more than 10 million cable subscribers and a stake in nearly every major cable network, from CNN and Discovery to QVC, he was called a ruthless gatekeeper to America's eyeballs. The resentment was not just over what Malone did, but how he did it: by being one of the corporate world's most feared negotiators. Square-shouldered at 61, Malone, who has lifted weights since high school, is physically and intellectually intimidating, with a flypaper memory and an ability to perform complex calculations in his head. One person who has sat across the bargaining table from him says he has a "frictionless mind." Other negotiators complain that Malone has an annoying penchant for tweaking the deal to his advantage just as closure seems at hand. When he finally decided to sell his crown jewel to AT&T for $37 billion in stock in 1998, many competitors and partners alike wanted to wish him good riddance.
Now Malone is back in the game, this time in Europe. And judging by the heavy odds he faces and the already nasty reception, he must feel right at home. The Connecticut native is busy trying to build a new cable empire--one that eventually wires all of Europe and offers not just interactive cable TV but high-speed Net access and telephone service as well. With a $2 billion war chest and a long-term investment philosophy that doesn't worship at Wall Street's altar of quarterly earnings, Malone is one of the few big players willing and able to make such a bold bet.
By consolidating a debt-ridden, fragmented European cable industry worth $70 billion, he thinks he can achieve the economies of scale in programming, equipment and marketing that helped turn TCI into such a titan. But he faces a much tougher task on a continent that, despite its efforts at economic union, confronts any newcomer with a thicket of regulatory and cultural barriers. "Malone has been getting an education in Europe," notes Tom Crema, a partner in Compere Associates, the London investment firm that is bidding for some of the same German cable assets that Malone failed to win earlier this year.
One need only glance at the recent business headlines to see the hurdles Malone, now chairman of Liberty Media, faces. In Britain the premium over-the-air service ITV Digital recently shut down, and each of the country's two big remaining cable companies, Telewest (in which Liberty holds a 25% stake) and NTL, is saddled with billions of dollars in debt. NTL bondholders rebuffed Malone earlier this year, and if he continues to be shut out of Britain, "there will be a serious piece missing" from his master plan, notes Gary Klesch, a London-based media investor and former Malone partner.