John Malone's Great Escape

John C. Malone has been called many things as he built the world's largest cable-TV empire. By his own account, they include "Darth Vader" and "one-man military-industrial complex." One thing he has never been called is a quitter. That's why his decision to sell Tele-Communications and Liberty Media to Bell Atlantic came as such a shock. Not only will Malone no longer run TCI or Liberty on a day-to-day basis but they will carry another company's name.

Why is Malone folding his tent? Cynics say he saw a great opportunity to make himself even richer. Indeed, the $11.8 billion Bell Atlantic deal will give Malone about a 1.5% stake in the new company.

A "GODSEND." Of course, malone could always reenter the fray later on. But for now, Malone tells a different story. He says he had been looking for ways to get TCI into the telephone and interactive-media businesses and realized he couldn't do it without outside help. But the need for telephone expertise throughout TCI implied a deal far broader in scope than a simple joint venture. Malone, moreover, says he realized that he no longer enjoyed managing a major company. Bell Atlantic's offer, he says, was a "godsend" since it addressed both issues.

In an interview with BUSINESS WEEK, Malone also claimed to be weary of the knocks he has taken through the years as the most high-profile symbol of an industry that is often reviled by the public. "I don't like the invasion of my privacy," says Malone. "I don't like all the things that scare my wife to death and make us feel insecure in our home."

What the 52-year-old electrical engineer looks forward to is a return to his first love. "I get very turned on by invention and creativity," he says. Indeed, the deal will allow this former Bell Labs researcher to explore new technologies, such as interactive media, within his role as vice-chairman of the combined company. No longer will he have to run a multibillion-dollar business part of the year from a house in Maine, where he spends summers. Malone will have no executive duties at Bell Atlantic, but says he'll help integrate TCI and Liberty with their new parent and promote the merger to the investment community.

Malone says he had been planning to sever his ties with TCI anyway in favor of running Liberty. In part, that was motivated by regulatory concerns, since he believed the government would force him to choose between cable systems and programming. But Malone says he also wanted to focus on Liberty's more exciting media assets. He has been busy planning new cable ventures such as the Encore pay-TV channel and the merger of QVC Network with archrival Home Shopping Network.

As it turns out, Malone didn't have to choose between TCI and Liberty after all. By pulling off the Bell Atlantic deal, Malone may have found a way to tinker in a wide array of new media ventures without being labeled a control freak or a monopolist. That unenviable risk falls to Ray Smith.

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