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Leadership Style at Tele-Communications Inc.

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Leadership Style at Tele-Communications Inc. - May 11th, 2011

Tele-Communications, Inc. or TCI was a cable television provider in the United States, for much of its history controlled by Bob Magness and John Malone.
The company came into being in 1968, following the merger of Western Microwave, Inc. and Community Television, Inc. It was the largest cable operator in the United States at one time.
After going public in 1970 (ticker NASDAQ:TCOMA), the company grew rapidly, and became the top cable provider in the United States. After a failed merger attempt with Bell Atlantic in 1994, [1] it was purchased in 1999 by AT&T, whose cable television assets were later acquired by Charter Communications and the Comcast Corporation.
This article is based on a personal interview with Dr. John Malone at his Liberty Media Corp. offices in Englewood, Colorado. Dr. Malone was one of sixteen prominent successful leaders and entrepreneurs included: Dr. Anthony Bonanzino, Jack Canfield, William Draper III, Mark Victor Hansen, U.S. Senator Orrin Hatch (R-UT), Monzer Hourani, U.S. Senator Daniel Inouye (D-HI), J. Terrence Lanni, Dr. John Malone, Angelo Mozilo, Laurence Pino, Dr. Nido Qubein, U.S. Army Major General Sid Shachnow (Ret.), Dr. John Sperling, Dr. Blenda Wilson, and Zig Ziglar.

This groundbreaking Leadership and Entrepreneurship Research was peer debriefed by five internationally known and well respected leadership scholars, who all offered their reviews and positive comments on this groundbreaking leadership and entrepreneurship research and findings including: Dr. Kenneth Blanchard, Dr. John Kotter, Professor Jim Kouzes, Dr. Paul Stoltz, and Dr. Meg Wheatley.

Dr. John Malone, the founder and current Chairman, Chief Executive Officer, and Director of the Liberty Media Corp. shared his views on both entrepreneurship and leadership. John Malone build up his prior successful entrepreneurial venture (with his partner Robert Magness). Robert was Chairman, and Dr. Malone was President and CEO of TeleCommunications Inc.

John Malone grew up in modest circumstances. John was born in 1941 into a modest middle-class family in Connecticut. John described his father as "a junior scientist and inventor," and a stereotypical 1950's Dad, who was the sole breadwinner in the house. John said his "mother was a supportive wife and mother." John Malone's father was gone nearly all the time and "John rarely saw his father."

John was a bright student and qualified for a work-scholarship to a nearby, well-respected preparatory school. Malone said, at prep school, John "met the love of his life, Leslie Ann Evans," when he was 17 and she was 15. After completing his work at a local prep school (on scholarship), John attended Yale University in New Haven, Connecticut and he was able to qualify academically for a work-scholarship.

In 1963, Dr. Malone experience three major life milestones, which included: (a) graduating Phi Beta Kappa from Yale with a Bachelor's degree in Electrical Engineering; (b) marrying his prep school girlfriend, Leslie Ann Evans; and (c) accepting a job as a systems engineer at Bell Labs. During our over 2 hour one-on-one interview at his Liberty Media Corp. offices, in Englewood, Colorado, Dr. Malone told me that he "took the job at Bell because they would pay completely for my education all the way through my doctorate in operations management [at John Hopkins University] and pay me [a salary] to boot."

Malone completed his doctorate (Ph.D.) in Operation Research at John Hopkins University, and then continued to work for AT&T's Bell Labs. Soon after graduating and going to work full time, Malone presented to the AT&T Board of Directors a massive and complicated mathematic model of his own design, "proving that AT&T should make a radical change in its balance sheet and shift its debt-to-equity ratio into more debt." Notwithstanding the brilliance of the idea, after the presentation to the Board the Chairman of AT&T told Malone in essence that the AT&T Board would never accept his radical idea. Dr. Malone was so disillusioned, that he decided to quit working for AT&T.

John Malone left AT& T to accept a consulting position with the major international management consulting firm of McKinsey & Co. Dr. Malone worked for McKinsey & Co., for just two years. Then one of his consulting clients, General Instruments, hired him to run their troubled acquisition of Jerrold Electronics. Malone joined General Instruments, as the President of Jerrold Electronics, when John was just 29 years old. Immediately Malone faced the challenge of dealing with a very disgruntled competitor, who was losing sales to Jerrold. This upset competitor petitioned the Federal Trade Commission. The petitioner was "alleging that Jerrold was trying to build a monopoly by selling below their cost." John, as the brand new Jerrold President, immediately jumped in and addressed this major problem. He promptly compiled all the information and proved to the FTC that the charges were untrue. This was a great start to his career with Jerrod (General Instruments).

John came to quickly realize that even his hard-won respect within General Instruments and Jerrold that he "would never be enough to overcome the ongoing internal political battles." Dr. Malone said he then knew that he "would never be in line for promotion to Chief Executive Officer of General Instruments." Then, at age 30, John received and accepted a major offer from one of his Jerrold Electronics clients, Bob Magness, who was the founder and chairman of TeleCommunications, Inc. (TCI).

Dr. Malone took what he called a "significant cut in pay" when he joined TCI. John was eager to embrace the challenges of the new job and run "the entire business as the new President and CEO." Malone's shared that his "first crisis at TCI was a dangerous cash flow problem." Over the next thirty years, Dr. Malone fought many battles with other operators, suppliers, local politicians, state and federal cable regulators, and the U.S. Congress. Dr. Malone credits Robert Magness as one of two key mentors in his life. Malone and Magness, battled their foes together to build there company TeleCommications Inc. (TCI) into the world's largest cable television company.

John Malone faced a number of major obstacles both personally and professionally, after the death of his mentor and partner, Robert Magness, the majority shareholder of TCI. Robert Magness's widow (his second and much younger wife) and Bob's two adult sons waged a major battled with Bob's hand-picked trustees, who were all trusted TCI senior executives. Dr. Malone was not a Trustee and not involved with the sale of Magness's TCI stock. Dr. Malone, knowing that Robert Magness's heirs shares were the controlling interest in TCI, John sought financial support from William Gates III (Microsoft) and Brian Roberts (Comcast Corporation).

Magness's trustees sold all of Robert Magness's TCI stock, over his heirs objections. Magness'e widow and his sons filed a lawsuit and the trustee's sale of all of Magness's TCI stock was overturned in the Colorado courts. This Colorado State court action put the TCI stock and the controlling interest in TCI "back into play." Then to Dr. Malone surprise, in 1997, "Bill Gates stunned the cable industry by investing $1 billion in cash in Comcast." John quickly recognized that he would not have Gates and Roberts as allies.

Dr. Malone acted promptly to protect TCI, his personal interests, and his control of the firm in early 1998. John successfully negotiated with Magness's heirs (his widow and Bob's two adult sons) magnificent stratagem which would assure that the control of TCI would not be taken away from him. TCI control was preserved by Dr. Malone "agreeing to pay them [the three heirs] $200 million for the right to vote Magness's stock which they still owned." This creative and strategic move gave Malone the control he needed to thwart the takeover bid of Roberts and Gates, or any other corporate raider. Now, with the control of TCI secured, John then moved to spin off as a separate affiliated company everything except the cable business. Malone personally controlled a large number the "super shares" of this separate TCI affiliate was Liberty Media Corp.. Liberty Media was the TCI subsidiary which controlled most of the programming and all the non-cable interests of TCI. John was preparing to sell TCI's cable operations in the very near future.

John then sold all the cable interest of TCI to AT&T for $58 billion. Dr. Malone had successful build his personal worth to over $3 billion. Based on his now significant AT&T stockownership from the sale of TCI, Malone now sat on AT&T's Board of Directors. Unfortunately, Malone had to suffer and now he "had to watch as the AT&T Board made a series of painfully poor and costly decisions." In spite of Dr. Malone's well thought out suggestions and many objections, "AT&T repeatedly made decisions which materially devalued my AT&T stock." AT& T Board's actions had now cost Dr. Malone, nearly half of his personal $3 billion net worth.

Dr. Malone was so feed up with the Board's mistakes, he resigned from AT&T's Board of Directors. As part of his resignation from the AT&T Board, Malone "successfully negotiated to be able to resume the full-time management of Liberty Media, as Chairman and CEO."

Dr. John Malone and I met for our interview for well over two hours, in his Liberty Media Corp's HQ, in Englewood, Colorado. Dr. John Malone, as Chairman and CEO will continue to make history as an entrepreneur in the cable and programming arena with his ever expanding and successful firm, Liberty Media Corp.

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