The King of HDTV; John Malone Built a Cable Empire That Changed Television Forever. Now He's Trying to Repeat the Feat with a High-Definition Satellite-TV Dynasty
Roberts, Johnnie L., Newsweek
Byline: Johnnie L. Roberts
A short time ago, in a galaxy that seems far, far away, John Malone was the Emperor of Cable Television, a man deemed so powerful by fearful rivals he was dubbed "Darth Vader" by none other than Al Gore. He'd amassed unmatched power for his Tele-Communications Inc. (14 million customers) through, critics charged, ruthless conquests, annexing competitors and requiring tribute from cable channels that wanted to be on his systems. But at the height of his power, in 1998, Malone sold out to AT&T and retired to his home base, suburban Denver, where the billionaire seemed satisfied to be a passive media investor.
Malone, it now appears, was merely plotting his next conquest. And this time he's switched allegiances. With an $11 billion deal last month for control of satellite-TV leader DirecTV (15.5 million customers), and possible projects with No. 2 player Dish Network, Malone is once again aiming to shape the future of television--and in the process zap cable TV, the very industry he helped propel to world dominance. Key to his goal: high-definition television, which offers images so crystal- clear you can see the blemishes under a starlet's makeup. After launching two new satellites, DirecTV plans to add 100 new high-def channels, including CNN and FX. "It'll make us the clear leader in HD," DirecTV CEO Chase Carey boasted to NEWSWEEK. "We'll have a lead probably triple what anyone else has." Malone's cable rivals are unable to expand quickly, because high-def hogs too much of their existing bandwidth. In short, Malone is poised to become the King of HDTV (which, despite the hokey-salesman sound of it, is a nicer nickname than his "Star Wars" moniker). "He certainly wouldn't be out of line in calling a crown maker to take his measurements," says media billionaire Mark Cuban, who controls HDNet, the all-high-def network that is on DirecTV.
Immortalized in the 2002 book "Cable Cowboy: John Malone and the Rise of the Modern Cable Industry," Malone led the charge that dethroned broadcast TV and the Big Three networks as the rulers of mass media. His knack for imagining the future helped position cable as the broadband option of choice. Wall Street celebrated his wheeler-dealer flair, and even after leaving cableland, Malone remained a significant financial player as CEO of Liberty Media, which assembled massive stakes in Time Warner and Rupert Murdoch's News Corp. To acquire DirecTV, which is controlled by Murdoch, Malone agreed to swap his News Corp. holdings.
Yet this time Malone faces a media universe that's infinitely more challenging. There's a frenetic race among old-media broadcasters to compete in cyberspace with digital giants like Google and disruptive newcomers like YouTube. Comcast, Time Warner and other cable titans now offer phone service and broadband, luring customers with their "triple-play" packages of TV, Internet and telephone services. AT&T, Verizon and other telcos are retaliating by storming into television and Internet access. Meantime, DirecTV and Dish--who've been unable to offer phone and Internet connections for technical reasons--are partnering with the telcos to offer those services. "The competitive fires are burning brightly" across the industries, says Marty Franks, a top CBS exec, "and HD is a large part of the fuel." Malone, he adds, "shakes up any business sector he enters."
Television officially entered the high-def epoch in the mid-1990s after the federal government, as steward of the public broadcast airwaves, mandated a shift to the digital spectrum from analog. …