Analysts and friends who've followed the hard-charging career of Tele-Communications Inc. Chief Executive John C. Malone were surprised Wednesday by Malone's decision to sell TCI to Bell Atlantic and settle for the vice chairman's job at the still-youthful age of 52.
But the deal accomplishes two important things for the cable magnate--it creates enormous wealth, and it removes him from the front line of fire in the battle over cable regulation.
On the financial side, the Bell Atlantic sale will make Malone's holdings in Denver-based TCI worth $1.1 billion. That's not bad, considering it was worth $49 million three years ago.
For that alchemy, he has won awe and respect from Hollywood to Wall Street. By surrendering control to Bell Atlantic Chairman Raymond W. Smith, Malone may hope to diffuse growing concern over his power. Already, he was ruffled by politicians--including Vice President Al Gore--who attacked his marketplace clout.
"I think Malone was worried about becoming the Mike Milken of the cable business, being the one that's persecuted for what people see as the excesses of an industry," said one cable TV executive, who added: "The only time I ever saw John lose his cool was when he was talking about Washington."
Paul J. O'Brien, a 29-year veteran of the TCI board and its predecessor company, acknowledged Wednesday that Washington's regulatory mood could have been a factor in the timing of the transaction, but only one of several driving the deal.
"This is the crowning achievement in his professional life," said O'Brien, publisher of the Salt Lake Tribune, who described Malone as "a brilliant guy, and a very nice guy."
As several industry executives noted, Malone could hardly wrest the top job from Smith, whose company is far bigger than TCI. Nor was Malone likely to accept a chief operating officer's job or other "line" position at the phone company, whose culture differs so radically from the entrepreneurial world of TCI.
"The idea of John Malone being an employee at a telephone company is obviously a little odd," said one securities analyst.
Over time, however, Malone may seek to influence the board, where TCI will have five out of 15 seats. According to a Denver friend, Malone will try to shift the board's focus from dividends to long-term strategies that pay off in strong cash flow. Malone's role will evolve depending on "John's capability to persuade and influence a very public board which is very much controlled by funds, institutional investors, widows and orphans," the friend said.
"He gets $1 billion in Bell Atlantic stock; access to capital and the ability to deliver all these new services. Is this so bad?" asked John Tinker, a securities analyst at Furman Selz Inc. in New York.
For years, Malone has done much of his deal-making from his vacation home in Maine, where his exquisitely restored, 1920s wooden ferry boat is a familiar sight in Boothbay Harbor. It is part of the Malone legend that he travels to Maine in a recreational vehicle, to accommodate his wife Leslie's aversion to flying.
From Maine, he keeps in touch with Denver headquarters by fax and two-way video phone. Some TCI executives have described the unnerving experience of speaking to his video camera: They know they are losing Malone's attention when in mid-sentence the remote-controlled lens begins to swivel, as Malone controls the camera's movements by a joy stick more than 2,000 miles away.
"I think he's genuinely shy; he does not hang out at fancy restaurants and big sports events," said one longtime acquaintance, who insisted that Malone "in a personal sense is quite humble." But the same acquaintance added: "When his gray TCI suit is on, he's tough as nails."
Times staff writer John Lippman and researcher Adam S. Bauman contributed to this story.
The deal combines two companies with complementary strengths. Bell Atlantic has great financial resources and crucial switching technology. Debt-laden Tele-Communications Inc. is a cable giant with a big investment ion programming.
Bell Atlantic is known as one of the most aggressive of the so-called Baby Bells. It serves six Mid-Atlantic states and the District of Columbia.
* Headquarters: Philadelphia
* Employees: 72,200
* Chief Executive Officer: Raymond W. Smith
* 1992 Revenue: $12.6 billion
* 1992 Profit: $1.3 billion
Wednesday closing price: $65.875, up $5.875 on the New York Stock Exchange
TCI is the biggest cable TV provider, with about 20% of the market.
* Headquarters: Englewood, CO
* Employees: 22,000
* Chief Executive: John C. Malone
* 1992 revenue: $3.6 billion
* 1992 operating income: $956 billion
* Wednesday's closing price: $31.375, up $3
Researched by ADAM S. BAUMAN / Los Angeles Times