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TCI's head deploys his powerful forces to stay cable's king

John C. Malone's personal life has all the markings of a more genteel, slower time.

Most days, he drives home from the office for lunch. And each year about this time, he leaves the Denver area to spend the summer at his retreat in Maine or on his sailboat. He usually makes the long trip to Maine by car because his wife, Leslie, does not like to fly.

But in his business life, as head of Tele-Communications Inc., Malone is anything but genteel.

"This is not touch football; this is tackle," he said in a recent interview. And he is almost always the fastest player on the field.

Malone, who holds a doctorate in industrial engineering from Johns Hopkins University, has already built TCI into the nation's biggest operator of cable systems. Two years ago, he spun off most of TCI's cable programing services into another powerhouse that he heads, Liberty Media Corp.

Somewhere along the line, he became known to the industry _ if not the public _ as the brilliant and sometimes brutal king of cable TV who has the clout to call many of the industry's shots.

Television is on the brink of a technological revolution that promises to change what Americans watch and how they watch it _ and the 52-year-old Malone is positioning himself to be at all the right spots to lay claim to a new reign as the king of all of TV.

Thanks to fiber optics and digital transmission, the television viewer is being pulled into the world of computers and high-speed two-way communications. Hundreds of channels are on the horizon, along with a trove of "interactive services."

Viewers will be able to call up movies on demand, for example, or stroll through video libraries. Home shoppers will flip through electronic catalogs, pressing buttons to see a taped demonstration of fly-casting equipment, say, or a model wearing lingerie. And video-game players will spar on screen with opponents across the street or on the other side of the country.

With so much up for grabs, the battle to get control of the new wires and programing heading for American homes is roiling the communications industry. Alliances among cable operators, telephone companies, broadcast networks and video-game makers are being announced willy-nilly as jittery companies fear missing out on one new gold mine or another.

Judging by the number and breadth of the deals Malone has been striking in recent months, it seems clear that he does not want to miss out on anything.

On the one hand, he is spending billions of dollars to upgrade his cable systems to deliver TV's exotic new products in this country and to expand that delivery to viewers around the world. On the other hand, he is buying and developing programing of all kinds, anticipating the insatiable appetite of all those new channels.

But there is no guarantee that consumers will pay for all the new goodies. If they don't, TCI's cash flow could be constricted. And as Malone's empire continues to grow, he risks regulatory reaction. For the moment, federal rules do not address the question of the breadth of his control over the industry, but some competitors are hoping desperately that Washington will eventually curb his power.

In any event, a sampling of deals and spending plans shows how fast Malone has been going:

Last December, TCI said it would introduce data-compression technology _ a way to squeeze vast amounts of information through existing cables. The technology could be employed as early as next year, ultimately allowing viewers to receive 500 channels, 10 times more than the current limit.

In April, the company said it would spend $2-billion to lay fiber optic cable in more than 400 communities by 1996. Such cable, which has virtually unlimited capacity, is the vehicle for an "information superhighway."

In recent months, Liberty Media has been consolidating its hold on the home shopping industry. It has taken voting control of St. Petersburg-based Home Shopping Network and is part of a group that now controls rival QVC, in which it previously held a stake.

As part of the QVC deal, Malone joined forces with Barry Diller, the respected former head of Fox Inc. Diller, who now runs QVC, is not expected to be content selling cubic zirconia rings or baseballs autographed by Pete Rose.

His ambitious plans go beyond electronic shopping catalogs to encompass travel services (choosing a hotel by "walking" around the premises on screen) and other upscale products. But they also extend to interactive news programs (with viewers requesting particular stories) and entertainment shows. There is talk of merging QVC with the Home Shopping Network _ and even of launching a fifth broadcasting network with Diller at the helm.

Eager to have access to a film library, TCI invested $100-million in April in troubled Carolco Pictures in exchange for the right to run its films on pay-per-view TV at the same time they open in movie theaters.

Weeks later, TCI joined with Sega of America and Time Warner to develop a cable channel that will bring video games into the home.

And last month, one of Liberty's pay TV services, Encore, announced six new theme-oriented channels for older films and still another channel for new movies.

Malone is hardly alone in trying to prepare for the future. In April, Time Warner, the country's second-biggest cable operator, announced a joint venture with US West to develop sophisticated cable systems.

The alliance represents the biggest deal so far that tries to marry a cable company's programing expertise with a phone company's strengths in two-way communication.

"US West and Time Warner temporarily moved ahead on the board in terms of strategic position," said Paul Kagan, a telecommunications consultant.

It could be a tenuous lead, however. For one thing, rumors have been circulating about a grand alliance between the American Telephone and Telegraph Co. and TCI. Neither side will comment.

For another, TCI has critical mass: It has 10.4-million cable subscribers, or roughly 18 percent of the domestic market. Last year, TCI generated a strong cash flow of $1.6-billion.

What's more, TCI has Malone, who is more than willing to use his company's size _ and his own elbows _ to get what he wants.

"We play within the rules, but we play hard," he said. But he is sometimes accused of playing outside the rules as well. There has been a string of disputes and court battles with the cities and towns served by his cable systems over complaints about poor service and rising rates.

To succeed, he said, an entrepreneur has to be tough.

"IBM likes to look back and see itself as a bunch of sweet, nice guys. When they were building IBM, they were sons of bitches. As a result they got huge market share, got very rich _ and then forgot how they got there."

John Malone got there by taking a chance on TCI in 1972.

Graduating Phi Beta Kappa from Yale, he began his career with Bell Labs. After a stint as a management consultant at McKinsey & Co., he joined General Instrument Corp., quickly becoming president of its Jerrold cable equipment division. As a supplier to cable systems operators, he caught the eye of Steven J. Ross, head of Warner Communications, who offered him the top job at his fledgling cable operation.

Wanting to move his family out of New York and looking for something more entrepreneurial, he turned Ross down. Instead, he signed on with Bob J. Magness, the man who began building TCI in the 1950s.

Malone has since made hundreds of deals, recognizing early that being the largest operator gave him enormous leverage in getting programing.

But owning even big systems was not enough to dominate the industry. For that, Malone needed to own the programing directly, setting off a new buying spree. Now, as the industry enters its new phase, he is wearing his dealmaker hat again.

As he extends his reach, he is not likely to become any less combative, however, judging by the Darwinian note he sounded in a recent speech about the industry's prospects.

"It is every man for himself," he said.

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