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Cable Cowboy (book on John Malone) - Mark Robichaux


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Figured this one deserved a thread since so many here seem to have read it.  :)

 

[amazonsearch]Cable Cowboy[/amazonsearch]

 

I've had this on order for a while but it's back-ordered and apparently not getting closer to shipping, so I decided to cancel that order and instead just get the kindle version (it isn't available in Apple's iBook store...) and read it on my iPad.

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Just found this book on Amazon: "The Billionaire Shell Game: How Cable Baron John Malone and Assorted Corporate Titans Invented a Future Nobody Wanted". Can anybody recommend it or is the author really too biased?

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Something that I learned and that I think is pretty big: until the spin off of Liberty

Media in the 1990s, Malone had almost no equity in TCI. 'Less than 1%'. Crazy how much value he created for Magness and other shareholders in something he had so little of. Of course, that changed quickly once he decided he wanted a bigger piece of the pie...

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  • 2 weeks later...

 

I learned a lot from the book about the Cable industry's history in the USA; it's almost like a reference book of 1. which company did what 2. when 3. how many subscribers 4. cost etc.  Less so about Malone, it would be great to read something where the focus is on the man himself.

 

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I learned a lot from the book about the Cable industry's history in the USA; it's almost like a reference book of 1. which company did what 2. when 3. how many subscribers 4. cost etc.  Less so about Malone, it would be great to read something where the focus is on the man himself.

 

Agreed, but it doesn't seem like something Malone wants to do. This book was unauthorized, though Malone did many interviews with the author (not sure if they were specifically for the book or for newspaper pieces that the author did over time), and I feel like all those interviews were mostly about the business because Malone wants to keep his private life out of the spotlight.

 

Not sure if he'll ever pull a Buffett and open up completely to a biographer.

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  • 2 weeks later...

Figured this one deserved a thread since so many here seem to have read it.  :)

 

[amazonsearch]Cable Cowboy[/amazonsearch]

 

I've had this on order for a while but it's back-ordered and apparently not getting closer to shipping, so I decided to cancel that order and instead just get the kindle version (it isn't available in Apple's iBook store...) and read it on my iPad.

 

Thanks for this, it was great. There is also this:

 

http://www.amazon.com/Blue-Skies-History-Cable-Television/dp/1592132871/ref=sr_1_8?s=books&ie=UTF8&qid=1377541169&sr=1-8&keywords=history+of+cable

 

Not sure if it is as good as the above but so far so good.

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  • 7 months later...
Guest JoelS

Loved this book when I read it.. I took down some brief notes at the time:

 

“If you’re going to ask about quar-

terly earnings, you’re at the wrong meeting, and you probably own

the wrong stock,” he told one group of TCI investors. “What we care

about is value. We want to create value for our shareholders. And I

think the best way to create value is to have a very long view, so

that’s what we do. So when we have the opportunity to expand into

an area we think is going to have long-term value, we do it. We don’t

have to worry about the impact on earnings. So it makes a different

kind of organization.” john Malone

 

By buying into networks, Malone thought, TCI

could own both the pipe and the water flowing through it. The

cable wire and the cable programming, if owned under one roof,

could be leveraged off of each other to create innumerable effi-

ciencies. Vertical integration of companies would become an awe-

somely powerful and controversial tool for Malone to use in

building TCI.

 

 

As the stock continued to climb, Malone pointed out that it was the

accumulation of valuable assets over time, not the flow of reported

after-tax earnings, that was making TCI shareholders so wealthy.

“Forget about earnings. That’s a priesthood of the accounting pro-

fession,” he would preach, unrelentingly. “What you’re really after

is appreciating assets. You want to own as much of that asset as you

can; then you want to finance it as efficiently as possible.”

 

And

above all else, make sure that the deals you do avoid as much in

taxes as is legally possible. And then some.

 

 

risk was a function of skill and knowl-

edge. If you know you can exert control on the outcome, Malone

reasoned, the risk is far less than those who jump into a deal with

no expertise or facts.

 

Malone kept TCI’s enormous debt at bay by slicing it up and

assigning it to various interlinked subsidiaries with an eye toward

insulating the parent company. He liked to use naval metaphors,

such as bulkheads, to describe the setup. Large ships are designed to

withstand battle damage because they have watertight bulkheads,

separate and self-contained compartments that can be sealed off to

prevent an injured vessel from capsizing. “You can take a torpedo

in any one part” and still stay afloat, Malone liked to say. With each

new system he bought, the debt was secured by a TCI subsidiary, not

by the parent company. So if the cable system defaulted on a loan,

only one subsidiary would be threatened.

 

TCI was beginning to run the way Malone had wanted it

to run—highly decentralized. He had cut the company into six sep-

arate operating divisions, each nearly autonomous, with its own

accounting and engineering departments. “When you’ve got it run-

ning right, when you’ve got it decentralized, when you’ve got it

structured properly, it’s like flying the most powerful fighter jet in

the world,” he liked to say.

 

 

leaving the founder in charge would become a hallmark of Malone’s

management style. If you buy a property and find a manager moti-

vated by ownership in the company, keep him or her in power and

trust him or her implicitly.

 

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  • 1 month later...

As the stock continued to climb, Malone pointed out that it was the accumulation of valuable assets over time, not the flow of reported after-tax earnings, that was making TCI shareholders so wealthy.

“Forget about earnings. That’s a priesthood of the accounting profession,” he would preach, unrelentingly. “What you’re really after is appreciating assets. You want to own as much of that asset as you can; then you want to finance it as efficiently as possible.”

 

Malone still is one of the most underestimated investors of our time – not on this board but in the public mind. He is a real Renaissance thinker, especially with regard to how to think about corporate earnings. If you think about it it's really crazy to aim for large corporate earnings only to see 40% of it vanishing every single year – money that could be compounding within the company growing shareholder wealth. Jeff Bezos understands this very well, the rest of Wall Street not so much.

 

Something that I learned and that I think is pretty big: until the spin off of Liberty

Media in the 1990s, Malone had almost no equity in TCI. 'Less than 1%'. Crazy how much value he created for Magness and other shareholders in something he had so little of. Of course, that changed quickly once he decided he wanted a bigger piece of the pie...

 

I found it to be really rewarding to read the TCI chapter in Greenblatt's "You Can Be a Stock Market Genius" side by side with the corresponding passages in Robichaux's book.

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  • 2 years later...

Any suggestions for books on some of the other characters in the book? Turner, Murdoch, Ergen, anyone else? Murdoch seems especially interesting, although more interested in Fox the broadcast station than Fox News, which a lot of books seem to focus on.

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Ted Turner wrote a book called, "Call me Ted" that I read a long time ago.  I don't remember it being bad, but it's been a long time.  His life was interesting but he isn't an entirely self made man (he started with a lot of billboards if I remember correctly)

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  • 5 weeks later...

I enjoyed the book as well and got a nice and quick history on cable. As I read the book, I couldn't help but to draw parallels between TCI and SUNE/VRX- levering up to roll-up an industry with long-term cash flow... If there is a TCI-equivalent today, I'm not sure if I can identify the opportunity...

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Thanks for the stock recommendations- I'll look into them.

 

What I meant to say is that as an investor, I wonder what are the differentiating factors that separate TCI from those who pursued a roll-up strategy and failed? One thing from the book is that he uses bulkhead concept aka non-recourse financing but I still don't think that fully explained his success... 

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See my post at http://www.cornerofberkshireandfairfax.ca/forum/books/billion-dollar-lessons-paul-b-carroll-chunka-mui/

In short IMO often there are no clear differences between the companies that succeeded and the ones that failed.

Or the difference is the management if you can evaluate it.

 

So yeah perhaps it's safer not to invest in levered rollups at all. Or be careful and watch closely. But then you're likely to sell out at any sign of trouble. And even successful rollups usually go through trouble spots. So, we pretty much come back to trusting management or not investing. Just IMO though. :)

 

Disclosure: I have positions in various Liberty companies.

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