Cable Cowboy: John Malone and the Rise of the Modern Cable Business

by Mark Robichaux Narrated by Michael Butler Murray

Overview

An inside look at a cable titan and his industry



John Malone, hailed as one of the great unsung heroes of our age by some and reviled by others as a ruthless robber baron, is revealed as a bit of both in Cable Cowboy. For more than twenty-five years, Malone has dominated the cable television industry, shaping the world of entertainment and communications, first with his cable company TCI and later with Liberty Media. Written with Malone's unprecedented cooperation, the engaging narrative brings this controversial capitalist and businessman to life. Cable Cowboy is at once a penetrating portrait of Malone's complex persona, and a captivating history of the cable TV industry. Told in a lively style with exclusive details, the book shows how an unassuming copper strand started as a backwoods antenna service and became the digital nervous system of the US, an evolution that gave US consumers the fastest route to the Internet. Cable Cowboy reveals the forces that propelled this pioneer to such great heights, and captures the immovable conviction and quicksilver mind that have defined John Malone throughout his career.

Editorial Reviews

Publishers Weekly

In 1973, 29-year-old John Malone became the CEO of a debt-ridden Denver cable company, Tele-Communications, Incorporated; in 1998, he sold TCI for $48 billion. In the intervening 25 years he frenetically built a cable and media monopoly. Robichaux, an editor at the Wall Street Journal, pens an account that is part Horatio Alger success story and part cautionary tale of the abuses of unfettered capitalism (the latter a more timely narrative these days). Malone is a complicated hero; focused and driven, he built his empire largely through clever, complicated financing deals that sidestepped bank rules and taxes and enriched an inside group of shareholders. In the spirit of "[c]harge as much as you can for a product...and spend as little as you can get away with," TCI, the author says, provided shoddy service to cable subscribers and bought out potential competitors to keep the cable industry an insular cartel. When local governments protested, Malone cut off service. Robichaux doesn't make much of it, but it's notable that junk bond financier Michael Milken and the former CEO of Global Crossing, Leo Hindery, appear in these pages as Malone's trusted friends. Although he cooperated with Robichaux for this book, Malone doesn't (as do minor characters like Ted Turner) spring to life from its pages. In this, once again, the reclusive Malone seems to have gotten things his way. (Nov.) Copyright 2003 Cahners Business Information.

Library Journal

Robichaux, an editor of the Wall Street Journal's "Weekend" section, covered cable television for the paper from 1989 to 2001. Here he draws on interviews and published sources to produce a well-written account of John Malone. In the early 1970s, at the young age of 29, Malone took over a small cable company on the edge of bankruptcy known as Tele-Communications, Inc. (TCI), which he adeptly turned around and in 1998 sold to AT&T for $48 billion, making it the largest media merger in history. The author weaves an intricate tale of the cable industry and TCI as he reveals the brilliant deal-making strategies that built the largest cable company in the world. A typical strategy would be to swap stock, which defers recognition of profit on the deal whereby taxes would not have to be paid. Using these tactics, Malone acquired hundreds of companies and was viewed as a monopolist, creating a political backlash in Washington that caused him to be called Darth Vader, Genghis Khan, and the Godfather rolled into one. Readable and well researched, this work is unauthorized but was written with Malone's cooperation. Recommended for media collections in public libraries and those interested in the "art of the deal."-Bellinda Wise, Nassau Community Coll. Lib., Garden City, NY

From the Publisher

Robichaux, an editor of the Wall Street Journal's "Weekend" section, covered cable television for the paper from 1989 to 2001. Here he draws on interviews and published sources to produce a well-written account of John Malone. In the early 1970's, at the young age of 29, Malone took over a small cable company on the edge of bankruptcy known as Tele-Communications, Inc. (TCl), which he adeptly turned around and in 1998 sold to AT&T for $48 billion, making it the largest media merger in history. The author weaves an intricate tale of the cable industry and TCI as he reveals the brilliant deal-making strategies that built the largest cable company in the world. A typical strategy would be to swap stock, which defers recognition of profit on the deal whereby taxes would not have to be paid. Using these tactics, Malone acquired hundreds of companies and was viewed as a monopolist, creating a political backlash in Washington that caused him to be called Darth Vader, Genghis Khan, and the Godfather rolled into one. Readable and well researched, this work is unauthorized but was written with Malone's cooperation. Recommended for media collections in public libraries and those interested in the "art of the deal." —Bellinda Wise, Nassau Community Coll. Lib., Garden City, NY (Library Journal, January 15, 2003)

Product Details

BN ID:	2940173396464
Publisher:	Tantor Audio
Publication date:	10/22/2019
Edition description:	Unabridged

Read an Excerpt

1
LICENSE TO STEAL

In the autumn of 1972, in a conference room in a squat, brown converted warehouse on the outskirts of south Denver, executives of Tele-Communications, Incorporated (TCI), most of them clad in Western-style shirts and boots or off-the-rack polyester suits, were winding down their day with libations. They often did this, but this day was nonetheless special: They were about to meet TCI's new president, John Malone, and his wife, Leslie. It was after five o'clock in the afternoon, and the Malones should have shown up by now.

But the Malones had been liberated from a long wait at LaGuardia Airport in New York only an hour earlier, after a delay caused by ominous thunderclouds. From the moment their flight was called, they had worried that the tardy departure was forcing the TCI executives out West to sit around waiting. Before long, though, the flight was Denver-bound, and John Malone began to ponder his fate with the new company. Weeks earlier Malone, who had run the cable TV division of a big company called General Instrument Corporation, had spurned a far more lucrative job offer in New York, the world's business capital from Steve Ross, the legendary chairman of Warner Communications, to head up Warner's budding cable TV operations. Ross saw cable as a direct pipeline for delivering Warner Bros. movies to home viewers. Ross had promised the 29-year-old Malone a limo and a $150,000 salary, even pledging to relocate the new cable headquarters to Connecticut, where Malone lived, to shorten the young executive's commute.

Instead of accepting those cushy terms, Malone had chosen hardship--to take a pay cut and joinTCI, an obscure cable company that had lurched from crisis to crisis for the preceding 20 years. Instead of hustling in the bustle of the Big Apple for the charismatic Steve Ross, Malone had elected to work in a western cow town for Bob Magness, a former cottonseed salesman and cattle rancher. Magness had used a wobbly foundation of brinkmanship, bald-faced gambles, and abundant debt to build TCI into the fourth largest cable provider in the United States--although it still reached fewer than 1 million homes. Malone had picked TCI because Magness, fatigued and running out of luck, was ready to relinquish power and let a new man run the entire show--and because, if Malone could make it work, he might become extremely wealthy. TCI, which had become a publicly owned company in 1970, might be a diamond in the rough.

In his visits to cable clients in Denver in the preceding year as president of Jerrold Electronics, the General Instrument division that acted as a lender and supplier of cable boxes and other equipment to cable systems, Malone had taken a liking to the informal Western setting there. Colorado was scenic and unhurried, a world away from New York. Malone had first fixed his sights on Bob Magness after watching the elder executive haggle with Jerrold's best two salespeople in a meeting one day. Magness had deftly outfoxed Malone's men in negotiating the terms for building and financing yet another TCI cable system. Impressed, Malone had quickly grown fond of the slow-talking, quick-witted rancher, and soon they were eating steak dinners together in the Magness home in Denver. In successive meetings, Magness, with his signature brevity, captured a little bit more of Malone's imagination. Eager in his persuasion, Magness told Malone and Leslie on a visit to Arizona, where he owned property, that the winters were equally balmy in Denver.

"I can't pay you very much," Magness told him one day, "but you've got a great future here if you can create it." Malone found the challenge irresistible.

Magness's top executives were roughriders, not the MBA types that Malone knew back on the East Coast. Malone felt that they were men of conviction, especially Magness, whom he regarded as quiet, straightforward, and wickedly witty. Magness liked whiskey. Cigars, ever-present fixtures in his mouth, seemed to grow shorter, though they were never lit. Malone learned from Magness's friends that the TCI chairman ingested unlit cigars, taking tiny bites, sometimes even as he chewed on his favorite meal of filet mignon steak.

Malone believed in him and had staked everything on this job--and then some. Upon shaking hands, Magness had agreed to a salary of just $60,000. Malone also had seen fit to buy 7,500 shares of TCI stock, which he helped to pay for with a $60,000 personal loan from a local bank.

On the plane to Denver that afternoon, fears of what might go wrong crept into the back of his mind, but Malone banished them, at least temporarily, especially in front of Leslie, who abhorred flying. They were high school sweethearts, and though they had been married for a decade, it sometimes seemed as if she was still waiting for him to come into her life. Too much travel and too many long workweeks had come between them. Malone promised her everything would be different in Denver. It was cleaner than the East, and the people were nicer. Leslie could raise horses. He would travel less and spend more time with their two children. They could finally have dinner together in the evenings, just like a real family. Malone vowed never to leave home for extended periods, as his own father had done. Sure, there would be risk, he told Leslie, but he could make their fortune with this ragtag band of cowboys. He would be running the show.

After the jet landed in Denver, the Malones took a cab to the party. It was after eight o'clock. They were several hours late. Malone walked into the room and started to apologize, but his new colleagues weren't put off at all by the long wait. Some revelers hardly noticed the guests of honor had even appeared. Most of the TCI executives were already happily, rip-roaring drunk.

* * *

Bob Magness had made it sound like he was doing John Malone a big favor by hiring him to run TCI, but in fact Magness had turned to the brilliant youngster in desperate need. Magness was exhausted, plain and simple. For two decades he had relentlessly driven himself and his wife, Betsy. They had started out with a single cable system in Memphis, Texas, that they had built themselves, and they had ultimately assembled a company with more than 200 cable systems in the top 100 markets. Magness had done it by constantly doubling up on his bets and accumulating a mountain of debt, always gambling that Americans' hunger for this new thing called television would permit his company to grow fast enough to stay ahead of the bill collectors. For most of the previous two decades, this upstart approach had worked--but now Magness was in trouble. Debt threatened to cripple, or worse, destroy the company. It was 1972, and in just a year Magness had nearly doubled the size of TCI, which now had $19.2 million in annual revenue. Its debt load was at an obscene level for a borrower of its size: $132 million, or about six and a half times total revenue, when it should have been a fraction of that. In one year, TCI's stock had fallen more than 50 percent because of its ailing finances. If Magness didn't do something dramatic--like land John Malone to lead him out of this mess--he was in danger of losing TCI to a hostile takeover, or worse, to those bastards at the banks.

Magness had hated bankers almost from the moment he had gotten into the cable business. He had discovered the fledgling industry in a chance encounter on a summer afternoon in 1952, when he gave two strangers a ride after meeting them in a cotton gin outside Memphis, Texas. Magness was a 28-year-old cottonseed buyer at the time with blue eyes and a smile that revealed a wide gap between his two front teeth. On the rare occasion that he spoke, his voice was flat, slow, and deliberate. He was shy and shrewd, two traits that came in handy in the cotton business, in which buyers gave cotton-ginners a fixed price for seeds, then sold them to cottonseed oil mills. Among this coterie of seed brokers in West Texas, Magness enjoyed a reputation as one of the best. He made sure that his clients were always content, and the tools of his trade often included a fishing pole, golf clubs, and a jug of whiskey. Folks just called him Bob.

Magness had grown up during the Great Depression, an only child in a family of farmers and ranchers. He came from authentic Sooner stock--his mother and her kinfolk arrived in Oklahoma in a covered wagon, and Bob was born there, in Clinton, on June 3, 1924. Fear of financial failure, which tore at a generation of children reared in the 1930s, tormented Magness throughout his adult life. Yet, despite this constant worry about money, or perhaps because of it, Magness was a risk taker, a trait nurtured by his grandfather, Tommy Cook. Part Cherokee, Cook was a bear of a man who rode a big white horse called Old Tony, stuffed a .45-caliber revolver in his waistband on trips into nearby Lawton, and raised cattle on fields in Comanche County, about 40 miles from the Magness home in Clinton. Magness spent summers with his grandfather, often with three cousins around his age. Between fishing trips, Cook took his young posse on rounds to go "doctor" cattle, which the young Magness particularly enjoyed. Of all the lessons Magness learned from Cook during those dusty summers at the ranch, the most valuable came from the poker table. Cook could be seen with one or more tykes studying a fan of cards behind a pile of matchsticks, verbalizing little and betting imaginary fortunes.

Before Cook died, he passed on to Magness his old six-shooter. Magness tucked it in his belt after he was drafted into the army, three months shy of his 19th birthday, and was shipped off to France to battle Hitler's Third Reich. Magness fought in the armored infantry of General George S. Patton's Third Army, sometimes serving as a lead scout. In letters from the front to his mother in Oklahoma, Magness confided that he was "having a bad time with it," recounting stories of bullets that barely missed him and bombs that killed men with whom he had spoken moments earlier. He was sure of a few things already, he told her: He didn't like military life, and he didn't like to lead. "I don't want to be responsible for the lives of other men," he wrote in one of many letters he sent back home. "I came in this army a buckass private and I'll leave it a buckass private."

Yet, in the army, Magness earned a reputation among his fellow GIs as a lethal gambler. He became a master at reading people at a poker table, and he liked horses, both to ride and bet on. One day on patrol, Magness "liberated" a German military horse branded with a swastika, standing in a field. For two months near the end of the war, when the soldiers held horse races on the weekends, betting on a collection of captured and owned steeds, Magness was putting cash on his chestnut beauty--and winning. As Magness later discovered, the horse, a beautiful Arabian with apple cheeks and chiseled features, could consistently beat a big-boned thoroughbred in races over a mile, the smaller Arabian's stamina winning over speed. When he returned home, his pockets were bulging; he had made more money wagering than he had earned in army pay. But he never forgot the chestnut mare, which he was forced to leave behind; one day Magness would assemble the largest and finest herd of Arabian horses in the world, and he would own a world-champion stallion.

After the war, Magness pursued a college degree, determined to enjoy all the prosperity the postwar economy could offer. He worked in oil fields a couple of summers, then graduated from Southwestern State College in Wetherford, Oklahoma, in 1948, with a bachelor's degree in business. With his sights on a job in the cotton business, Magness proposed marriage to a girlfriend of three years who would become his lifelong partner, Betsy Preston, a strong-willed, straight-A student, just three months his junior who came from nearby Elk City, Oklahoma. Bob admired her pluck. It was Betsy who asked Bob out on their first date, to the annual Sadie Hawkins dance in Clinton. Betsy, whose family farmed cotton in Kentucky, was eager to start life with this quiet, gap-toothed war hero with a dry wit. Magness would gain more than a country girl in his wife--she would prove to be an astute business partner.

Magness launched his livelihood with Anderson Clayton Company, one of the largest cotton brokers and cottonseed oil producers in the world. He and Betsy raised cattle part-time, but cotton was his career. Magness learned to listen instead of talk, and within a short time he could read a customer like a poker player, anticipating what that person wanted from the deal moments into negotiation.

On that afternoon in 1952 when he unwittingly started on his cable career, Magness had walked into a cotton gin near Memphis, Texas, to do a little business. He knew most of the men there but couldn't place the two men talking to the ginner. He surmised from the conversation that their pickup truck had thrown a rod as they were driving back to Paducah, Texas, and that they were stranded at the gin. Magness offered the pair a ride. They visited for the next couple of hours, stopping to grab a burger, and the two men told him they had just built a big "community antenna system" that helped folks in tiny Paducah get broadcast TV signals from bigger markets far away. Community antenna television--they called it CATV. Magness thought his riders were intriguing, but once in Paducah, he dropped them off and thought nothing more of it.

Days later a business partner mentioned to Magness that "if you knew how to get into something called the CATV business, I understand that's a license to steal." To which Magness replied, "Hell, I know how to get in." 7 The next morning, Magness drove out and talked with the two men he had picked up, who introduced him to the owners of the Paducah cable system. They gladly showed Magness how the operation was financed and gave him key contacts. Magness drove away thinking two things: (1) Cable TV sounded like a bona fide business, and (2) West Texans must be the most hospitable people in the world.

* * *

Bob Magness had a plan: to build a new cable system in the isolated town of Memphis, Texas. It would have a tall antenna tower that would pull down the broadcast signals of three TV stations 8 in two nearby towns--Amarillo, about 80 miles away, and Lubbock, about 140 miles away. If he could raise the money to pull it off, Magness would be able to charge his neighbors a monthly fee for the television service--which he would get free of charge, basically pirating the programming from the TV stations themselves without paying them a cent. In cotton, business looked bleak because nylon and rayon were becoming the preferred material; cable TV looked like an industry with a future.

When Magness broached the idea with Betsy, she listened intently. She certainly didn't want to return to a life of ranch chores or, as Bob put it, "back to the cotton farm" that she grew up on. She told Bob she would do anything to support the idea. So they decided to bet the ranch, literally, on cable. Magness sold his cattle, mortgaged the house, and borrowed $2,500 from his father. He directed the construction, climbing poles himself to string wire, while Betsy deciphered the finances and took service calls at the kitchen table. He invested everything he had, and still he had to go into debt. He needed help--in a hurry. So he brought on a partner, the superintendent of the cottonseed oil mill where he worked. Eventually, Magness paid $100,000 to a Forth Worth company to erect a tower more than 30 stories high, on a 60-foot rise near Memphis, and opened up for business.

In a town of 4,500 people, word spread quickly. Magness's new community antenna service was trumpeted on the front page of the August 2, 1956, issue of the Memphis Democrat: "First Showing of Cable TV Slated for Friday Night." "The Master Antennae Service, as the organization is called, will hold open house from 7:30 [P.M.] until 11 [P.M.] at the American Legion Building.... Everyone is invited to view live network programs... " TV dealers furnished sets for the demonstration. "We will be able to begin hooking up sets at home in Memphis on Saturday," Magness told the paper. Subscribers paid a onetime hookup charge of $33, plus a $6.60 monthly fee. Bob and Betsy soon had their first 700 customers; the following year, they added another 3,000 in nearby Plainview.

At the time Magness was drawn into cable, most Americans, Bob and Betsy included, had rarely seen a TV set and certainly didn't own one. David Sarnoff, the chairman of RCA who crusaded for television's development, had unveiled the invention at the 1939 New York World's Fair. Two years later, commercial TV began its seduction of American viewers, and in short order 32 TV stations lit up around the country. As the economy boomed after the Second World War, America hungered for entertainment. Some 78 companies were selling nearly 200 different models by 1948, and nearly 600,000 TV sets flew off appliance store shelves. Each day, an estimated 1,000 new sets were being installed. An avalanche of applications for broadcast licenses hit the Federal Communications Commission (FCC), which became so overwhelmed with technical and policy issues to create a national broadcast system, it simply stopped granting new licenses altogether. The freeze lasted for four years, and in the meantime, the 108 operating stations weren't plentiful enough to reach everyone. In the same period, however, the number of homes with TV sets increased to more than 15 million homes.

Viewers just outside the broadcast signal's range were trying to tune in from anywhere they could. Most viewers were doomed to hazy images and the dull roar of static over the speakers. So close, but too far for good reception. Just as with radio, hopeful viewers tried anything to catch a weak signal. The most common way was to build a really tall antenna and hope to catch a signal.

Many more far-flung locales couldn't get a picture at all. Hills and mountains blocked TV signals. This new business that Magness was sizing up was the bridge for a simple but critical gap. Like others in this CATV service, he would plant a large antenna on a mountain to catch the broadcast network signals from faraway local TV stations--gigantic rabbit ears, essentially--then string wire from pole to pole into the valleys, where folks had poor reception. The terrain of West Texas was just hilly enough to need the new business. And there were nooks, crannies, and bowl-shaped valleys all across America that couldn't pick up network TV signals. For a wave of cable pioneers, the opportunities were endless.

Folks erected massive homemade towers to catch a signal and would sit for hours watching--anything to see this marvelous, new big-city invention. Nothing in modern society compared with a TV, which in 1948 sold for $149 ($1,100 in today's dollars) in the Sears Roebuck catalog. The comedian Milton Berle, as host of Texaco Star Theatre, did more to sell TV sets in the late 1940s than any RCA salesperson, and by 1952, I Love Lucy drew 10 million of the nation's viewers. Little wonder that TV became the largest advertising medium in the world almost overnight. The mass embrace of the medium that RCA had so confidently promoted--despite a world war, technology snafus, and new regulations--was finally happening.

The fraternity that Magness had joined, cable TV, got its start in 1948 in response to the demanding wife of a man named Ed Parsons, who owned a radio station in Astoria, Oregon, a small town at the mouth of the Columbia River. At a radio convention in Chicago, Grace Parsons sat mesmerized at a demonstration of a new invention called a TV set, and she just had to have one. Parsons, a skilled engineer, located the clearest TV signal from atop the Astoria Hotel and ran a single wire across the street to his apartment. The 9-inch black-and-white set, which he initially called "wasting our money," suddenly sprang to life. People drove from more than 300 miles away to watch. "We literally lost our home," he later told an interviewer. Parsons never made a business out of his antenna service, but he sold equipment to customers and gave answers to anyone who asked. Exhausted, he finally moved to Alaska and flew back to the Lower 48 only once--to dedicate a monument to his pioneering act. Despite other legitimate claims to be the first cable system, Parsons's discovery is forever etched in a plaque on Coxcomb Hill in Astoria, which reads: "Site of the First Community Antennae Television Installation in the United States. Completed February 1949."

An army of cable entrepreneurs tore out into the hinterlands to deliver TV to the masses, who, by all accounts, were starved for it. The grassroots creation and spread of the community antenna was inevitable, given the situation: a rural population dying to get what folks in the big city got, and a broadcast industry that was unwilling to invest the money needed to reach them. In high school gyms, parking lots, and appliance stores across small-town America, television started getting piped in from nearby cities by a CATV system, and the seeds of billion-dollar fortunes were sown. On January 8, 1951, the front-page headline of the Wall Street Journal said it all:

Stretching Television: New "Utilities" Deliver TV to Towns Outside Usual Reception Range

Firms Erect Big Community Aerials, Hook on Your Set for a Monthly Fee

The Appliance Dealers Grin

Every broadcaster in the West, it seemed, was trying to get in on cable. Entrepreneurs in the East began investing in cable around the same time. In Mahanoy City, Pennsylvania, in the cleavage created by the ridges of the Allegheny Mountains, John Walson, an appliance store owner, strung wire along treetops down the side of the mountain, and later, on poles rented from a utility where he worked, down to his store to display TVs with pictures from nearby Philadelphia.

In 1958, Magness moved to sell the original system he had built only two years earlier in Memphis, Texas, netting a handsome profit. Magness liked this new business, and he looked for a way to reinvest in it. Luckily, tax laws made it attractive. Cable operators could gradually write off the cost of their systems over a number of years, allowing them to reduce the leftover profits they reported as earnings and thereby sheltering a healthy flow of cash from taxation. And once they had written off most of the value of a cable system's assets, they could sell it to a new owner, who could begin the tax-eluding depreciation cycle all over again. Magness wanted some help in figuring out where to invest next, so he called the man whose name was known to every cable cowboy looking to strike it rich: Bill Daniels.

Daniels, too, had fallen under the spell of television; for him, it happened one night in 1952 when he stopped in at Murphy's Restaurant in Denver for a corned beef sandwich and a beer. That's when he saw television for the first time. A Navy fighter pilot in World War II and again in Korea, Daniels started his first company in 1952 with the help of Gene Schneider and his brother, Dick, both of them engineers, who were at the time operating the Houston franchise of the country's first coffee dispenser, Quick Kafe. Over the next few years, Daniels built up a collection of cable systems in the West but quickly turned to a faster-growing business--acting as a broker of cable systems, matching buyers to sellers. So began the Daniels & Associates brokerage service, which would dominate the brokerage business for more than three decades. Asked later to describe technically how cable works, Daniels replied, "Beats hell outa me." Daniels sold everyone within preaching distance on the promise of cable and, by 1956, served as the head of the newly minted National Cable Television Association.

When Magness called Daniels in 1958, the broker directed his attention to a system for sale in Bozeman, Montana. Magness, an avid fisherman, thought Bozeman could be a great place to raise his two boys, Gary and Kim. In September 1958, Magness made the move and quickly partnered up with Paul McAdams, who already owned cable systems in nearby Livingston, to import broadcast signals from Salt Lake City.

Like Bill Daniels, Magness soon realized he might make as much money serving the new television industry as he could owning cable systems. Consequently, he and McAdams launched a signal transmission business, Western Microwave, Inc. It transported TV signals to commercial customers, typically broadcast companies, to Montana via common-carrier microwave. Microwave towers were used to bounce TV signals overland in short hops, from giant dish to giant dish. Magness's cable systems made money from individual subscribers in each town, while the microwave business made money relaying the signals of the Big Three networks to 21 broadcast stations, serving TCI's own cable systems at the same time. Traveling to some sites on horseback, Magness built a 130-mile microwave relay from Salt Lake City--unheard ofin those days--making it possible for residents of the lonely outpost of Great Falls, Montana, to see their first live World Series game in 1961.

"Bob would drive this new Mercury he had to the tops of mountains to select these microwave sights," recalled Larry Romrell, who joined TCI in 1960. "Paul McAdam drove a Cadillac with a boiler plate welded to the bottom to protect his oil pan. They would flash their headlights from one mountain to another to see ifit was in the line of sight--that way they'd know if the microwave would work."

When McAdam bowed out of the company after a heart attack, Magness partnered with John "Jack" Gallivan, president of the Kearns-Tribune, publisher of the Salt Lake City Tribune, and George Hatch, a regional broadcaster in Salt Lake City, who owned KUTV and other TV stations and some cable systems in Nevada. By 1965, the partnership had built six cable TV systems with a combined total of 12,550 customers. In 1968, Magness corralled the various cable and microwave assets and named the resulting company Tele-Communications, Inc.

Despite the company's larger success, Bozeman itself turned out to be an inhospitable home for TCI, and no one knew this better than the men Magness employed to hang wire. In the winter, the mercury often dropped to 20 degrees below zero. One TCI engineer sent to check on a remote sight on a mountaintop died in a helicopter crash. Another lost his toes in a snowmobile accident. Occasionally, the men would kill a deer and leave frozen venison hanging outside the shed that housed the transmitter at Monida Pass; it would feed anyone hemmed in by a snowstorm. All TCI engineers carried guns for hunting and for self-defense--it wasn't unusual to happen upon a mountain lion. New employees were asked: Can you walk 10 miles in 10-below-zero weather? If a site was inaccessible on foot, as most were in winter, engineers made their way up the mountains with the help of a weasel, a surplus World War II cargo carrier that resembled a snowmobile. When the weasel was unreliable, TCI hired a biplane stunt pilot to deliver engineers and parts to remote sites; barrels of fuel for the generators were tied to the plane's wings with steel cables.

Back at the office, Magness never wrote a memo. More often than not, he poured a drink. In the early days of TCI, it was easier to find whiskey in the office than paper clips. Everyone took their cue from Magness, who tolerated no stars and no pomposity. Every evening a handful of TCI cowboys would sit around Bob's big desk, and he would open the bar and review the day's events.

The company's headquarters in Bozeman was spartan, which matched Magness's bare-bones management style. The wooden floor was so decrepit that the secretaries had to be careful about getting their heels caught in its many holes. When a new secretary was hired, she was given three cardboard packing boxes, and that was her desk. TCI's earliest attempt at local programming was just as crude: a TV camera aimed at a news ticker service, another fixed on a thermometer and, occasionally, a camera trained on a goldfish bowl. Sometimes the goldfish died.

One day, standing alongside engineer Art Lee at a site where TCI was building a new system, Magness delivered a memorable lesson. Lee cut off a small scrap of coaxial cable and tossed it aside, prompting Magness to ask him for a quarter. When the engineer handed over the coin, Magness sent it sailing a hundred feet away. " Why'd you do that?" Lee asked Magness, and the boss answered: "Because that's what you did when you threw that scrap of cable away."

From Bozeman, where they lived for about a decade, Bob and Betsy started expanding, winning franchises in adjoining towns in Montana, Utah, Nevada, and California. Bozeman finally seemed too cold, too inaccessible to Magness's growing empire. Magness came under pressure to move to Salt Lake City where his partners were, but Besty didn't like the Mormon influence on the town. They compromised on Denver. It was one of the few communities out West with a direct flight back East, where the banks were. Convenient and clean, Denver would emerge soon as the capital of cable. Equipment suppliers made stops in Denver. Bill Daniels, the biggest broker in the business, was based there. So were other cable operators. Something about the Western city came to define the spirit of these pole climbers, in an era when individual men, not conglomerates, reigned sovereign over an industry. So in 1965, TCI moved to Denver to play with the big boys.

* * *

By the mid-1960s, Bob Magness had realized the potential of community antenna to fill a vast need; he likened cable to the oil rush days in his native Oklahoma and Texas. Though he was building his own wealth, building TCI had given Magness a thrill not unlike betting big in a poker game. He continued borrowing money and buying up systems. He had good reason to believe he held a strong hand. Few cable systems had ever failed up to this point, largely because the values of the systems that were trading hands kept rising. It was genius, really, to anyone who took the time to figure it out. Cable TV systems, to every new owner's delight, generated bundles of cash from installation charges, $100 to $300 a customer in the 1970s, and monthly services fees of $5 to $20. Most of the money was plowed back into the companies, with hardly anything going to pay dividends to shareholders. This high cash flow could service an immense amount of debt, which was used to buy more systems. So the actual value of the acquired systems was always growing. Moreover, the companies paid hardly any taxes because of the high depreciation on the equipment. The average cable system enjoyed a profit margin of 57 percent, far fatter than most businesses.

But cash was in short supply, and Magness was always on the hunt for more. He quickly realized big banks hadn't a clue where the flyspeck towns he served were. Bankers had to ask for chamber of commerce brochures of the cities TCI wanted to wire, and they wanted to know details like exactly where on the map the city of Ogallala, Nebraska, could be found. TCI had started out buying or building systems in the West, wary of spreading itself too thin, but soon Magness realized that to tap the money markets back in New York, he needed to start operating cable systems back East; then the bankers would know what this new cable business was all about.

By 1968, TCI had tapped a healthy new vein of capital: insurance companies. In exchange for an initial loan of $10 million, Teachers Insurance and Annuity Association received a slice of TCI through warrants and convertibles. Like many cable TV operators at the time, Magness financed the construction of his systems through his equipment supplier, Jerrold, which had access to money when few cable companies did. Jerrold loaned customers like Magness what they needed, taking notes that essentially were promises to pay back the full amount.

The entire industry weathered a storm of capricious regulations throughout the 1960s and early 1970s by the FCC, which was unsure of what cable TV was and what it would become. The powerful lobby of the Big Three broadcast networks began to argue that free television was threatened by cable TV. The FCC was particularly concerned that cable operators threatened the newer, weaker broadcast stations in the UHF range (channels 14 to 83). Some broadcasters had invested early on in cable--in the early 1960s, nearly one-third of all cable systems were owned by such old-line media firms as Cox Broadcasting Company, CBS, Westinghouse, and Newhouse Broadcasting. By the early 1970s, however, the broadcast lobby had won a set of FCC rules that effectively halted cable's growth. Citing the public interest and intent on protecting broadcast TV, the FCC by 1972 had imposed sweeping regulations. The rules prohibited cable operators from importing distant signals into the top 100 TV markets, limited the number and types of signals that cable could pull down from the skies, and required systems to carry signals from all three networks and to take them from the nearest network affiliate--no leapfrogging to bring a big-city affiliate into a small town. Moreover, technical standards were imposed for the first time, and larger systems were forced to make public-access channels available for citizens, governments, and schools.

Other rulings seemed outright bizarre. Pay services such as a movie channel, which charged viewers over and above their regular monthly fee, were limited to showing one feature film just one week each month, and it had to be more than 2 years old and less than 10 years old. Broadcasters continued to paint cable with the same broad brush: thieves pulling signals out of the sky, then charging John Q. Public. That the broadcasting industry had its way in Congress was no surprise. At least 30 U.S. senators and congresspeople owned interests in TV or radio stations, and even more had invested in companies that owned broadcast properties or in related industries.

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As the 1970s began, TCI had gobbled up so many new cable systems that it was like the winner in a pie-eating contest--victorious, but a bit woozy from the pace of ingestion and a little anxious about keeping it all down.

TCI's bankers fretted over the torrid pace at which the company--and its yawning debt--had expanded. As their alarm rose, so did Bob Magness's blood pressure, a condition he blamed on the legion of bankers knocking at his door. Magness's diet was not exactly balanced, either--steak and potatoes, mainly, and plenty of whiskey. Magness drank almost daily, discreetly, at home and in the office, though few could tell unless they saw a bottle. Alcohol, however poisonous to his body, dulled the anxiety that gnawed at him. If economic conditions worsened, the weight of TCI's debt threatened to topple the empire that he and Betsy had worked so slavishly to build.

After nearly 20 years of struggling, the scrutiny was now unbearable for the white-haired cowboy. TCI and its subsidiaries were failing to meet critical financial benchmarks required by the terms of their loan agreements. Bankers wanted to know: Why hadn't TCI hit its cash flow projections? When did it expect to make the next payment? Why hadn't TCI foreseen all this trouble? Magness had simply run out of gas, and many of his executives were burned out, too. The complexities of running a public company and tracking the performance of more than 200 cable franchises in 21 states, all the while fighting regulators and lawyers, was becoming too much for the onetime cottonseed salesman. And so one day in the fall of 1972, after he had spent hours toting up TCI's financial position, Magness finally and fully grasped just how terribly precarious the whole situation had become. He skimmed the numbers, looked up at Betsy, and blurted out, "I'm gonna hire the smartest sonofabitch I can find."

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