Book Dishes on Malone, Ergen, Murdoch

By KENT GIBBONS -- Multichannel News, 11/29/1999

Stephen Keating has written the latest book John Malone doesn't want you to read.

Actually, Liberty Media Group chairman Malone probably does not care a fig whether or not you read Keating's Cutthroat: High Stakes and Killer Moves on the Electronic Frontier. But then, Malone never signed off on Cablevision magazine's cover last year that assigned that description to L. J. Davis' The Billionaire Shell Game, subtitled, "How Cable Baron John Malone and Assorted Corporate Titans Invented a Future Nobody Wanted." So apparently, that declaration is up for grabs.

Malone is one of three protagonists in this new nonfiction tome (Johnson Books, www.cutthroat.org) by The Denver Post business reporter Keating that in some ways updates the Davis book. Keating centers on the cratered News Corp.-EchoStar Communications Corp. deal to create a "DeathStar" satellite juggernaut, rather than on the cratered Bell Atlantic Corp.-Tele-Communications Inc. deal featured in Davis' book.

EchoStar chairman Charles Ergen is at least as prominent a character as Malone in Cutthroat, followed in importance by News chairman Rupert Murdoch.

Ergen gets the last word here, declaring that "Malone got what he wanted" by first helping Murdoch to realize that the EchoStar deal wasn't in his best interest, and later selling TCI to AT&T Corp. and getting a pot of cash to "go run a content company."

Murdoch, too, "got what he wanted" in the form of greater distribution for his cable networks, although he had to settle a breach-of-contract lawsuit Ergen filed.

In an interview, Keating said he was trying to get at "basically the strategic aspects of the business and the fact that there's really no enduring relationship that can't be undermined. I wanted to show what I thought was a fascinating culture and really some of the personalities and power plays within that."

As it turns out, that culture has begun to draw authors the way cable has drawn investors since the DeathStar deal crumbled. Before Keating came Davis, and The Wall Street Journal reporter Mark Robichaux has been working on a Malone book for seemingly as long as anyone can remember.

"I think it's good that there are so many books coming out about this, because it was undercovered," Keating said. "When I started looking into it, there were no books about Malone, but many on [Microsoft Corp. chairman Bill] Gates and [Time Warner Inc. vice chairman Ted] Turner. He's a tougher subject, but I think he's kind of more interesting for that reason."

Ergen also comes through as an interesting character -- one who is now grumbling about aspects of the newly passed law to allow retransmission of local broadcast signals. Local-into-local was the DeathStar mantra. Has the landscape changed so much that investors no longer fear a direct-broadcast satellite killer application?

"I guess the question is: Will the bill even survive?" Keating said. [Sen. John] McCain [R-Ariz.] was here yesterday, and he doesn't support it. Ergen is against it, and I guess DirecTV [Inc.] supports it. I think it's going to be a sleeper."

As for Ergen's response to the bill: "Charlie's a great game-player. I'm sure he'd accept it if it passed and meanwhile bark about it if it's not what he wanted. One thing that I think comes out in the book is how much he learned from going up against guys like Malone and Murdoch. It seems to me that he evolved over this decade as pretty calculating and yet risk-taking."

Meanwhile, since the DeathStar deal broke apart in 1998, cable has been on a big upswing, helped, of course, by investments from the likes of AT&T, Gates and Microsoft cofounder Paul Allen.

Will those kinds of affirmations sustain cable's rise? "That certainly helps. It's almost like cable is this island unto itself, and now it's been joined unto these larger forces of broadband and computer processing, and that's part of a long-term trend. But to me, it's interesting how much perception matters. Cable was doing Internet and telephone in some markets long before Bill Gates invested in Comcast [Corp.]. But when that happened, everybody sat up and said, 'They can really do it.'"

Ergen and DirecTV are also chugging along. Can cable and DBS prosper and coexist?

"This is the proof of Malone's fear of DBS. DBS is not charging ahead, and if the local-channels bill were to get passed, it could cut even deeper into the cable space."

The fact that both are growing now could be "a factor of the economy," Keating said. "It's not clear to me if the market's expanding or people are keeping lifeline cable and adding DBS."

In the book, Keating is candid about the principal players and some of the supporting cast, such as former AT&T Broadband & Internet Services CEO Leo J. Hindery Jr. ("he sometimes treated truth as a variable") and former Federal Communications Commission chairman Reed Hundt, who mixed "erudition" and "conceit."

Does that pose a problem for his ongoing coverage of the industry? Keating said he and his editors discussed that, and he's decided to do more general-assignment reporting, while still weighing in on some media stories when appropriate. "There are some obviously opinionated statements in there, but I felt that they were supported by other reporting or other people's views," he said.

Some of those statements and reporting will be on display in an upcoming Multichannel News excerpt from Keating's book.

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