Going With the (Cash) Flow

Publish date:
Updated on

It’s pretty obvious that the successful history of
the cable and broadband industry can be laid at the feet of the pioneering
entrepreneurs and employees who birthed these industries and who
later led them to success, the technologies which continued to evolve
in almost-magical viewer-friendly and family-friendly fashion, and the
creative content that advanced from general and one-size-fits-all to specialized
and personal and interactive.

Broadcast begat CATV begat multichannel cable begat broadband and

Yet too many observers still look backward and forward on broadcast,
cable and content as three “silos.” Better to see them instead as three big
pieces in a very large four-piece jigsaw puzzle, ebbing and flowing over
the years in relative import, sometimes even merging one into the other.
But always toward the “end” of a cornucopia of multichannel broadband
distribution of traditional, community-of-interest and Internet-based programming
and content for viewers and users.

But remember, I said “four-piece jigsaw puzzle,” and it’s past time to
give that fourth piece its proper due. And that piece is the early financing
history of the cable and later multichannel cable industries, for which
the architect was, no surprise, John Malone, the inestimable CEO of Tele-
Communications Inc.

If the cable industry had not evolved into being the recipient of “cable
cash-fl ow” lending, then the entire media industry would be completely
different than what it is today.

It took the astuteness, insight and articulateness of John Malone in
the late ’70s and early ’80s to convince the New York banks to move
up, so to speak, from net earnings, with its crushing depreciation and
amortization charges, to earnings before interest, taxes, depreciation
and amortization (EBITDA) as the most meaningful measure of a cable
company’s creditworthiness. And without this change in perspective,
well …

In my career in media, it’s been my privilege to acquire and exchange
a lot of properties, sell them to the great advantage of my investors and
shareholders and, with the help of some truly extraordinary women and
men, run them responsibly and well. But none of this, and I mean none
of it, would have been possible without the brilliance and vision of John
Malone, no slouch himself when it comes to doing deals and running cable

Cable cash flow was the lending criterion that changed and then defined an entire industry — more than technology and more than content.
It was John Malone at his very best.

Leo J. Hindery Jr. is managing partner of InterMedia Partners and the
former CEO of Tele-Communications Inc. and AT&T Broadband.