Malone Eyes $100M Stock Profit

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Tele-Communications Inc. chairman and CEO John Malone has
exercised stock options for nearly 9 million shares, which could net him a profit of more
than $100 million.

According to filings with the Securities and Exchange
Commission, Malone exercised options on 8,718,770 shares of Series B TCI Group stock, at a
purchase price of $35.5875 per share, Oct. 14. The deal cost Malone more than $310
million, which he borrowed from a consortium of banks including Toronto Dominion
Securities, NationsBank and Societe Generale, using his other TCI holdings as collateral.

But given the current price of TCI shares -- they closed at
just under $41 each in trading Nov. 5 -- Malone could sell that stock for $357 million,
enjoying a profit of about $47 million.

It is unlikely that Malone will sell those shares anytime
soon. And if his deal with AT&T Corp. goes through, as planned -- it's scheduled
to close early next year -- those shares could be worth even more.

According to the merger agreement with AT&T, each share
of Series B TCI Group stock would be converted to 0.8533 shares of AT&T stock. Under
that formula, Malone's option stock would be converted into 7.4 million shares of
AT&T common stock, worth $453.8 million. Based on that deal, Malone's profit
would soar to $143.5 million.

Not that Malone needs the money: He already controls more
than 17 million shares of TCI stock, worth nearly $700 million. And he also will end up
with controlling interests in Liberty Media Group.

"What does this say to me?" asked Ted Henderson,
an analyst with Janco Partners in Denver. "It's what I've been saying all
along: [The AT&T-TCI merger] is absolutely going to happen, and it's absolutely
happening by the first quarter of 1999."

Henderson, who has long recommended that investors purchase
TCI shares, said purchasing TCI now constitutes buying AT&T shares at a discount,
given both company's stock prices and the fact that TCI shares will be converted to
AT&T shares after the merger.

The options came about as part of the settlement between
Malone and relatives of his late mentor, TCI founder John Magness. Magness, who died in
November 1996, left an estate valued at $1 billion, including 32 million TCI Series B
supervoting shares.

However, the Magness family was facing a hefty estate-tax
bill, and there was a possibility that they would have had to sell a large portion of the
stock to cover it. TCI and its investors feared that flooding the market with so many
shares would seriously dilute their stock's value.

In January, the Magness estate, Malone and TCI reached a
settlement in which the estate transferred some of its shares to Malone in the form of
options.

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