The Twilight of the Moguls

For a long stretch from the 1970s to the 1990s, "you had four or five personalities in a full-size way in the entertainment and media business," Diller said in a brief interview with NEWSWEEK (he is a director of The Washington Post Company, which owns NEWSWEEK). "One by one," they've crossed Malone, Diller notes, agreeing that his own row may be seen as the end of an era of outsize media moguls. "I think that's accurate," he says. Diller would not comment on his specific dispute with Liberty Media.

Malone, who rarely ventures beyond Liberty's headquarters in a Denver suburb, got his start in the 1960s as a cable-equipment executive. In the years that followed, the Connecticut native became one of corporate America's most powerful, if controversial, industrialists, emerging in the 1970s as the boss of Tele-Communications Inc., once the nation's biggest and most aggressive cable operators and Liberty Media's progenitor. Armed with a fearsome intellect for financial wizardry and business strategy, Malone was arguably the most important force behind the rise of cable television, supplanting the traditional supremacy of CBS, NBC and ABC.

TCI was flirting with bankruptcy in 1973 when it wooed Malone. After holding lenders at bay and refinancing the loans, the Yale-educated financial whiz began a new debt-fueled frenzy of deals that expanded TCI into one of every five homes over the next two decades. By then, Malone and TCI's founder, the late Bob Magness, had gained tight control over the industry's most powerful company, which also held stakes in the Discovery Channel, Black Entertainment Television and other top-10 cable networks. When Malone structured a cable bailout of Ted Turner's debt-laden company, TCI ended up with a 25 percent stake. Similarly, he gained a stake in News Corp. when Murdoch ran into financial trouble in the early 1990s.

In 1992, Malone hired Diller when he left Murdoch's employ. Diller—who had worked his way up from the mailroom of the William Morris Agency to head Paramount Pictures and then Fox—joined QVC, the home-shopping network then jointly controlled by Malone and the Roberts family of Comcast. From that perch, Diller—with the backing of Malone and Roberts—launched a takeover battle for the Paramount studio. It pit the Diller-Malone team against Redstone, who was also bidding for Paramount. In the end, Redstone was victorious—one of the few times Malone was defeated.

Apparently with Malone's continuing support, an unbowed Diller arranged a CBS takeover in 1994. But it fizzled after the Roberts family—which was clearly against the deal—moved to take full control of QVC and fired Diller. But Diller's godfather Malone was steadfast: he handed Diller new assets, including Home Shopping Network and a group of local television stations, to make a fresh start. It was the beginning of IAC/InterActive—and the beginning of the end of a relationship that now, 18 years later, is crumbling in a courtroom showdown over who controls whom. Too bad it won't be televised.

© 2008