Podcast Review: #268 Cable Cowboy by Mark Robichaux’s Founders Podcast

By Nelson de Mestre | Associate Analyst at NAOS Asset Management

Podcast Review: #268 Cable Cowboy by Mark Robichaux’s Founders Podcast

This podcast is a great listen, as it goes through the life and career of John Malone, the “cable cowboy”. The podcast runs through how Malone started in an extremely difficult position ($19 million in sales against a $132m debt load as an example), to run a lean, efficient and successful national business. 

Some interesting points from the podcast include:

• Malone went through years of lean living to get the company off the ground
• “John and his wife went without telephone services for 9 months to save costs”
• Decentralisation
• “No main executives left for the first 16 years, very decentralised, 6 separate operating units with their own accounting and operating systems”
• Controlling the “choke-point”
• “Malone thought we will make money on the content, not just the cables. TCI could own the pipe and water flowing through it.”
• “TCI controlled distribution and therefore had phenomenal leverage: Gave programmers access to 1/5th of America instantly. If you control distribution, you get equity in return.”
• Economies of scale
• “As an example, TCI started off paying 8 cents per small part of equipment and ended up paying 1/10 of 1 cent”
• “TCI paid $0.90 per subscriber for HBO, a small cable operation paid $5.00 (both on a monthly basis)”
• Opportunistic Acquisitions
• “He would grow in economic downturns, relishing the role of bargain hunter in tough times, waiting for multiples to come down”

Mark argues the Cable Cowboy's approach is similar to that of Rockefellers rules:

Parallels to Rockefeller Rules:
1.         Raise money to increase production 
2.         Use increased production to get better rates on transportation than other refiners
3.         Use increased profits (based on better transportation rates) to buy competitors
4.         Continue to find secret sources of income

Link to Podcast

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