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Letter from New York
Mathew Tombers is Managing Director of Intermat, Inc., ( a television company which executive produces programs and consults with industry companies on a variety of issues. Intermat, Inc. is currently involved in approximately thirty hours of television in various stages for a variety of networks. He is one of the Executive Producers of OFF TO WAR, a ten hour series for Discovery Times and for a one hour on international adoptions for Discovery Health. He has consulted a variety of companies, including Ted Turner Documentaries, WETA, Betelgeuse Productions, and Creation Films, Lou Reda Productions as well as many others.

December 7, 2006

The return of Darth Vadar, who finally gets his Death Star….

Today, as I often do, I picked up the New York Times to read on the train going down to the city – though I didn’t get as much read as I had anticipated as, with the wonders of my air card, I worked most of the way, catching up on e-mails and chatting with someone over in the U.K. on my cell phone.

Moments like that remind me how much of a science fiction world we live in; the stuff of sci fi stories when I was a boy, are now the tools of my adulthood.

I did take a pause long enough to look at the business section. In the far right column was the news that Rupert Murdoch, the mogul who oversees the News Corp Empire [Fox] had traded assets to John Malone in exchange for Malone giving back to Murdoch his share in News Corp. The assets shed by Murdoch included Direct TV, the satellite behemoth Rupert bought just a few years ago from G.M.

Back in the day, John Malone found himself on the cover of Business Week magazine, personified as the “Darth Vadar” of cable television, the man who made all the puppets move – and, indeed, that seemed to be the way it was. Then Malone sold his company, TCI, to AT&T and seemed to flounder about the media pool, not quite making anything work with the old black magic he used to have.

It’s not that he didn’t stir up the dust here and there. He took his interests in QVC, Starz Pay Service and his 50% stake in Discovery Communications into a publicly traded holding company that too has seemed to flounder.

He also acquired a pretty significant stake in News Corp., a move that got Rupert all riled up, so riled up he got the company to adopt a “poison pill” clause to prevent Malone from seizing control. It was so onerous it gave Rupert’s shareholders dyspepsia and there was just a lot of background noise that Murdoch didn’t need. So sometime after Malone said something like: half the shareholders are afraid Rupert will die and the other half hope he won’t, Murdoch set out to find a way to get himself free of his irksome friend.

It took two years and I never doubted it would happen. Today a deal was agreed upon which gives our Darth Vadar character his Death Star in Direct TV, plus some Fox Regional Sports Networks, not to mention a half a billion plus in cash.

Both men can claim a victory and Malone can take pride that he has once again pulled off his signature financial feat, a transaction in which he will have to pay no taxes. Malone and his troops know the loopholes in the tax law better than the IRS.

Murdoch has made some billions with Direct TV and managed to shed an outlet that he has some questions about as it didn’t easily provide high speed internet connections, a service television providers are increasingly being expected to offer.

Now all of this could come unglued; it has before.

It’s certainly interesting to watch from my perspective, knowing enough about the industry to find it fascinating and having had the opportunity to have met both these players once at the Superhighway Summit in 1994 for the Television Academy. [I did literally bump into Rupert another time, in New York. He had been being true to the Aussie stereotype and had had a few too many, leaving his steps unsteady on Spring Street where he was showing his new wife some jewelry in a window.]

Now all of this may seem far removed from our everyday lives. It’s not. News Corporation remains a mega media player and John Malone, aka Darth Vader, will once again strut his favorite stage with an asset more malleable than his passive stake in News Corp. and out of all of this will come changes to our lives that will come beaming right into our living rooms, just like the Death Star beamed its death ray down on planets…