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The Expanding Universe Of Glenn Jones


The Corporation

THE EXPANDING UNIVERSE OF GLENN JONES

Employee meetings at the Englewood, Colo., headquarters of Jones Intercable Inc. are hard to miss. "It's the sound of the bagpipes," says Robert Luff, the company's former chief technology officer. Summoned by kilted musicians, employees attend "state-of-the-fleet meetings."

That's fleet as in spaceships, reflecting the founder's fascination with the science fiction classic Dune. There's also the company's Medallion of the Alliance, awarded to employees who have achieved the rank of "dragon slayer" by beating back the fire-breathing challenges of the day.

TRUE NORTH. To the uninitiated it may sound less like a day at the office than one at a theme park. But to the faithful at Jones Intercable, the nation's seventh-largest cable operator, such corporate flamboyance is simply testimony to the entrepreneurial brilliance of founder Glenn R. Jones. The 64-year- old Jones, a onetime bomb-disposal expert for the U.S. Navy, is known as much for his offbeat enthusiasms as for making his $683 million-a-year cable-television empire one of the most innovative in the industry. "Glenn's a dreamer, and sometimes that makes him seem a little different," says Bill Daniels, a Denver-based investment banker who specializes in cable TV. "But his dreams have turned out pretty well."

Indeed, driven by what Jones calls his "own North Star," his company was among the first to replace old-style coaxial cable with high-performance optical fiber and to secure a Europ-

ean beachhead. Both moves have since paid huge dividends. In July, Intercable folded its six British cable franchises into a company controlled by Bell Canada International Inc., getting in return a 14% stake in Bell Cablemedia PLC, Britain's largest public cable and telephone company.

Now, Jones is again pushing the frontiers. With the launch of tests offering telephone services to its cable customers outside Washington D.C. and Chicago later this year, Intercable is rushing to become the first cable outfit to counter the wave of telephone companies that are moving to sell video services over phone lines. And Jones's ties to Bell Canada will soon grow exponentially. By yearend, federal approval is expected for BCI's December agreement to pay up to $400 million for a 30% stake in Jones Intercable. The deal would give Jones access to BCI technology he needs to expand into phone and data services, as well as provide the muscle to raise up to $1.6 billion to buy new cable systems.

Jones has long excelled at deft management of cable systems. Far ahead of competitors, he saw the advantage of building systems in close regional clusters, concentrating on upscale suburban areas such as Northern Virginia and outside Chicago. Clustering cuts down on administrative and other operational costs. Jones's systems are also among the most technologically advanced, with fiber-optic cabling beginning ahead of the pack in 1989. "When you talk about vision and getting somewhere first, Jones is usually at the top of the list," says Sharan Stover, vice-president at cable rival Tele-Communications Inc.

The son of a Pennsylvania coal miner, Jones labored briefly as a lawyer and found cable TV after an unsuccessful 1964 run for Congress as a Goldwater Republican left him $40,000 in debt. In an oft-repeated story, he borrowed $400 on his beat-up Volkswagen for the downpayment on a cable system that served 150 homes in Georgetown, Colo. Borrowing again, he bought two more systems.

Then, he started dreaming bigger. "I sat down and figured that it would take $10 billion to cable all of America, and I didn't have any way of getting that much," he says. So, Jones copied the deals common in oil and gas, becoming the first cable operator to finance growth through what became a widely popular vehicle, limited partnerships. The partnerships, which paid fees to his company for managing cable systems owned by investors, shielded Jones from heavy debt. As rising values brought new investors, the network of cable systems Jones's companies own or manage has grown to 55, with 1.3 million subscribers.

Today, publicly held Jones Intercable and its sister company, Jones Spacelink Ltd., have combined revenues of $299 million, up 15% from $260 million in 1992, while the partnerships they manage have revenues of $386 million. Like most cable operators, however, they lose money. Intercable and Spacelink together lost $35 million in the fiscal year ended in May, while the partnerships lost $73.3 million.

But in the cable-TV industry, reported losses matter little. Cable companies have enormous capital costs--and the partnerships are designed to give tax losses to investors. More important than producing earnings has been Jones's ability to generate cash flow needed to fund expansion and upgrade systems with fiber-optic cable. Still, the complex web of partnerships and the relatively thin trading of its stock have hurt Jones's tightly controlled public companies on Wall Street. "It's just not worth the time it takes to understand it," says Kidder, Peabody & Co. analyst Alan Gould, who follows one of Jones's partnerships.

The complexity hasn't hurt Jones, however. He has amassed a fortune estimated at more than $300 million by holding huge blocks of both Intercable and Spacelink, as well as a controlling stake in Jones Space Segment, a private company that generates millions from the operating companies by leasing satellite transponder space. A few years back, Jones Intercable also paid its chairman $4.3 million for his stake in Jones Galactic Radio, which provides stereo music to cable subscribers, while other private companies owned by Jones provide data and financial services and arrange deals for the public cable companies.

Jones's deal with BCI is expected to simplify the structure, giving the company more allure on Wall Street. Intercable and Spacelink will be merged and many of the investment partnerships bought out. Although the deal will cut Jones's personal stake in the merged companies to 35%--he currently controls 86% of Spacelink and 48% of Intercable--it will give him the funds to go shopping for more cable systems. He'll also pour more money into his longtime infatuation, Mind Extension University. Jones spent $30 million of his own to launch the seven-year-old cable university, which offers college courses to some 26 million cable homes.

For Jones, a voracious reader who employs a full-time staffer to summarize books for him, education is a mantra. But he insists the money-losing Mind Extension University is also a business in the making; he is currently launching three new channels with courses in computers, foreign languages, and health.

Jones plots his empire's next move from a building just outside Denver that is designed to give employees a grand view of the Rocky Mountains. The waterfall in the atrium, he admits, was inspired by a scene from Dune. His office suite includes a "war room" with a console of TV screens and electronic devices that would do the Starship Enterprise proud.

No question about it, there are few chief executives who do things quite like Glenn Jones. Writing as "Yankee Jones" in a series of books he has published called Briefcase Poetry, Jones might be talking of himself in a poem entitled Entrepreneur: "The dreamer is a practical man, he can do things no one else can." And now he has the cash to turn more of his dreams into reality.JONES'S

JEWELS

1993 PROFIT

OR LOSS --

1993 REVENUE --

JONES SPACELINK*

Controls 86% of operator of cable-TV systems; manages

cable partnerships with

revenues of $41.6 million

-- -$10.4 million

-- $166.9 million

JONES INTERCABLE*

Controls 48% of cable operator; also manages cable partnerships with revenues of $344 million

-- -$25 million

-- $132.4 million

MIND EXTENSION UNIVERSITY

Has a 51% stake in this provider of higher education programming received in 26 million cable homes

-- Not available

-- $10.8 million (estimate)

JONES SPACE SEGMENT

Wholly owns this private company that leases satellite time and transponders to other Jones companies

-- Not available

-- $2.4 million

JONES GALACTIC RADIO

Controls 79% of this provider of music services to cable systems

-- Not available

-- $2.7 million

*Pending merger between Spacelink and Intercable followed by Bell Canada International's acquisition of a 30% stake would reduce Glenn Jones's control to 35% of combined company by yearend

DATA: JONES INTERCABLE

Ronald Grover in Englewood, Colo.


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