THE THIRD MAN: JOHN MALONE

JOHN MALONE HATES IT THAT SOME PEOPLE THINK OF HIM AS A BOARDROOM bandit. The country's most powerful cable operator--whose 21% stake in Turner Broadcasting gave him potential veto power over last week's big merger--has been variously described as Darth Vader, Andrew Carnegie and Genghis Khan. Such comparisons, says Malone, have him all wrong. He's shocked, shocked by reports that he held up the merger--first by insisting that Time Warner do away with its "poison pill" takeover defense, then by demanding seats on the board--until he had squeezed all the juice he could from the deal. "The speculation is laughable," he says. Malone still came up with a great package: He'll swap tbs stock for Time Warner stock (his share of the total: about 9%) at a higher exchange rate than most other investors and sign a new "carriage agreement" with Time Warner that locks in discount programming for his cable system through 2015.

Malone a treacherous negotiator? Don't be silly, he says. Equally ridiculous, he adds, is the idea that he plans to make trouble for Levin down the road--even, as some lurid scenarists would have it, helping Ted Turner move against Levin to wrest control of the company. "I know Ted very well," Malone says. "His life-style is such that he doesn't want to be in there running anything. Jerry is king. We're giving him the power to be a really strong CEO." Because Malone controls a huge cable system, FCC rules bar him from controlling more than 5% of the voting stock of another system--Time Warner's. (The rule has been struck down in one court, but Malone is abiding by it anyway). In a move some analysts consider the most dramatic part of the deal, he gave control of his shares to Levin. Malone says this will help Levin enforce his will over the fractious Time Warner family. "It was a little like old England, when the king was a titular head and the barons could topple him whenever they wanted," Malone says. "By strengthening the king, you get a more orderly arrangement. Jerry has our votes. I think you'll be amazed at how much better Time Warner works."

Was this a vote of confidence or something darker? "What John Malone giveth, John Malone can taketh away," says Porter Bibb, a media-investment banker at Ladenburg, Thalmann who has been a frequent critic of Levin's. Bibb believes that Malone saw the merger as an avenue to power. "Levin is now a puppet on Malone's strings. Malone is never going to be CEO of Time Warner. He'll probably never sit on the board. But he wanted to control Levin, and now he does." A scenario even has Malone divesting some cable interests, getting back his voting stock and making an all-out run for Time Warner.