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By David Bank 04/23/1999 As chief financial officer and top deal maker for Microsoft Corp., the 38-year-old former religion major is steward to $21.8 billion in cash reserves and $450 billion in market value. He stands to make hundreds of millions in salary and stock options. But in an unusual recruiting tug of war, Mr. Maffei could leave Microsoft behind to build a media empire with some of the nation's largest cable operators, delivering high-speed Internet, telephone and other digital services to millions of households. In recent weeks, RoadRunner, a joint venture of cable giants Time Warner Inc. and MediaOne Group Inc., has been trying to recruit Mr. Maffei as its first chief executive officer. If the Internet boom on Wall Street continues, he could conceivably be worth billions of dollars after an initial public offering. One giant catch: Microsoft's chairman, Bill Gates, has so far vetoed RoadRunner's attempt to poach his chief financial strategist. Mr. Gates won the power to veto RoadRunner's choice for its top job after Microsoft bought a 10% equity stake in RoadRunner in June for $213 million. In fact, it was Mr. Maffei, a member of RoadRunner's board, who recently conveyed Mr. Gates's veto of his own job offer to his fellow directors. "Greg's a key guy here at the company, and Bill thinks very highly of him," says Mich Mathews, Microsoft's vice president of public relations. "Therefore, it's natural Bill would veto." Mr. Maffei himself declined to comment. There is still a slim chance that he could take the RoadRunner job, depending on Microsoft's unfolding relationship with the high-speed digital service. The tussle over the young financier reflects both Mr. Maffei's rising star at Microsoft and the huge stakes of the current round of maneuvering to control high-speed digital links to the nation's 100 million households. Cable companies are eager to turn their video networks into "broadband," or high-speed digital pipes for audio, video and electronic commerce. The companies see the transformation as a chance to develop vast Internet sites like America Online Inc. At Home Corp., another high-spee d Internet provider over cable, controlled by AT&T Corp.'s Tele-Communications Inc. unit, has a market value of nearly $18 billion. With about 250,000 cable-modem subscribers, RoadRunner could use Mr. Maffei in its rivalry with At Home, which has about twice as many users. And executives of Time Warner and MediaOne, which is the subject of a bidding war between AT&T and Comcast Corp., have been seeking a leader from outside their companies who can quickly ready an initial public offering. With his deal-making experience, Mr. Maffei would seem well-suited to the job -- which is why Mr. Gates is reluctant to let him go. Mr. Maffei is personable enough to successfully negotiate with Steve Jobs, Apple Computer Inc.'s interim CEO and once one of Microsoft's main detractors. During a long walk with a barefoot Mr. Jobs in Palo Alto, Calif., in 1997, he sealed a $150 million investment in Apple, foreclosing potentially damaging copyright litigation by Apple against Microsoft. Since arriving at Microsoft in 1993, he has also arranged the company's $1 billion stake in Comcast with cable mogul Brian Roberts and helped create the MSNBC joint venture with General Electric Co.'s NBC unit. His recent spending spree includes a $500 million investment in British cable carrier NTL Inc. and a chunk of Dutch cable group United Pan-Europe Communications NV "There's no one who can negotiate like Greg," says Bill Comfort, chairman of Citicorp Venture Capital Ltd., a unit of Citibank, who once hired Mr. Maffei. "He understands the pressure points. He understands the ramifications completely. Nobody's going to outnegotiate Greg." Mr. Maffei grew up in New York City and Lloyd Harbor, Long Island, before moving as a teenager to Concord, Mass. At Dartmouth, he thought he might become a journalist or perhaps a lawyer. Even after Harvard Business School, "I hadn't figured out what to make of my career," he said in an interview before the recent overtures from RoadRunner. During a stint at Dillon Read (now Warburg Dillon Read), Mr. Maffei caught Mr. Comfort's eye when he arranged the sale to Citicorp of a struggling refrigerator manufacturer. "He made a better sell than we made a buy," recalls Mr. Comfort, who wooed Mr. Maffei for six months. With a "hunting license" from Citicorp, Mr. Maffei rode the hot corporate buyout market of the 1980s. When the market cooled, Mr. Maffei wanted experience in operations and moved to Seattle to take over Pay 'N Pack Stores Inc., a chain of home centers that was 75%-owned by Citicorp after a heavily leveraged buyout. The chain was burdened by stores that weren't big enough and other problems. Mr. Maffei put it into bankruptcy-law proceedings and liquidated it within 18 months. Mike Brown, Microsoft's treasurer at the time, hired Mr. Maffei in 1993 to set up Microsoft's first deal-making shop. One of his first coups was resolving a dispute with Stac Electronics Corp., which had sued Microsoft for patent infringement and beat the giant in court. Mr. Maffei negotiated the acquisition of the company's file-compression technology. "It started as a lawsuit and he turned it into a deal," recalls Mr. Brown. When he succeeded Mr. Brown as finance chief in 1997, Mr. Maffei saluted his predecessor for presiding over the addition of $150 billion to Microsoft's market value, an achievement he says that is "probably unparalleled among chief financial officers." Since then, Microsoft has added nearly $250 billion more to its capitalization. And Mr. Maffei may well have to stay put as chief financial officer at Microsoft. The path could be cleared for his departure, however, should RoadRunner's owners try to reverse Mr. Gates's veto by offering what Microsoft has long coveted, a franchise to provide the software systems not only for high-speed Internet access but for digital television itself. But if no agreement is reached, Mr. Maffei has only himself to blame. The clause giving Microsoft a veto over RoadRunner's CEO selection was added at his insistence. Copyright © 1999 Dow Jones & Company, Inc. All Rights
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