John Malone, Largest Private Landowner in the U.S., Speaks

 In February John C. Malone, the chairman on Liberty Media, became the largest individual landowner in the U.S.—with 2.2 million acres—surpassing his good friend, Ted Turner. Malone, 70, spoke to Forbes about his plans for his land, his conservation ethos and his relationship with Turner.

Here's the conversion with John Malone:

Forbes: Tell us about the recent purchase of 1 million acres in Maine (980,000 acres) and New Hampshire (20,000 acres)?

• John Malone: We bought it from GMO Renewable Resources, a private equity firm. We privately negotiated the deal starting about eight months ago. I already have forestry operation in Maine [68,000 acres] and was looking to expand around where I was. GMO happened to own property around there. I asked if they would part with some of it. Their response was they would, but it would expensive. Then I offered to buy their entire northeastern operation. The bulk of the land GMO had bought from IP five years prior.

Forbes: Why Maine?

• Malone: We’ve had a long history in Maine. My wife and I have been going to Maine since 1982. We used to spend summers there even when I was CEO of TCI. We’d move the summer office there every year. Maine is very similar to area where we both grew up in Connecticut before that state was overbuilt. And we’ve had a getaway place, a personal retreat, on a lake in Maine near the Quebec border for a dozen years.
• The new land goes from New Hampshire through Maine to the New Brunswick border, not contiguously, but more or less so. It fit our interests in land conservation and sustainability. From a financial point of view, it’s a pretty decent hedge on devaluation of currency. It’s a commodity-based asset, a hard asset, an asset that could see a tailwind if in fact the U.S. construction industry comes back.

Forbes: So what do you plan to do with the land?

• Malone: All of it will be operated as sustainable forestry. We’re trying to increase the value of what you don’t cut and trying to build a longer term asset. You cut down over-mature trees, you thin, which actually accelerates growth. You have a very long-term time horizon. In addition, we’re protecting lake fronts, riverbanks, and any drainages from any kind of siltation that might be caused by overcutting. Meanwhile you’re trying to provide continuing employment for pretty large contingent of people who make a living in timber industry. There’s also some potential to develop windpower on the property.

Forbes: There’s a long-held tradition in Maine of private landowners allowing public recreation on their property. Do you plan to keep that tradition going?

• Malone: Absolutely. Hunting, fishing, skiing, snowmobiling… all recreation. In Maine, property owners are protected from liability claims. It would be great if we had that out West. In Colorado if someone shoots himself in the foot because he tripped over wire on my property, there’s no protection. In Maine, we’ve kept the lake on which we have our personal getaway open to the public at no charge. We’ve never had a problem in 12 years. It works.

Forbes: What about the proposed national park in Maine? Have you considered donating any land to that cause?

• Malone: I would hate to see forestry banned.  I’m not an extreme tree-hugger. I do believe trees grow and are a useful agricultural product that can be harvested without damaging the ecology and wildlife. In fact, done well, it can enhance wildlife and recreation. In that sense I’m an agricultural person. I think private ownership is generally superior to public because you care about the land more and it doesn’t get trashed.

Forbes: Last August you bought the 290,100-acre Bell Ranch in New Mexico. Why?

• Malone: We already have a 250,000-acre TO Ranch in northern New Mexico. It goes back-to-back with Ted’s [Turner] Vermejo Ranch. I go east from him. We’ve had it for a number of years and really enjoy it.  It’s a traditional horseback and cattle ranch. So we just expanded those operations with the Bell Ranch. I had looked at it for years. It was pretty pricey. When it finally got to a rational price, we stepped up and negotiated a deal. It will be a horse and cattle ranch. I brought in a new manager who had been a professor in the cattle field at Texas Tech. He’s also an expert on equine and bovine nutrition. Our plan is to operate the ranch with a state-of-the-art understanding of breeding and natural food and pasture management. We also have cattle ranch operations in Wyoming and Colorado.

Forbes: The Land Report says you are now the nation’s largest private landowner, overtaking Ted Turner, with 2.2 million acres.

• Malone: Ted and I are roughly of equal size. He was down in the dumps last time I saw him because he said I still had a lot of dry power and he was pretty tapped out [laughs]. If it was a race I think he would concede, but that’s not what it is. We’re really good friends. Ted first gave me this land-buying disease. I was with him when he negotiated to buy the Vermejo. He’d never seen it from the air so I took a helicopter down and flew him around to see the ranch from the air.

Forbes: You and Turner are both land conservationists, but you approach that conservation differently, right?

• Malone: Ted’s done some magnificent things. Ted wants tradition but Ted’s idea of tradition is to go back to pre-European time. I really respect that. His Flying D Ranch is absolutely magnificent, with his bison herds. He’s eliminated any sign of human habitation. But I tend to more willing to admit that human beings aren’t going away. Ted feels that there are some places where humans can be kept out.

• Ted and I kid because we’ve looked at a lot of the same stuff without knowing that we we were both looking. We’ve never gone head-to-head. We’ve been in business together an awful long time. Neither of us wants something so bad that we would step on other guy’s toes. This isn’t that kind of thing. I’m just as happy to see Ted own it and preserve it.

• We basically both love the land, and are very heavily involved in The Nature Conservancy. Here in the Denver area I bought basically a large ranch that separates Denver from Colorado Springs. It’s really the only buffer between the two metros. I did that in conjunction with easement so that they’ll always be open space. It’s primarily an elk and bighorn sheep preserve.

• We’re not in this to get rich. The land is not going to provide a meaningful cash return on invested capital. But it does appreciate in value. You’re in it for inflation protection and long-term value, but primarily because it’s something that should be preserved and you can afford to do it if the interest rates are low enough and operations are efficient enough. I tell my ranch guys that the goal is to break even and to improve the quality of the ranch over time with better water, better grass, better fences, better buildings and better cattle. Then it’s sustainable.

Forbes: Are you still on the hunt for more land?

• Malone: We’re always interested. I’m looking at one large potential forestry addition back East, in the northeast and Canada. It would double us in forestry side there. We may or may not reach agreement on it. Then we are adding what I would call cropland to our land ownership, really so that we can go a little more vertical in cattle and produce more of our own feed and control costs better.

Forbes: So why make these land purchases now?

• Malone: Interest rates are very low so long term assets can be financed with low-cost money. Secondly, the devaluation of U.S. dollar would seem to be pushing up the value of commodities and commodity-producing assets. Also we’ve just come out of a very depressed period in which western ranch land became illiquid. It’s not so much there was collapse of prices as much as there was prolonged period of illiquidity which led to places like the Bell Ranch becoming available. There’s an old joke where one rancher says to another ‘there’s a four-year backlog in ranch sales.’ And the other guy says: ‘No, there’s a four-year pricing process, then a one month liquidity period.’ What happens with these properties is that most will sit in hands of a generation that doesn’t know what to do with them. It takes a while for them to conclude that the prices are not what they had hoped, so properties periodically come to the market.

Forbes: You’ve detailed the conservation and financial reasons for owning land. Are there any other reasons?

• Malone: My wife says it’s the Irish gene. A certain land hunger comes from being denied property ownership for so many generations.  My uncle told me one time that he didn’t want much, that he just wanted his little farm and all the ones attached to it [laughs]. There’s an emotional and intellectual aspect of walking the land and getting that sense of awe and the feeling that ‘wow, this is neat.’ I own it, sort of, for my lifetime. But I’m really just a steward.

•  I love to fish and I bird-hunt occasionally on the property. I like to shoot sporting clays. My wife rides horses for four hours a day.

Forbes: What about long-term plans?

• Malone: If you’re really clever maybe can protect it after you’re no longer here. I’m putting most of the land in conservation easements which are hopefully supposed to be perpetual. But I’m not going to kid myself and think that 500 years from now, with population growth, that the government won’t start putting people on the land. But at least I tried.

(By MONTE BURKE/Forbes)