Run the Numbers

A CFO Explains the History of EBITDA

5 snips
Feb 2, 2026
Guest
Ben Hillman
Ben Hillman, executive producer and frequent conversational partner who steers sharp financial chats. The conversation traces EBITDA from John Malone and cable TV to private equity, SaaS, and today’s AI boom. They unpack why EBITDA removes debt, taxes, and depreciation and trade wild examples of adjusted EBITDA stretches. The talk closes by weighing depreciation, cash flow, and the metric’s staying power.
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ANECDOTE

Malone’s Cable Playbook

  • John Malone ran TCI, a debt-heavy regional cable company and argued net income was misleading for cable operators.
  • Malone prioritized pre-tax cash flow and growth over reported profits, building an empire while avoiding taxes through debt and depreciation.
INSIGHT

What EBITDA Actually Measures

  • EBITDA isolates operating cash generation by stripping interest, taxes, depreciation, and amortization from earnings.
  • That vacuum allows comparisons across companies with different capital structures and tax environments.
INSIGHT

EBITDA As A Universal Valuation Tool

  • EBITDA became the lingua franca for leveraged deals because it shows capacity to service debt independent of capital structure.
  • Investment bankers and private equity adopted headline multiples like "10x EBITDA" to compare companies rapidly.
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