Liberty Media chairman John Malone said his company’s failed attempt to purchase the 21 Fox regional sports networks put up for sale earlier this year by the Walt Disney Co., would have helped to right what he sees as one of cable’s biggest mistakes -- allowing content providers to force distributors to carry programming bundles that are too large and too pricey.
Liberty was one of several bidders for the Fox RSNs, which were eventually won by Sinclair Broadcast Group and a minority partner -- Byron Allen’s Entertainment Studios -- for about $9.6 billion. Liberty had reportedly teamed up with Major League Baseball in its bid, but backed off when the price became too high.
At Liberty’s Investor Day in New York Thursday, Malone confirmed that Liberty teamed with MLB on a bid, which he said would have been “affordable, and less disruptive.”
“It was designed essentially to be a little more rational, and not to allow retransmission consent to be confounded with regional sports,” Malone said. “The unfairness of that leverage would just make the overpricing of the big bundle that much worse.”
Malone continued that he saw the cable industry’s allowing networks to make carrying all of their networks across the board as a contractual obligation, as a mistake.
“That really turned the negotiation into a tax,” Malone said. “Once there was competition among distributors and a fear that distributors would lose market share if they didn’t carry pretty much everything in the sports area, it really just turned sports programming into a tax.”
He added that in addition to enriching players and distributors, that practice also drove the price of the big bundle beyond the economic limits of many households.
“If you didn’t have that component in the cost of content, you would probably see far fewer cord cutting for economic reasons,” Malone said.
While Dish Network managed to report a solid Q3 even after dropping the Fox RSNs in July, Malone said satellite’s economics are different, because in many markets it is the only viable video alternative. For other distributors with three or even four competitors, it would be tougher to survive without the channels.
Late Sen. John McCain (R-Ariz) had proposed a solution about a dozen years ago, where any network that was priced wholesale over a certain threshold, would be made available a la carte by the distributor.
“The industry had a chance to support that and did not,” Malone said. “It was a huge mistake.”
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