NEW YORK — Cable legend and Liberty Media chairman John Malone told a packed audience of investors that the only way cable operators can solve their most pressing problems is through cooperation — not necessarily consolidation.
Liberty Media has been one of the biggest catalysts for consolidation since March, when it purchased a 27% interest in Charter Communications for $2.6 billion. Since then, Liberty has reportedly made overtures to Time Warner Cable concerning a possible merger with Charter, only to be rebuffed, and Charter stock has appreciated about 39%, increasing the value of Liberty’s holdings by about $1 billion.
While past arguments around consolidation have centered around how added scale could help encourage joint ventures to create new products and services, including a cable answer to streaming video giant Netflix. “The smaller players are already willing and able to affiliate with technology schemes and brands, but they have to be underwritten by the biggest players who have more in common than they have to fear from each other,” Malone said.
Malone added that cable could create its own rival to Netflix by creating a national brand that could buy programming and distribute it over the Internet.
”I see no reason why a vehicle whether it’s Xfinity or the equivalent can’t be syndicated, whether Hulu couldn’t be bought and syndicated or whether some entrepreneur comes in and starts something from scratch that the industry at large can get behind and give it the ability to purchase content on a ubiquitous basis,” Malone said, adding that even Comcast which covers 25% of the country, doesn’t have enough scale to buy national programming alone.
Malone added that a successful TV Everywhere offering could be the difference. “Had TV Everywhere become TV Everywhere as we sit, we would be looking at new revenue streams, we would be looking at a way to manage the issue of ad skipping and elimination. The content side and the distribution side still have a huge monetization system to defend. I think at some point they will realize that.”
Malone was in rare form, touting the benefits of consolidation to bring the industry together to solve its high cost and competitive problems. At one point, Malone said he wanted Liberty to maintain its current size so it can help fund further deals. “It’s best not to get Liberty too small too soon so we can have the capital to chase a few more rabbits,” he said.
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