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John Malone on Whether Lionsgate Can Follow Netflix’s Direct-to-Consumer Model

Cable mogul John Malone has issued a bright outlook for Lionsgate after recently acquiring premium cabler Starz for approximately $4.4 billion.

“The real question for Lionsgate is how far up the food chain is it realistic to think Lionsgate can go,” Malone said on Tuesday during Lionsgate’s inaugural Investor Day. “Can you create a Netflix-like direct-to-consumer relationship branded on a global basis, is that within the scope of possibility? Because that’s a great model if you can get there.”

Malone praised Netflix CEO Reed Hastings before addressing how Lionsgate will deal with streaming platforms like Netflix and Amazon, noting that Netflix has recognized the benefit of Lionsgate and Starz being in a package as part of a broader service offering.

“He really broke the mold with his success,” Malone said about Hastings. “He got to scale. The traditional distributors who were asleep at the switch, they should have been doing that, they didn’t do that, they didn’t protect their scale monopoly position. So now they face going-forward competition for the consumer with content.”

Malone was engaged in conversation with investor Gordon Crawford as part of  Lionsgate’s briefings to Wall Street. The Starz deal gave Lionsgate the flagship Starz platform that reaches 24 million U.S. subscribers, the Starz Encore network with more than 32 million subscribers, and five OTT services.

Malone, who held the majority stake in Starz, has voting control of Liberty Media and Liberty Global, in addition to stakes in Lionsgate and Discovery Communications.

Malone said that he doesn’t believe Lionsgate should attempt to buy more companies at this point and noted that the merger between Lionsgate and Starz gives the combined entity “a predictable stream of revenue.”

Starz CEO Chris Albrecht told investors that the merger will enable the network to be more aggressive. He also pointed out that Starz had grown from 18 million subscribers in 2010 to 24 million by the end of 2016’s third quarter.

Albrech pointed to “Power” and “Outlander” as examples of series that are targeted at the under-served audiences — African-American and women, specifically.

Investor Day follows Lionsgate’s dominance at Sunday’s Golden globes, where “La La Land” won a record seven awards. Malone issued a cautious outlook about the feature film business, noting the difficulty of consistency while adding, “Volatility is your enemy.”

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