Maffei was cautious but not completely tight-lipped in discussing Liberty’s pursuit of Time Warner Cable, via its controlling interest in Charter Communications, during his session Tuesday at Citi’s Internet, Media and Telecommunications conference in Las Vegas.
Maffei was pressed about Liberty’s history of diving into businesses at a time when others see them as on the decline or distressed. Maffei emphasized that the focus at present is not strictly on consolidating cable systems but also on finding ways for cable overall to be more competitive.
“Fifteen-20 years ago you did not have scaled national competitors in wireless or satellite companies, you didn’t have over-the-top and other technologies,” Maffei said. “The cable business has new threats but also new opportunities, most of them enhanced by scale, not just on the cost side but on ancillary opportunities. A new set of reinvigorated cable opportunities comes from working together and building scale. Some of that is from consolidation and some of that is from confederation and working together more closely.”
In response to a question from the audience, Maffei was candid about his assessment that Time Warner Cable has not been as well run as its major competitors, namely Comcast. He acknowledged that there will be pressure to make strides quickly should a Charter-TW Cable deal get done.
“We are being asked to pay for a bunch of assumed synergies,” he said, most of which would stem from savings on content and marketing costs. “All are achievable to some degree. But can they happen fast enough will be the real key. There’s also an opportunity to run that asset better than it’s been run. It’s not performed as well as say Comcast, or what Tom (Rutledge) and his team (at Charter) have been able to do.”
When pressed on the timetable for a formal Charter bid for Liberty, Maffei would only say: “I wish it were yesterday just like you.”
Other points Maffei touched on during the sesh:
** Liberty’s plan to buy up the rest of Sirius XM Satellite Radio is a means of putting in place “a more rational capital structure” for the radio satcaster and to allow Liberty access to its cash flows. He noted that some of those who have criticized Liberty’s offer as too low of a premium have also sounded the alarm about high-tech cars putting Sirius out of business. “Oh my gosh you guys are stealing the company and at the same time you’re all worried about the death of the company because of the connected car,” Maffei said.
** Google’s budding efforts to offer cable-like programming service and broadband subscriptions via Google Fiber are not much cause for concern for cable operators. He sees the Google’s unlimited access broadband offering as “a political statement” with “value in D.C. as much as anything else.” But he allowed that if Google pushes its into more markets it come become “a specter around the valuations of cable as a broadband carrier.
** Liberty is on a new path that is very different from its past corporate strategy of holding stakes in various businesses or grooming assets for spinoffs, i.e. DirecTV. “That game is over. That game worked great (but) it’s really hard to replicate going forward. We need a new game. The game we did then is not going to serve our shareholders. We need new ways to create value. We think they’re out there but it’s not going to be following the same path.”