The pair spoke in New York on Thursday as Liberty Media and affiliates held their annual investor day presentation. Neither Malone, Liberty Media chairman, or Maffei, CEO, mentioned the AT&T-Time Warner merger by name but the pair were asked to comment on the prospect of the Justice Department adopting a much stricter standard for media M&A in the Trump administration.
Malone, a renowned media investor, has been predicting a wave of consolidation of mature content and distribution businesses for some time. Earlier in the day, Malone told CNBC’s David Faber in an interview that Amazon was akin to a “Death Star” that was a major threat to traditional media as well as other industries given its size and scale.
In this context, Justice Department efforts to block the vertical merger of AT&T’s distribution businesses with Time Warner’s content companies is curious, the executives said.
“The traditional content business is really challenged,” Maffei said. “The idea that you’re going to block consolidation is crazy.”
Malone got a laugh with quip: “I personally have very little insight into what the anti-trust division is smoking these days,” he said.
Malone noted that Discovery Communications, in which he is a major shareholder, has seen the approval process of its acquisition of Scripps Network Interactive move more slowly than expected, although he has no lack of confidence the deal will be approved.
Malone acknowledged that politics is a factor when it comes to the content arena at present.
“With respect to the content business, it’s extremely politically sensitive — perhaps more than it’s been in a long while,” he said.
Malone and Maffei held another half-hour Q&A session later in day. Among other highlights from both conversations:
Wireless market: Malone is not “in love” with wireless services but recognizes that it’s an important service that cable needs to offer in order to ensure that the cable pipe is the central source of broadband and mobile connectivity for consumers. He is still predicting that cable and wireless companies will come together over time — there were rumors earlier this year of Verizon making a bid for Charter Communications (in which Liberty is a major shareholder) — but he thinks the joint-venture approach that Charter and Comcast have set with Verizon is a good start “as opposed to trying to jump off a cliff and do a large transaction,” he said. “It’s very important that the cable company figure out how connectivity on any device comes through us — that we become the platform of preference.”
Peak TV: The exponential growth in TV content chasing consumers and licensing dollars raises the question of who’s going to pay for it all, Maffei said. “We’re not going to pay for it at Charter,” he said. Maffei credited Netflix with having a “major-league advantage” in their business model that allows them to charge less for far more content than HBO and other premium services. “That’s a tough proposition over the long-term unless you believe that the people at HBO are inherently smarter at picking shows,” Maffei said.
Charter’s suitors: Malone is gratified by the fact that there is so much chatter in the marketplace about Charter as an acquisition target. Liberty helped drive the resurgence of the operator after it went through bankruptcy under a previous management regime, and it helped steer Charter’s expansion through the acquisition of Time Warner Cable. “All this noise about everybody wants to buy Charter — it’s actually true,” he said. “It’s a fabulous company. It’s going to go in a great direction.” He’s also heartened by the steady advances in the services and functions that flow through the cable pipe. “It’s wonderful to see this evolution of technology,” he said. Cable’s “fundamental asset is it’s connectivity capabilities and massive capacity.”