Liberty CEO discusses Comcast, MGM

Maffei: Comcast gets hedge, but pays high price

NEW YORK -- Liberty Media president and CEO Greg Maffei said Tuesday that Comcast is paying a "pretty big price" for a 51% stake in NBC Universal, but he lauded the cable giant for pulling off a deal that will allow it to hedge potential future challenges.

He also said Liberty will take a look at MGM, but signaled it would bid conservatively if at all.

"We have as you noted a lot of cash," he said in an appearance on the second day of the 37th annual UBS Global Media & Communications Conference. "We'll look at MGM like everyone else," but Liberty will see whether the acquisition is a better use of cash than stock buybacks or other potential deals. MGM could be a fit with Liberty Starz, which houses the Starz premium TV service.

The Liberty CEO said he agreed with Lionsgate vice chairman Michael Burns who had recently said MGM would be attractive to him, but only at the right price, which he signaled was fairly low.

"(Film) library values have continued to decline," added Maffei predicting that "they'll continue to melt."

Asked about Comcast-NBC Uni, he cited a push by broadcast networks for retransmission fees and a continuing rise in overall programming costs as key challenges for distribution firms.

This is leading to wars between content and distribution players that "can only escalate" more in the future, according to Maffei. "(Comcast chairman and CEO) Brian (Roberts) gets to hedge that" by having a presence on both sides of the equation, he said.

But Maffei also warned that the largest U.S. cable operator is paying a "pretty big price for the NBCU assets." Plus, he highlighted that investors should not forget about the tail-end costs to Comcast as the company must buy out General Electric in two stages for billions of dollars that come on top of the initial capital outlay.

"It was cleverly structured," said the Liberty CEO, who is known as a smart dealmaker, when asked if the NBC Uni deal, which will give Comcast a 51% stake in the entertainment giant, is a transaction that has a Liberty feel to it. He also quipped that such a comparison must mean the deal is complex.

He also reiterated that "we did not look at the deal," but "we would have liked to look at the (NBC Uni) deal."

But Comcast managed to keep talks with GE exclusive. "Brian embraced the (deal) price GE wanted," Maffei said.

Maffei was also asked if the Comcast-NBC Uni deal is an endorsement of Liberty's strategy to combine content and distribution assets. He reiterated his belief in possible synergies if the two businesses are managed well together and warned that "investors prefer pure-play (companies) if there is no synergy."

Maffei suggested that with the NBC Uni deal, Comcast will be "even more powerful," but he feels Liberty's businesses will be fine. "We'll have our challenges and our arguments with them," he said, but Starz and QVC have business models that provide distributors with a chance to make money via commissions and the like. "In a world where distributors are squeezed...we're pretty well positioned to be an ally," said Maffei.

Will Comcast-NBC Uni accelerate a new M&A wave in the industry?

Maffei said it is unlikely to drive companies to deals they wouldn't look for anyway for other reasons.

Maffei also got a question on Starz's original content strategy. He said "Spartacus" will be the premium TV network's first big test and called original programming important. But he also cautioned that Starz is unlikely to have the HBO and Showtime-type budgets for it.
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