John Malone: Combined Fox-Time Warner Would Be 'Very Powerful'
Liberty Media chairman John Malone on Monday discussed the planned Comcast-Time Warner Cable deal and a possible 21st Century Fox deal for Time Warner.
Asked about the entertainment conglomerates' potential combination at the annual shareholder meeting of Liberty Media, which was webcast, Malone said it would create "a very powerful programming enterprise with lots of market power." He also described the possible deal as an issue, "which clearly raises all kinds of consolidation, [monopoly] and market power issues for both [the Justice Department] and the FCC."
Liberty CEO Greg Maffei added that a Fox-TW deal would "on the margin probably not [be] great for the Liberty family...probably not perfect."
Time Warner recently rejected an $80 billion bid by Rupert Murdoch's Fox, which has since been looking at a possible updated bid.
Discussing industry consolidation in general, Malone said: "Consolidation is going to happen. The media industry is a scale-driven industry." He added that the digital revolution may not even be half-way done in the sector, with the globalization of media just in the beginning stages.
Asked about the proposed Comcast-Time Warner Cable deal, Malone echoed: "Consolidation makes a lot of sense in the U.S. cable business. the industry is becoming sub-scale. It is sub-scale even if you put together all companies in the U.S." compared with the companies it competes with, which have been going global.
The main question will be if the merged firm has too much over people that need access, but he feels it has "a high probably of ultimate success," Malone said. He predicted there would be "some horse trading on some issues," mainly the definition of net neutrality and protection of independent suppliers.
He summarized the key question as being "whether a dominant transport player has to have some kind of rules that would guarantee free or fair access to its facilities."
Malone also said that the Comcast-TWC deal is "complicated" by two pay TV transactions announced in its wake - an agreement by Charter Communications, in which Liberty owns a stake, for some cable systems that the combined Comcast-TWC would sell, and telecom giant AT&T's deal to buy DirecTV.
FCC boss Tom Wheeler "will have to scratch his head" and decide if he views the three deals as separate transactions or if they should be considered together, which would most likely delay the regulatory reviews, Malone said.
Discussing Charter's deal, Malone reminded investors that Charter originally had gone after all of TWC. He argued that the deal Charter got in the end was "superior to the one they started with," saying "shareholders are better off" than if Charter had bought all of TWC.
If the Comcast deal gets blocked by regulators, Charter could re-start full deal talks with TWC, "but that's not something we expect," Malone said.
Asked about recently announced spin-offs and deals and whether they will make Liberty Media's asset base clearer and the company more transparent, Malone quipped: "We are much more transparent than the Obama administration."