Liberty CEO Leaves Options Open for Future of Sirius XM CEO Mel Karmazin
Liberty Media CEO Greg Maffei at an investor conference on Thursday discussed the possible future of Sirius XM Radio CEO Mel Karmazin and once again touted the healthy outlook for premium TV service Starz, predicting that in the future a digital distributor was likely to offer it on a tiered basis.
Karmazin, whose contract is expiring at the end of the year and who observers have predicted would likely leave the company if Liberty takes a majority stake, and his team "have done very well," Maffei told the Goldman Sachs Communacopia conference in New York in a session that was webcast.
Asked if Karmazin was valuable, he said: "Obviously." But is he irreplaceable? "Graves are full of irreplaceable people," he said.
Maffei added: "Mel has done a great job. There are plenty of people who can do a great job running the business....We are going to pursue obviously discussions...the board will pursue discussions with Mel, I'm sure. But without Mel, the business will not fail."
Maffei reiterated that Liberty wants to push for shareholder returns to help Liberty get back its investment in Sirius before a potential spin-off.
Amid continued suggestions that a bigger entertainment conglomerate could acquire Starz once Liberty spins it off into a separate company, Maffei said that "there is no doubt that someone with incremental distribution, channels, retrans and [more] content might be able to do more with it." But that must be weighed against the downsides of residing inside a bigger company, he said.
Asked if Netflix was a rising challenger to premium TV businesses, Maffei said "they could ramp their original content," but "they are relatively nascent" and still lack original programming scale." That means that even Netflix has continued success with originals, "they would not be displacing HBO," he said. "I'm actually pretty bullish on the space" of premium TV given it focuses on highest-quality TV content.
Discussing Starz's online strategy, Maffei reiterated that the company will have an authenticated broadband video service for pay TV subscribers "shortly." And he predicted that "there will be down the road online offerings that are more compatible [with Starz's business model and positioning] and tiered."
Maffei said that this was one key reason why Starz didn't renew a distribution deal with Netflix. "Our business was better served" given "channel conflict with our traditional channel partners," which was "enormous" and would have cost the company support, and overages to content partners Sony and Disney would have been drag on revenue and profit. Also, in terms of long-term postiioning and branding, Starz was looking to come off as high-end. The Netflix one price non-tiered model "was not attractive" in that context, Maffei said.
Asked if there could be a standalone online Starz service in the works, Maffei said "my guess is that is not the way the world works," even though he argued that he should never say never. Except for a recently announced deal in Scandinavia, HBO has not offered an online-only service either.
The Liberty CEO once again called small stakes in Viacom and Time Warner Cable non-core holdings.
Asked about Liberty's deal focus, Maffei said: "It is increasingly hard to find things that we find attractive." Valuations tend to be so high that private equity buyers tend to be able to offer more. Meanwhile, strategic buyers can offer more synergies, he said.