UBS Conference: 4 Takeaways About John Malone's Content Deal Plans
Top execs at Liberty Media, Starz and Discovery address the complicated business ties and possible deals in passing.
Billionaire John Malone didn't attend. But as the Liberty Global and Liberty Media chairman eyes entertainment industry consolidation, Malone sure made his presence felt at the UBS Global Media and Communications Conference in New York this week.
Top execs from studios and TV network owners, with increasing interlocking ownership as Malone builds stakes, on Monday and Tuesday mostly held back from talking in depth about possible future deals, and Malone's role in them. But as investors remain unclear about what the prolific dealmaker's end game may be, here are THR's takeaways from the UBS conference commentary.
1. Everyone sees benefits in consolidation. Liberty Media CEO Greg Maffei ended Tuesday's conference day by predicting more consolidation in media content in the next couple of years. "I think there [are] benefits to scale and there [are] benefits to merger efficiencies," Maffei said in discussing the deal outlook for the industry, without discussing Liberty's or Malone's own plans.
2. No one is in a hurry to do deals. Starz CEO Chris Albrecht, while telling the UBS conference he saw no downside from Malone's possible consolidation game, added no deal will be easy to execute anytime soon.
"It could be multiple companies" coming together in a deal, he argued. "We are not planning on something happening" and go to work every day running the business as an independent company, added Albrecht. The Starz CEO has in the past said consolidation works if it makes financial sense and creates scale benefits.
Some Wall Street analysts predict favorable tax benefits would make a deal involving Starz and Lionsgate likely, starting in 2016. Starz has been talked about as an acquisition target for Lionsgate since Malone earlier this year swapped part of his stake in the cable network for a stake in Lionsgate.
3. Expect closer business ties and partnerships between companies in Malone's orbit. Only last week, Discovery Communications followed up acquiring a stake in Lionsgate by tapping the studio to distribute its programming across all U.S. packaged media platforms.
That deal followed comments from leading Lionsgate, Discovery and Liberty Global execs that "strategic opportunities" were possible with the closer investment and partnership ties between the three players. The bet is content producers like Discovery and Lionsgate will secure scale and negotiate leverage by developing closer ties, and having Malone spearhead more possible deals.
4. Despite the proliferation of online platforms, content remains king. Discovery CEO David Zaslav at the UBS conference touted his company's recently launched TV Everywhere app, and expressed caution about supplying SVODs with content. "The best model is that we own it, and we own the relationship with the cable operator or direct to consumers. That doesn't stop us from doing deals with other players, but you should expect that we'll be rational," he said.
Zaslav insisted SVOD models depend on content to attract subscribers, noting that without licensed fare many over-the-top platforms "are dumb pipes." "We as an industry are supporting economic models that don’t make sense," he added.