LONDON – Liberty Global chairman John Malone and CEO Mike Fries in a Wall Street Journal interview have commented on the recently intensified discussion about media consolidation and the international cable operator’s recently increased focus on content acquisitions.
Asked about recent industry deals and chatter about more transactions, such as a potential acquisition of Time Warner by 21st Century Fox, Malone said: “It’s the “eat or be eaten” drive of capitalism. Scale economics are compelling in the media space where you have high fixed and very low marginal costs.”
Added Fries: “Consolidation is king. Scale has always been critical for the industry, and I think it is more critical today than it has ever been.” He suggested that amid globalization and digital growth, “you need to have great scale to compete with Google [and] Netflix.”
Liberty Global recently acquired a 6.4 percent stake in U.K. TV giant ITV from BSkyB. Analysts have wondered if it was an opportunistic investment or if Liberty Global could look to increase its stake or maybe even make a play for full control.
“Are we committing today that we’ll never, ever own more shares? Of course not,” Fries told the Journal. But he added: “We don’t have any intention to do anything. There is no smoking gun there.” Malone said a closer relationship with ITV could help Liberty Global in terms of its content supply given ITV’s “very large production studio.”
Malone also said that Liberty Global has continued talks about a possible deal to buy a stake in racing circuit Formula 1 with Discovery Communications, in which he also controls a big stake. A deal would give the companies access to valuable sports content. Said Malone: “You have got to kiss a lot of frogs before you find a prince. At this stage we are still kissing the frogs.”