Liberty Media CEO Predicts More Content Consolidation in “Next Year or Two”

Greg Maffei, CEO of John Malone’s Liberty Media, said at the UBS Global Media and Communications Conference in New York on Tuesday that he sees the content business more challenged right now than the distribution business and predicted more consolidation in media in the next couple of years.

Sports and skinny pay-TV bundles have strengthened the hand of TV distributors in their relationships with content companies as of late, Maffei signaled. He also argued that there is currently more doubt about the business model of TV networks. But he emphasized recent Malone comments that it was surprising how much entertainment stocks have been affected by investor worries, given that advertising and carriage revenue won’t collapse overnight. “The market overreacted” to cord-cutting fears, said the CEO.

“I think there [are] benefits to scale and there [are] benefits to merger efficiencies,” Maffei said in discussing the deal outlook for the industry. “I think there will be more consolidation in the next year or two.” He didn’t detail any of Liberty’s or Malone’s own plans.

Wall Street has been discussing the content plans of Liberty and Malone ever since he acquired a stake in Lionsgate. He also owns stakes in Starz, Discovery Communications and Charter Communications, whose top executives spoke at the UBS conference earlier on Tuesday and on Monday. Analysts have suggested Malone could use Lionsgate as a vehicle to consolidate content assets similar to how he has used Charter to acquire cable operators.

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More recently, Discovery and Liberty Global, in which Malone owns stakes of 29 percent and 25 percent, respectively, each purchased a 3.4 percent stake in Lionsgate. At an investor event last month, Malone didn’t rule out an acquisition of Lionsgate.

Asked if Liberty would be open to leveraging a $1.1 billion legal judgment against Vivendi for a stake in Universal Music Group, Maffei said he wasn’t sure Vivendi was interested in that. But he did say, “Sure, depends on the price.” The exec said that “a tighter partnership” with Universal Music would help both sides as the music company could benefit from Live Nation Entertainment and SiriusXM, in which Liberty owns stakes.

Asked about companies or sectors that look red-hot or attractive to him, Maffei said: “Short-form video is exploding,” citing YouTube and Snapchat. “That is a huge trend … That is an area I’m liking a lot.” Millennials are spending increasing time with such content, he said.

Asked if that would hurt the value or outlook of Liberty’s current content assets, Maffei would only say, “These things always take longer than people think.”

While talking about Discovery, Liberty and Lionsgate, Michael Burns, vice chair of Lionsgate, earlier in the conference day said: “If I was a betting man, I would expect to see more collaboration between the three companies.” Asked about a possible merger with Starz, Burns lauded its CEO Chris Albrecht for “executing the right strategy, emphasizing hit shows” and saying as a shareholder, Lionsgate was pleased.

Albrecht said in a session following Burns: “It could be multiple companies” coming together in a deal,” but “we are not planning on something happening” and are focusing on the day-to-day business.

Asked about key growth businesses that are part of Liberty, Maffei said: “I’m very excited about what Charter’s opportunity is.” He also touted the continued growth of satellite radio firm SiriusXM.

“I’m confident that we will end up having a relationship with Howard [Stern]”, Maffei also told the UBS conference. Sirius executives have also been hopeful that Stern and the company will end up extending their long-running relationship. Stern’s current contract ends this year.

Liberty recently announced it would pursue a reclassification of its common stock into three new tracking stock groups. One will be designated as the Liberty Braves Group, which will include Liberty’s Braves Holdings that indirectly owns the Atlanta Braves baseball team and certain related assets and liabilities; the second will be called the Liberty Media Group; and the third will be the Liberty Sirius Group, focused on the stake in satellite radio giant SiriusXM.

The remaining Liberty Media tracker will include all the other assets, including stakes in Live Nation Entertainment, small equity stakes in Time Warner and Viacom and any recovery received in connection with the Vivendi lawsuit.

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