John Malone on Netflix's Reed Hastings: "He Really Broke the Mold With His Success"
The media mogul told Lionsgate's Investor Day that traditional media distributors were "asleep at the switch" as Netflix built scale to go direct to consumer.
Billionaire media baron John Malone, fresh from helping engineer the Lionsgate-Starz merger to compete on the content side against Netflix, on Tuesday praised the video streaming giant's CEO, Reed Hastings.
"He really broke the mold with his success," Malone told the studio's first-ever Investor Day in Denver. "He got to scale. The traditional distributors who were asleep at the switch, they should have been doing that, they didn't do that, they didn't protect their scale monopoly position. So now they face going-forward competition for the consumer with content."
Besides holding voting control of Liberty Media and Liberty Global, Malone has big stakes in Lionsgate and Discovery Communications as he moves to consolidate the pay TV industry in the face of fast-growing competition from new streaming platforms like Netflix and Amazon.
Malone's Liberty Broadband also owns a big stake in Charter Communications, a major cable player in a sector saddling up to Netflix and other streaming players to remain relevant with consumers. "Even Reed Hastings recognizes the benefit of being in a package built as part of a broader service offering," Malone said.
"He's approached most big operators...about a revenue split in exchange for, and including, Netflix content being inside the fence, accessible on an advanced set-top box, and potentially part of the billing process," he explained.
Malone said the combined Lionsgate-Starz entity was "well-positioned" to take advantage of consumers increasingly tapping video content and other entertainment offerings in the digital landscape. "The real question for Lionsgate is how far up the food chain is it realistic to think Lionsgate can go. Can you create a Netflix-like direct to consumer relationship branded on a global basis, is that within the scope of possibility? Because that's a great model if you can get there," he told investors.
"If you can't get there, you may have a distribution asset that is part of some broader distribution package," Malone said. The cable mogul, asked whether he thought Lionsgate should be put up for sale, now that it has secured scale, said he favored continuing to build value with the combined entity.
"If I had control of Lionsgate, that would be the last thing I'd do," Malone said. But the studio's boardroom, which does control Lionsgate, may want to entertain a take-out bid, he added, if shareholders weren't willing to tolerate "negative growth" as the company builds for the future.
At the same time, Malone talked about a pro-business climate from the upcoming Trump administration opening the way for a new round of industry consolidation. "One could contemplate in a Trump administration Comcast and Charter could merge. I don't know. But there would be a lot of synergy," he said.
And with AT&T attempting to buy Time Warner for $85.4 million, Malone added "maybe the three major cable companies get together and buy T-Mobile" to get deeper into the wireless business.