John Malone Won't Rule Out Acquisition of Lionsgate

John Malone - H 2015
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John Malone - H 2015

Malone also lamented "not going hostile on Netflix" when he saw an opportunity to acquire that company years ago.

When a Wall Street analyst gave John Malone a chance to deny speculation that his Liberty Media might acquire Lionsgate — or another creator of movie and TV content — the billionaire politely declined on Thursday. 

"The store is always open. … We don't rule anything out," the Liberty Media chairman said at the company's investors day, where CEO Greg Maffei and other top executives also spoke.

Malone's comments come two days after Liberty Global, controlled by Malone, and Discovery Communications, 29 percent owned by Malone, each purchased a 3.4 percent stake in Lionsgate, where Malone has been a board member since February.

But after declining to rule out an acquisition of Lionsgate, Malone and Maffei reminisced about mistakes made in the past, and many of them had to do with content creation.

"The worst thing we did was entering the movie business," said Maffei. "I've done that three times. Always with the same result," added Malone. "It's a good tax-loss generator," Maffei quipped.

Perhaps the biggest mistake, Malone lamented, was "not going hostile on Netflix" when he saw an opportunity to acquire that company years ago. The reason for that, Maffei interjected, "was because we had Starz at the time, and the cable guys hated Netflix and they would have whipped us. Rather than throw Starz under the bus, we held off from buying Netflix."

Noting the difference in the valuation of the two (Netflix is worth $47 billion and Starz is worth $3.5 billion today), he added: "We could have flushed Starz, with all due respect," eliciting laughter from the Wall Street analysts in attendance.

The meeting took place just after Liberty Media declared its intention to split into three tracking stocks: Liberty Sirius Group, where its majority interest in Sirius XM Radio will be housed; Liberty Braves Group, for the Atlanta Braves baseball team and new $672 million stadium under construction; and Liberty Media Group, which will include equity interests in Live Nation, Time Warner, Viacom and others.

Maffei said the biggest of the three will be Liberty Sirius, given satellite radio is a "highly defensible" business, with Sirius XM installed in 79 million cars in the U.S. and projected to grow to 180 million by 2025. While the company encourages drivers to "subscribe, subscribe, subscribe," those who choose not to, "We drop you like a hot potato," he said. About 29 million currently subscribe to either XM or Sirius, which remain separate but similar services.

He said there are "interesting possibilities" between Sirius XM and Live Nation, the latter of which is 34 percent owned by Liberty Media Group. 2015 was the biggest summer concert season in Live Nation history, and it is increasingly becoming a new-media company with its digital distribution of music.

In an interview with CNBC at Liberty's investor day, Sirius XM Radio CEO James Meyer said he is "hopeful" that Howard Stern will remain a host at Sirius XM when his contract expires next month, but there's no deal in place yet. Stern, who is no longer a judge on America's Got Talent, makes an estimated $80 million annually at Sirius, but he and Sirius don't yet see eye-to-eye on how much he should make going forward.

Also at the event, Liberty Media CFO Chris Shean predicted big revenue growth for Liberty Braves Group, given that new stadiums typically drive larger ticket sales. He described the stadium as "intimate," which should keep ticket prices high, and he noted that taxpayers foot the bill for about half the cost of construction.

Meyer boasted of 36 percent margins, better than Netflix, Time Warner Cable and miles ahead of Pandora. "Ease of use really matters when you're going 65 miles an hour down the highway," he quipped, taking a shot at in-car competition that requires more interaction from users.

Live Nation CEO Michael Rapino called the company "kind of a Disneyland business" with 60 million customers at its events. On-site spending at Live Nation shows is $20 per person, while it's $30 at a Major League Baseball game and $40 at Disneyland, comparisons that Rapino characterized as a "huge opportunity" for growth. Using a Def Leppard hypothetical, he also boasted of Ticketmaster's high-tech ability to price concert tickets for maximum sales.

Partnerships with Yahoo, RedBull TV, LNTV and others are turning concerts into digital content and are helping to create a "path to $1 billion advertising network" for Live Nation, he said.