Liberty CEO: Malone is no Redstone
Suggests broadcast could emulate cable netsNEW YORK -- Liberty Media chairman John Malone's debt and liquidity position isn't as difficult as that of Viacom Inc. and CBS Corp. chairman Sumner Redstone, Liberty president and CEO Greg Maffei said here Wednesday.
"I don't think it's an issue -- or a Sumner Redstone issue," he told the UBS Global Media and Communications Conference.
Malone recently had to sell Liberty shares to cover margin calls, but Maffei said his boss has continued to reduce his debt as of late. Malone's overall net worth is in the billions of dollars, Maffei said Wednesday.
He also expressed confidence in QVC's ability to avoid running afoul of its debt covenants. That would become a risk if operating cash flow trends deteriorate much more from current levels, but he promised management would keep a close eye on the situation given nothing is certain in the current environment.
Maffei also had very strong words on the current advertising environment and the challenges for local TV stations and the broadcast business model in general.
"The ad market is horrible," Maffei told the UBS crowd in his early-morning session Wednesday. He highlighted how local TV stations are under pressure amid declining auto ad sales and how the number of auto dealerships is likely to fall in the current climate. Besides cable networks, Liberty owns a TV station in Green Bay, Wisconsin. "It's a very tough business," Maffei said about the station business.
He also said broadcast networks and stations may have to change in the future and may want to basically become like cable networks.
Asked about that suggestion by reporters after his conference appearance, Maffei said broadcast networks like CBS can continue to focus on getting retransmission money and work with stations, but may do better as cable networks. He pointed to ESPN getting rights to ballgames, arguing that the business model works out better for the Disney cable powerhouse than for broadcast networks.
Overall, the economy is putting a drag on key Liberty businesses, but most are holding up well.
"We are blessed at Liberty" for being less exposed to ad revenue than other media giants given that it has strong subscription and transaction businesses, Maffei told the UBS conference.
Still, the Liberty CEO said in the current economic environment "it is a very difficult environment for almost all businesses."
Things are "very tough" for a business like Liberty home shopping channel QVC, according to Maffei. The products it sells are nice to have, but not must-haves, he explained. For example, at current gold prices, jewelry is less attractive, he explained.
Meanwhile, Starz is holding up well as it hasn't seen any decline in premium services momentum yet, and DirecTV is exceeding market expectations, Maffei touted the strength of other key Liberty assets.