Liberty Global CEO "Happy" With ITV Stake
After the company's latest earnings report, Mike Fries also discusses how John Malone's international cable giant feels about Fox's Sky bid and the integration of Netflix into its cable offerings.
International cable operator Liberty Global is currently happy with its 9.9 percent stake in U.K. TV giant ITV, CEO Mike Fries told The Hollywood Reporter.
With ITV recently announcing that CEO Adam Crozier would leave his post mid-year, some analysts have suggested that U.S. and other companies could look at possibly buying the company.
"Adam Crozier is a great CEO. He will be missed," Fries told THR. "But the asset is also a good asset. So we haven't changed our investment profile at all." He added: "We're not getting bigger, we're not getting smaller. We're happy shareholders right now."
Asked about 21st Century Fox's bid to take full control of pay TV giant Sky, which U.K. regulators are reviewing, and whether it raises any concerns for Liberty Global, Fries said: "No. We have a good working relationship with Sky. We write them a very big check every year for their content that we then deliver to our customers. We don't believe on balance that this transaction will change that relationship."
Asked about Liberty Global's integration of Netflix, Fries said after Virgin Media in the U.K., the company now has also offered it in four other countries, namely Switzerland, Ireland, Holland and Germany. "Right after we launch it, it is quickly the most popular app on our video platform," he said. "But the good news, it is not cannibalizing any of our viewership or demand for video. People like it when you can aggregate and combine these popular OTT apps into the [cable] box. They love being able to watch BBC and then go to Netflix without having to make it complicated."
He added: "Customers who download the [Netflix] app generally pay us more, watch more video and churn less. So it's all about giving customers what they want, and so far so good.
Fries made the comments after John Malone's international cable operator on Sunday reported first-quarter operating income of $569.2 million, down from $586.6 million in the year-ago period.
Quarterly operating cash flow, another profitability metric, declined from $2.12 billion to $1.96 billion. Revenue rose 2.1 percent to $3.52 billion.
"In terms of European financials, we had a soft start to the year" as results were hurt by more challenging mobile trends in the U.K. and Belgium, said Fries. Liberty Global reduced its forecast for its European financial growth this year after reporting weaker-than-expected results in the U.K.
Fries said that also affecting the bottom line at the company's U.K. cable giant Virgin Media was "significant investment in our U.K. marketing efforts, emphasizing our competitive advantage on broadband speeds, TV superiority bolstered by Virgin's new 4K set-top box and our attractive new 4G quad-play offerings." He added: "These investments should allow us to deliver better results in the second half of this year."
The company's European business posted a net loss of $293 million, compared with a loss of $334 million in the year-ago period. European operating income fell 18 percent to $431 million from $527 million.
Liberty Global posted a first-quarter operating profit of $138 million for its Latin American business, compared with $60 million in the year-ago period. The division's net loss amounted to $11 million, compared with a year-ago loss of $39 million.
Liberty Global added 244,000 revenue generating units (RGUs) in Europe and 41,900 in Latin America. The company's video subscriber losses in Europe in the quarter amounted to 15,100, compared with a loss of 97,700 in the year-ago quarter. It added 5,200 video subs in Latin America, compared with 3,500 in the year-ago period.
"Our business-to-business [operation] continues to grow extremely well," Fries said when asked what upside surprise he saw in the first quarter. "We had 9 percent revenue growth in B2B across Europe. Most of that is coming from small businesses, which is exactly our target market, where revenue is growing 30 percent. B2B is now already 12 percent of our revenue in Europe and growing."
On an earnings conference call with analysts on Monday, Fries was again asked about ITV, saying content was "not unimportant" to Liberty Global. "If ITV was trading at a much lower multiple it might be interesting," he said. "Where it is trading today and the premium required, it is not interesting. ... So that’s the position that ITV, which is really no change at all at this point."