Liberty Global CEO Talks Netflix, Deal Chatter

Mike Fries Liberty Global CEO - P 2013
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Mike Fries Liberty Global CEO - P 2013

Mike Fries at a U.K. TV industry gathering also discusses the outlook for British cable giant Virgin Media, which John Malone's company recently acquired for $24 billion.

CAMBRIDGE, England – Liberty Global CEO Mike Fries here on Wednesday discussed his views on Netflix and the outlook for U.K. cable company Virgin Media, which the international cable giant acquired earlier this year for $24 billion.

He also said that "we are not expecting to be bought" following some recent suggestions that U.K. telecom giant Vodafone could look to make a takeover bid for Liberty Global with new cash from the sale of its stake in Verizon Wireless.

Speaking at a Royal Television Society conference, he was quizzed about an agreement that Virgin unveiled Tuesday that will integrate Netflix into its pay TV offerings. Fries said that the news made for "exciting headlines" and added: "We're excited about it."

He lauded that Netflix brings added content, such as original House of Cards, to Virgin, saying it is a "nice complement to our existing programming offers." But Fries also emphasized that with over-the-top, or broadband, services, it is less about the content. "It's more about the functionality, the experience," he said, citing Netflix's great interface.

Overall, "the more we can offer customers, the more we can justify a higher share of wallet," Fries said.

Asked if Netflix was a friend, enemy or frenemy, Fries said that can vary by market. "I'm not threatened by it," he summarized. "It is not a zero-sum game."

Fries shrugged off a question about what competition, including online players, he was most concerned about. "Our platform is naturally hedged" given Liberty Global has a big broadband business.

Who will be Liberty Global's biggest competitor in 10 years? "There's room for all of us," Fries suggested.

Discussing future sources of growth, the CEO said: "Over five years, we're less about connecting more homes." Instead, growth will mostly come from "getting connected homes to do more with us." Giving subscribers more value and improving customer relationships.

Fries said Wednesday that pay TV operators do certain things really well, such as offering the best content and the biggest distribution pipes. But he also highlighted areas where improvements are needed, such as in moving content across platforms and improving user interfaces. He said Liberty Global is trying to solve these issues with DVR partner TiVo and its next-generation set-top-boxes Horizon.

In the U.K., Virgin Media will for now continue to work with TiVo instead of launching Horizon. "TiVo has promised us innovation" to move into a similar direction as Horizon, Fries said.

Asked about the company's previously reported attempt to sell content arm Chellomedia, he didn't provide an update beyond saying that Liberty Global felt it could be "more valuable in the hands of somebody else."

Discussing the outlook for Virgin Media, Fries said that Liberty Global's increased scale could drive efficiencies and innovation.

He also commented on programming costs in different parts of the world. Liberty Global's spending amounts to about $4-$5 per month per subscriber in content, while the figure is about twice that in the U.K. But in the U.S., the cost is about $35 per month per subscriber, much of it driven by ESPN and sports programming, Fries said.

Fries' session was attended by a group of other Liberty Global executives, including new Virgin Media CEO Tom Mockridge, the former head of the U.K. newspaper operations of News Corp.

Liberty Global also sponsored a dinner for RTS attendees Wednesday. Fries quipped that there British industry folks don't have to fear the firm's recent takeover of Virgin Media. "We come in peace," he told the dinner crowd.

Twitter: @georgszalai