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“I personally have very little insight into what the anti-trust division is smoking these days,” he told financial analysts at the Liberty Media investors day during a session that was webcast. After reports that AT&T may have to spin off CNN to secure approval from the DOJ, Malone said he hadn’t seen signs of undue regulatory pushback to cable TV mergers.
Wall Street has raised doubts about AT&T closing its acquisition of Time Warner after the U.S. Justice Department signaled that it objects to aspects of the merger. The speculation is President Donald Trump is making his disdain for CNN an issue behind the scenes.
Malone cautioned that media businesses in his investment orbit routinely engage in dealmaking to improve competitiveness. “At the moment, we don’t seem to be running into that [regulatory pushback] ourselves, yet,” he said.
Malone also pointed to Makan Delrahim only recently taking his spot as head of the DOJ’s antitrust division. “We don’t know yet what their concerns are and what the hot buttons are going to be,” he said of a wait-and-see stance from Liberty Media.
Greg Maffei, president and CEO of Liberty Interactive Corp., who appeared alongside Malone at the investors presentation, said the current pushback from the DOJ was “kind of crazy,” given the traditional linear content business is challenged as it competes against digital insurgents.
Maffei said Netflix had a “majorly advantaged model,” compared to traditional media players, as HBO spends around $2.5 billion annually on content for its HBO Now offering, against Netflix investing up to $8 billion on content for a cheaper-priced streaming service.
“[Netflix is] charging between a third and 40 percent less and you’re getting three times as much content as a consumer. That’s a tough proposition over the long term unless you think HBO is inherently smarter in picking shows,” Maffei said. He also pointed to Amazon Prime Video as another streaming giant ramping up its content spending, just as Apple, Google and Facebook dip their toes in the content-making business.
“The traditional content business is really challenged, so the idea that you’re going to block consolidation there is crazy,” Maffei added about current anti-trust concerns coming out of Washington.
Malone also cautioned recent deals to combine cable and wireless assets to better compete against Netflix and Amazon Prime Video were “pretty straightforward” and low-risk when it came to political oversight. He pointed to the recent wireless partnership between Charter Communications and Comcast, which had the effect of increasing market competition.
“I’m not aware of pushback from the DOJ” on that deal, he said. Securing approval for a separate $14.6 billion deal for Discovery Communications to acquire Scripps Networks has been delayed, but Malone expressed a “high expectation” that transaction will get a green light.
“I can’t relate to how much of this is political and how much is traditional,” he added. Malone also responded to speculation industry players like Sprint, Softbank and others may be eyeing a merger with Charter Communications.
“It’s actually true. It’s a fabulous company. It’s going to go in a great direction,” he told investors.
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