John Malone on Netflix, content producers – The Hollywood Reporter

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On Monday, Liberty Media Chairman John Malone again argued that there has traditionally been more long-term value in content-based distribution businesses than pure content producers, as Wall Street continues to falter. expect an eventual consolidation of the content sector led by the media mogul who owns stakes in Lions Gate, Starz and Discovery Communications, among others.

The value of pure content production companies can go up and down based on successes and failures, and they generally have “no [been] great accumulators of wealth,” Malone said at a special meeting of shareholders hosted by Liberty to approve the creation of three shares tracing different parts of its business. But companies that build distribution assets using content are “very attractive” long-term assets, especially in today’s subscription environment and global marketplace, he said. declared.

Malone didn’t provide any new insight into the kind of content deals that might be on the horizon for him. He said small and medium-sized content companies could benefit from increased scale and more global reach. Earlier in the year, Lions Gate said he would explore a deal with Starzbut declines in both stocks likely complicated deal conversations, analysts said.

Greg, CEO of Liberty Media Maffei late last year also expressed doubts about the attractiveness of pure-play content companies, including movie studios. “The worst thing we did was get into the cinema,” he said in November. “I did it three times, always with the same result. It is a good generator of tax losses.

As he has done in the past, he pointed to Netflix’s success, saying its global reach and focus on subscriptions is exactly why the online video company has been “a very successful business”. Netflix CEO Reed Hastings “has built a wonderful business for himself,” Malone said.

He once again argued that players in the entertainment industry didn’t react to Netflix in the smartest way soon enough. “The entire industry”, in particular Starz under a former management team, “didn’t take Netflix as seriously” as it should have, Malone said, reminding investors that Starz a few years ago ended a licensing deal that gave the streamer low-cost content. “Strategically, [that was] a big mistake,” he said.

Starzled by CEO Chris Albrecht, not only ended the Netflix deal, but also expanded its subscription and global business with a recently launched direct-to-consumer service in the United States, which the company says will not cannibalize its core business and launches of international streaming services.

The special meeting of shareholders, which was webcast from Englewood, Color., approved the company’s plan to create three tracking stocks. They are for the satellite radio company SiriusXMthe Atlanta Braves and the remaining assets of Liberty Media.

Discussing the Braves’ tracking stock, Malone said on Monday that he includes not only the team but “a major real estate business,” adding, “They’re good real estate assets.” Ask if ForbesThe Braves’ estimated $1.2 billion valuation was correct, Malone said: “I have no idea. We’ll see soon. He added: “We’ll see what the market puts in it and decide on the effectiveness of our monetization thesis.”

With the Atlanta Braves having lost their first five games of the new baseball season, Malone was asked when they would win their first game. He replied, “It will take a while. We are rebuilding.

NBF Securities Analyst Robert Routh recently estimated that tracking stocks could have a combined value that is 16.6% above current levels. “It looks like trackers should create and showcase value for Liberty Media shareholders,” he said.

Evercore ISI Media Analyst Vijay Jayant wrote in a recent research report that he expects the follow-on shares to begin trading two to three days after shareholder approval. “The trackers will help attribute the value of the underlying assets and make it easier to track rebates on each tracker’s respective net asset value,” he said, explaining their benefit. “Furthermore, Liberty Media’s management has stated that it will use sharing redemptions take advantage of persistent discounts to net asset value. As such, we expect discounts to reduce after tracking stocks are created. »

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