Media Mogul Sees Mergers As the Future

From a New York Times story by Benjamin Mullin headlined “Media Mogul Sees Mergers As the Future”:

Early last year, the longtime media heavyweight John Malone made a prediction about a big change coming in the film and TV industry.

Over lunch with two fellow media moguls, Brian Roberts of Comcast and Barry Diller of IAC, at his winter home in Jupiter Island, Fla., Mr. Malone hypothesized that AT&T — then the owner of media brands like HBO, CNN and the Warner Bros. film studio — would soon spin off or sell those properties.

A short time later, his prognostication came true. Still, he said, he was surprised when David Zaslav, then the chief executive of the reality TV giant Discovery, called him in March seeking his approval, as an influential Discovery shareholder, to combine with WarnerMedia. The deal, forming Warner Bros. Discovery, was announced in May.

In an interview last week from his ranch in Colorado, Mr. Malone, 81, recalled that he gave his approval because Mr. Zaslav would “ultimately turn it into a great business.”

His conjecture about WarnerMedia was the latest in a series of uncanny hunches over the past half-century that have helped him earn him the nickname “cable cowboy” among his peers in the media industry. Mr. Malone, the former chairman and chief executive of Tele-Communications Inc., or TCI, struck a flurry of deals as cable was booming and parlayed his fortune into a media empire spanning TV, film, live music and motor sports. The company he founded, Liberty Media, has interests in Formula 1, Sirius XM and Live Nation.

Mr. Malone only sporadically grants sit-down interviews with the news media. But he talked for more than an hour on the phone last week, opening up about the streaming wars, the fast-changing news business and the future of his own career.

Mr. Malone said he endorsed the Discovery deal, in part, because he thinks smaller media companies need to get bigger to compete with the streaming giants like Disney and Netflix. He predicted further consolidation, with minor players either merging or bundling their services.

“The smaller guys can’t get to scale,” Mr. Malone said. “They’ll inevitably have to combine in order to try and become profitable.”

In the months since the Warner Bros. Discovery deal closed, the company’s stock price has fallen about 43 percent during a broader slump in the media industry. Mr. Malone said that decline — especially the tumble in the initial weeks of trading — didn’t surprise him.

Mr. Malone said he warned other board members that many shareholders of AT&T, the previous owner of WarnerMedia, would sell off the stock. They were accustomed to receiving a dividend from AT&T and would sell after the wireless giant announced lower dividend payments when the merger closed.

“I knew the stock was going to take a real beating,” Mr. Malone said. “I mean, I absolutely knew it.”

But Mr. Malone said he thought Warner Bros. Discovery’s bet on great films and TV shows would ultimately pay off.

One of the TV networks in Warner Bros. Discovery’s portfolio is CNN, which is undergoing a programming overhaul under its new chairman, Chris Licht. Last week, CNN announced that it was canceling the long-running media affairs show “Reliable Sources,” and that the show’s anchor, Brian Stelter, was leaving the network.

Mr. Malone said he had nothing to do with the decision. But he said the network should do a better job of distinguishing between news and opinion programming. Mr. Stelter had been highly critical of former President Donald J. Trump’s attacks on the media.

Mr. Malone, who cited the Fox News host Bret Baier as a reliably centrist newscaster, said he was open to cable networks having “wacko” programming, including partisan voices from the left and right; he once tried to recruit the conservative talk-radio host Rush Limbaugh to be a host on Fox News and advised Rupert Murdoch on starting up that channel. But those opinion shows should be clearly labeled, he said.

To illustrate the point, he told a joke about a cowboy who writes a letter to his grocer complaining about a mixed-up delivery. The coffee is good, the cowboy said. And the rat droppings in it might be OK, too, he added, “but please send them in separate containers.”

Mr. Malone said a less partisan network might sacrifice some viewers in the short run. But more companies would be willing to advertise alongside impartial news shows, he said, and straight-down-the-middle coverage might create additional demand for viewership.

He also said the news organizations played an important civic role in addition to their business obligations.

“I am an American,” Mr. Malone said. “I do believe that these organizations have a duty to try and bring the country together a little bit, instead of trying to exploit differences endlessly.”

For the Warner Bros. Discover merger to happen last year, Mr. Malone had to agree to give up his controlling shares in Discovery as part of a condition set by AT&T that the new company could have only a single class of common stock. But he said he intended to hold onto his controlling interests in other companies, including Formula 1 and Sirius XM.

Mr. Malone said that the voting shares allow him to prevent other investors from being forced to sell when their companies fall on difficult times, as Live Nation did when live music was stymied by the Covid-19 pandemic.

“I still have a godfatherly-like view that as long as I have a big voting position, I can protect the company and its shareholders from short-term disasters,” Mr. Malone said.

But in the long run, Mr. Malone said, he planned to dial back some of his business commitments to devote more time to his family.

“In all honesty, what I really want to do is stop going to board meetings, either virtual or physical, spend more time with my wife and more time on a boat — preferably a slow-moving sailboat,” Mr. Malone said.

Benjamin Mullin is a media reporter for The Times, covering the major companies behind news and entertainment.

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