What is Malone up to? With media investors worryin
Post# of 17653
Posted On: 07/09/2015 7:27:34 PM
What is Malone up to? With media investors worrying about cord-cutting and rising programming costs, the billionaire has doubled down on the cable business, betting big that it is the key to the future thanks to its broadband capacity. Broadband increasingly is seen as cable's new core offering as consumers move from pay TV packages to online video.
http://www.hollywoodreporter.com/news/liberty...nes-574340
"John Malone isn't buying media companies here; he's buying infrastructure providers," says analyst Craig Moffett of Moffett Research. "The assets he's collecting will be the digital distribution platform for media, regardless of whether that media is delivered via traditional cable packages or via Netflix and Hulu."
At the Liberty Media shareholder meeting in June, Malone outlined his vision for cable operators' relationship with broadband video services like Netflix. He predicted that cable operators could offer "various tiers of connectivity," possibly with built-in video offerings or bundles. That means Netflix and others would have to pay for some of the bandwidth they consume -- or, as Malone said, Netflix CEO Hastings would have to keep in mind some of the cost of broadband capacity "that he is burning."
Such a shift would position Malone's expansive cable holdings nicely. Still, some Wall Street observers believe Time Warner Cable might be too big a target for the Liberty-backed Charter (for now) and that Malone instead will try to gobble up smaller public and private cable firms. Deutsche Bank analyst Doug Mitchelson predicts that while some investors would go for a $110- to $125-a-share offer from Charter, TWC's board will hold out for a price closer to $146. "While TWC investors might be willing to sell at a lower price, we do not see how the TWC board could accept such an outcome," he says.
But Moffett says Liberty doesn't need Charter to go after TWC. "As programming costs rise, small cable operators are going to be forced sellers," he predicts. "The private-equity buyers of the past few years will end up as sellers as well. There are going to be bargains to be had; we're heading into a buyer's market of epic proportions. Malone has simply bought himself a ticket to the fire sale."
http://www.hollywoodreporter.com/news/liberty...nes-574340
"John Malone isn't buying media companies here; he's buying infrastructure providers," says analyst Craig Moffett of Moffett Research. "The assets he's collecting will be the digital distribution platform for media, regardless of whether that media is delivered via traditional cable packages or via Netflix and Hulu."
At the Liberty Media shareholder meeting in June, Malone outlined his vision for cable operators' relationship with broadband video services like Netflix. He predicted that cable operators could offer "various tiers of connectivity," possibly with built-in video offerings or bundles. That means Netflix and others would have to pay for some of the bandwidth they consume -- or, as Malone said, Netflix CEO Hastings would have to keep in mind some of the cost of broadband capacity "that he is burning."
Such a shift would position Malone's expansive cable holdings nicely. Still, some Wall Street observers believe Time Warner Cable might be too big a target for the Liberty-backed Charter (for now) and that Malone instead will try to gobble up smaller public and private cable firms. Deutsche Bank analyst Doug Mitchelson predicts that while some investors would go for a $110- to $125-a-share offer from Charter, TWC's board will hold out for a price closer to $146. "While TWC investors might be willing to sell at a lower price, we do not see how the TWC board could accept such an outcome," he says.
But Moffett says Liberty doesn't need Charter to go after TWC. "As programming costs rise, small cable operators are going to be forced sellers," he predicts. "The private-equity buyers of the past few years will end up as sellers as well. There are going to be bargains to be had; we're heading into a buyer's market of epic proportions. Malone has simply bought himself a ticket to the fire sale."
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