As a seasoned movie-goer who has witnessed the rise and fall of many media titans, I can confidently say that John Malone‘s insights are always worth listening to. His extensive experience in the industry, coupled with his keen business acumen, provides a unique perspective on the current state of play.
John Malone anticipates an increase in merger and acquisition activities within the media sector, as a result of the forthcoming political shift in Washington D.C.
On Tuesday morning, the well-known investor and chairman of Liberty Media participated in a comprehensive question-and-answer session to launch the Paley Center for Media’s yearly International Council Summit, which took place at their headquarters in New York City. During this discussion with Mike Fries, CEO of Liberty Global, topics ranged from how inflation and interest rates affect market behavior to the dangers posed by Big Tech’s immense financial resources and expansive goals.
As an avid sports enthusiast, I can’t help but voice my concerns about the future of our beloved pastimes on television. Once more, it seems that entertainment and cable industry titans haven’t collaborated enough to tackle the formidable challenge posed by streaming giants like Netflix. It’s disheartening to see how these digital behemoths enjoy a seemingly free ride through internet distribution, all without bearing any costs under the umbrella of net neutrality regulations.
But for broadband providers — aka cable operators — the demands on the grid are becoming unsustainable. Malone cited a stat that a live U.S. sports broadcast on a streaming platform can take up 30% to 40% of a broadband provider’s available bandwidth. Cable operators have hard costs, not to mention other regulatory restrictions, that make it impossible to compete.
Malone stated that streaming is simply a technology, and there’s no difficulty in consumers accessing content previously viewed on a sequential basis in an on-demand fashion. He emphasized that the technological advancement wasn’t what primarily caused this transition. Instead, it was the synergy of network neutrality regulations, which allowed newcomers to distribute their content at minimal or no cost, thus creating a favorable environment for new entrants over established providers. Some content providers opted to go directly to consumers instead of continuing with the traditional wholesale-retail distribution model, aiming to capitalize on this network neutrality advantage and bypass conventional distributors.
During the online meeting, Fries joined from London while Malone was in Colorado. Fries then questioned his superior about the particulars of mergers and acquisitions, given the current surge of potential deals in the industry. The election of Donald Trump as president is expected to bring significant shifts to both the Federal Trade Commission and the Federal Communications Commission, which have previously prevented large-scale mergers for the past three years.
Might it be possible for Comcast and Charter, the two leading cable service providers in the U.S., to merge into a single entity? In 2014, Comcast attempted to acquire Time Warner Cable, which later got purchased by Charter; however, this merger was prevented by regulatory bodies in Washington D.C.
Malone suggested an analogy, stating, “Why not, just as discount airlines don’t construct their own airports, should there not be instances where business competitors can collaborate under government-imposed limitations?” He further illustrated his argument by referencing the cable and satellite TV industries, both grappling with changes in consumer behavior as they transition to streaming platforms.
He expressed his opinion that Dish and DirecTV should have been permitted to join forces about five years back. He felt it would have been more advantageous for them to collaborate, rather than compete, in order to offer their services at a reduced cost while still maintaining competition with other distributors. He expressed hope that the government would eventually allow this merger to take place.
In a subtle manner, Malone expressed worries regarding Big Tech’s vast financial resources and their drive to disrupt multiple industries. The stock market, particularly Wall Street, has provided them with substantial backing through skyrocketing share prices.
Instead of labeling them as monopolies, they are nearly monopolies. They operate on a global scale, have an extensive array of franchises and financial resources, and have greatly profited from the stock market surge in recent years. Additionally, the advancement of AI only strengthens their position, with the largest debt companies being best situated to reap the most benefits. The accumulation of economic value and power in just a few global industries is remarkable and poses a significant hurdle for regular competitors.
More to come
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2024-11-12 19:16