Malone: Merged MSOs Could Nip Netflix
John Malone, chairman/CEO of Liberty Media and legendary cable TV operating executive, sees cable operators missing the boat on new digital businesses -- everything from TV Everywhere efforts to competing against the likes of Netflix.
Some of these efforts would work better if more multiple system operators merged.
Malone’s Liberty Media, for example, owns around 40% of Charter Communications, the fourth biggest MSO. It would please him if Charter would merge with Time Warner Cable (second largest) and/or Cablevision (fifth largest) to gain a bigger national footprint.
Malone’s been saying this for some time. Mergers would combat video renegade newcomers like Netflix and help push expansion of TV Everywhere, the initiative to allow cable customers to access programs on all TV media platforms.
No doubt mergers would also help long-promised but lagging national addressable advertising efforts. Canoe Ventures, anyone? Weren’t cable operators supposed to work together to resolve set-top box technical issues that were holding back such addressable advertising?
Malone also wants the cable operators to work together, like in the old days, to solve other current problems like the higher-than-ever-per-subscriber fees they pay to programmers.
On the digital front, Malone says Netflix has an advantage over cable because the Internet reaches the entire country and its “local distribution is incrementally free.”
Malone points to cable operators’ lack of scale: “As big as Comcast is, it has a 25% footprint. You can’t buy national programming when you have that kind of footprint.”
But it’s not too late to give Netflix a run for its money. Malone figures cable operators can start their own national streaming service -- or help push Xfinity or Hulu Plus to greater heights.
Even while their basic video business has declined, cable operators have profited by being smart enough to build up their phone and broadband businesses. They did launch advertising-supported video-on-demand services as well.
Netflix saw a different kind of opportunity – one where consumers are more than happy to get slightly old movie and TV content, commercial-free, for less than $10 a month.
Malone notes that HBO grew decades ago because the major movie studios “couldn’t work together” to sell directly to pay-TV subscribers. HBO was happy to do that for them.
Fast-forward a few decades, and now it’s cable operators who can’t seem to work together.