Fries: Content is a Means to End

Liberty Global Chief Says Sports, Free-To-Air and Production Assets Worth A Look

Liberty Global CEO Mike Fries said the international cable company’s recent content purchases are merely a way to drive customers to the core business, adding that in the future the company will continue to look at assets in the sports, production and free-to-air broadcast space.

After selling its Chellomedia content assets to AMC Networks in February for about $1 billion, the company has been on a tear, snapping up a 6.4 % interest in U.K. commercial broadcaster ITV for $822.4 million; partnering with Discovery Communications on the $930 million purchase of production house All3 Media and is reportedly eyeing a 50% interest in German over-the top service Maxdome.

“Content for us is a means to an end,” Fries said at the UBS Global Media & Communications conference in New York late Wednesday. “It’s a means to driving the connectivity business that is most important to us.”

Fries pointed out that Liberty Global has about 42 million broadband and video customers worldwide and spends about $2.5 billion on content annually.

“Sports is a killer app so we will look at interesting sports opportunities when we can,” Fries said. “Original production drives SVOD platforms, and so we will carefully look at some original production opportunities, and free-to-air delivers reach and scale that we don’t have in some of these markets, so we’ll carefully look at some free-to-air assets.”

On the sports front, speculation was high earlier in the year that Liberty Global and Discovery would team up to buy racing asset Formula One. But Fries said that is not in the cards for now.

“It’s an asset in transition in many ways, having its own challenges today,” Fries said of Formula One. “I don’t see anything happening there any time soon. …If you look at the lay of the land and the F1 asset, it’s probably not the right time for us to make that kind of decision.”

Liberty also has been the target of takeover speculation, mainly around a possible move by U.K. wireless giant Vodafone as a possible suitor. While reports have said Vodafone was considering a move, company CEO Vittorio Colao reportedly said at an investor meeting in England that such a move was not being considered.

Fries said he wouldn’t speculate on Vodafone’s plans, but said that he and Liberty Global chairman John Malone are on the same page regarding the direction and future of the company.

“John and I are 100% aligned. We believe in our business plan,” Fries said. “We have a great platform that we think will generate significant value for a relatively long period of time. I can’t comment on what they may or may not be doing– just Google Vittorio, he seems to be saying everything. I’ll only say what I’ve said in the past – we think the deals they have done in Spain and Germany are smart deals for them.”

Fries also touched on Liberty Global’s Latin American plans. The company said in October that it would split off its Latin American assets into a separate tracking stock called Liberty Latin America and Caribbean Group (LiLAC) early next year.  On Wednesday the company also announced that it had purchased Choice Cable TV, the second largest cable operator in Puerto Rico, in a joint deal with Searchlight Capital valued at $272.5 million.  Fries said Liberty will continue to look at opportunities in Latin America, but will be more focused on markets than on individual assets.

“The idea of owning little assets in 20 countries isn’t very exciting to us,” Fries said. "We’d rather own 20 assets in two countries.”