Malone’s Biggest Mistake: Not Buying Netflix

Liberty Chief Said Tried to Convince DirecTV to Buy SVOD Pioneer 4 Years Ago

Cable legend John Malone said his biggest mistake of the past several years was not going after subscription video on demand pioneer Netflix.

“I would say the biggest one in the last few years was not going hostile on Netflix when we identified it as being very undervalued,” Malone said during the Q & A portion of Liberty Media’s annual investors day meeting in New York.

Liberty CEO Greg Maffei chimed in, adding the reason Liberty didn’t buy a large stake in Netflix at the time was that it owned premium channel Starz and feared a Netflix buy would jeopardize the channel’s negotiations with cable operators.

“The cable guys hated Netflix and they would have whipped us at Starz, so we figured rather than throw Starz under the bus, we held off on buying Netflix,” Maffei said.

Netflix stock was trading between $7 and $12 per share in 2012. The stock was priced at $110.79 each in afternoon trading Thursday.

“We could have flushed Starz, with all due respect, and look what we would have made on it,” Maffei said jokingly.

Liberty spun off Starz as a separate company in January 2013, (when Netflix was trading at between $13 and $14 per share) but Malone said the spin wasn’t early enough to be able to do a Netflix deal without repercussions from distributors. But he did say that about three or four years ago, he tried “very hard to talk DirecTV into buying Netflix.”

That deal also did not materialize.  

Malone has a long history with DirecTV -- Liberty Media had held a controlling stake in the satellite giant and Malone served as chairman of the company from 2008 to 2009. In 2009, Liberty spun off DirecTV to shareholders and as a result Malone became one of DirecTV’s largest individual shareholders with about 5% of its shares and served as a member of its board of directors. DirecTV was purchased by AT&T in July in a deal valued at $48.5 billion.