Q&A With Liberty Media CEO Greg Maffei

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Greg Maffei talked with Multichannel News editor in chief Tom Steinert-Threlkeld about Liberty’s transition from its holding-company status. An edited transcript follows:

MCN: What attracted you to Liberty Media in the first place?

Greg Maffei: I had some experience with John, and I knew the assets.

I like the fact that it has TMT — technology, media and telecom — assets which I had some knowledge about, and I liked the fact that some of the challenges were clearly financial where I thought I could lend a hand.

MCN: In three to five years, what kind of operating company do you see Liberty Media being?

GM: We’ll be anchored around some interesting content assets and a distribution platform, DirecTV. Between Starz, QVC, GSN, the things we’re doing at Overture, I think we have a lot of interesting content of differentiated form with some real strengths.

Obviously, we have an interesting relationship with Discovery [Communications] as well, all those pieces are leading or well-positioned pieces of a puzzle that fit well with DirecTV.

MCN: You’ve now combined the IDT entertainment assets and Starz, and you’ve now got, as a result, both a content-production and content-distribution company. Where did the idea to do that combination come from and how does that play into what you want to do with DirecTV?

GM: With Starz, we have another kind of distribution platform. We are trying to take advantage of that.

In fact, pay TV relationships and deals have gotten more valuable. We can capture a portion of that value through our own content creation at Overture, and our own content creation through Starz Media — and leverage that further with a DVD relationship that we got with the Anchor Bay Co. that came in through our [acqusition of] IDT Entertainment.

And then finally, I think there’s an interesting interplay between content and distribution, the more classic fashion, the way that TCI did with Liberty, in the form that DirecTV can do with some of the content that we have in looking at both bolstering the content we have and creating new opportunities.

MCN: You see having the Starz integrated production house and the Overture production house, creating exclusive content for DirectTV?

GM: I don’t know if we’ll do that, but that’s certainly a possibility.

MCN: Isn’t that something that would help distinguish that platform?

GM: The Direc[TV] folks have done a great job of probably more licensing content exclusively, “[MLB] Extra Innings” or “[NFL] Sunday Ticket,” what they did with the U.S. [Tennis] Open.

Whether we take the next step and drive our own content that way, that’s certainly an interesting opportunity.

MCN: I guess the other side of that is, with that kind of distribution platform you could also drive the creation of new networks. Are you thinking of actually creating new networks that would get launched on DirecTV?

GM: DirecTV, I think, certainly can think about that, and we’ve thought about it with them. That opportunity is probably not as easy as it once was, just because of where the scale of the business is, and also because of how much has already been created, but it’s something that we’d look at.

MCN: Are there particular kinds of programming network opportunities, broadly speaking, that really interest you?

GM: I think we’ll hold our plans until we’re ready to announce them.

MCN: You will pick up a bunch of regional sports networks [in the DirecTV deal].

GM: We think that sports programming is very interesting programming, obviously, not only the way the Direct have done a bunch of stuff, but Liberty has a history in the RSN space.

MCN: Are you acquiring more RSNs at this point?

GM: If there are RSNs that are available, we’d certainly look at them.

MCN: Why buy a DBS company now?

GM: We received the opportunity to get the largest stake on very attractive financial terms [in] the largest DBS company, and thought that was attractive. I think certainly the depth of the demise of DBS has been well-reported or perhaps over-reported, particularly when you look and see that the satellite business gained 2 million subscribers last year.

[Satellite had] far better growth overall and on a percentage basis than cable. So we think there are lots of opportunities still in DBS, and some of the challenges that relate to broadband and the like are things that are manageable and probably can be dealt with.

MCN: How do you see the broadband and two-way services aspect of this being manageable?

GM: I think potentially through, we’ve got good partnerships in place already with Verizon [Communications], Qwest [Communications International] and Bell South.

MCN: For marketing purposes.

GM: Well, but also for bundling purposes, and selling together.

To date, there’s not been that much value created out of the integrated experience. We’ll see if that changes over time, but it’s not as if because you bought cable modem rather than [digital subscriber line] and satellite, you bought cable and cable modem, you’re getting some unique experience.

Does [video on demand] matter more over time? That’s something we can certainly look at combating in satellite with large-scale [digital video recorders] and the like and pushing the product [into the home].

If you imagine a world of user-generated content over time, it could challenge some of the aspects of our demand, but that also puts a little pressure, if you open up too much capacity, on the cable guys.

The cable guys are suddenly offering 20, 30 [Megabits per second] of capacity [for Internet downloads]. What’s it going to do to their video revenue stream?

So there are certainly challenges and things to think about in the future, but we think they’re all balanced risks.

MCN: Bringing up EchoStar, do you believe a merger with EchoStar would pass muster now in Washington, D.C.?

GM: I’m not an antitrust lawyer and don’t have enough ability to speak to it knowledgeably.

MCN: What if you do see that there are, experiences across television, telephone and the Internet that do make a difference? Right now, the only thing that people point to is the ability to see the phone number of an incoming phone call appear on your TV set, but if there are applications like that, that do gain ground, what kind of avenues do you think you could take to make sure you do have bundled integrated services?

GM: I think there’s a range of partnerships, whether it be tighter partnerships with owners of fixed lines, all the way to buildouts of your own broadband network, which would likely be a wireless experience.

So, I think there’s a whole range of possibilities out there that we’re looking at and thinking about, but I would think today those really haven’t been enormous opportunities. I would say that you haven’t seen that integrated experience yet which is changing the game, if it does.

MCN: If you start seeing them, then how much time would it take you to get in the game?

GM: That’s a good question. That’s one of the challenges for us to figure out.

MCN: It takes a long time to build a wireless network.

GM: Yep.

MCN: What kind of opportunities do you see in TV shows, series, movies that you produce now through Overture and/or Starz. Is Overture supposed to be the next Dreamworks, or is Starz? What is the ambition there, really?

GM: Overture has … an output deal with Starz, and in fact, output deals are valuable and the idea that we’re giving that value to an entity we own rather than a third party was appealing. Whether that content gets shown other than on Starz and aggressively in DirecTV or some other place, we’ll see.

MCN: It’s basically to have a captive production source?

GM: At the moment, yes. We like the appeal.

MCN: And will you be doing series as well as movies TV shows?

GM: No, that’s not in the current plan. There is TV production capability inside Starz Media but not inside Overture, but that’s been there before.

MCN: If you do start new networks, are those intended to be broadly-based? Will you give access to all distributors to Liberty-launched networks?

GM: When we have a plan on how it will be launched, I think we’d love to see our content shown as broadly as possible over time. But we don’t have an announced plan for any of those.

MCN: What other stakes are likely to be sold in the next year?

GM: For the long-term, all of the stakes like Viacom, Sprint, and Motorola, are probably not the highest and best use for our capital. Now, whether we’re able to achieve a deal that makes sense — we’re not obligated to, we’re not forced to dispose of those — we’ll look for that.

MCN: What do you want from Viacom, MTV?

GM: [Laughs.] I [don’t] think they’re selling MTV. We’ll see if we can find a deal that makes sense for both parties.

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