1 00:00:00,240 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,280 --> 00:00:12,360 Speaker 2: Billionaire John Malone made a fortune off of a big 3 00:00:12,400 --> 00:00:16,159 Speaker 2: bet that cable was going to revolutionize television, and in 4 00:00:16,239 --> 00:00:19,239 Speaker 2: less than a decade, Malone grew the company he ran, 5 00:00:19,480 --> 00:00:23,280 Speaker 2: called Telecommunications, Inc. Into one of the largest cable operators 6 00:00:23,320 --> 00:00:26,680 Speaker 2: in the United States. That attracted the attention of lawmakers, 7 00:00:26,760 --> 00:00:29,960 Speaker 2: who summoned Malone to Capitol Hill in nineteen eighty nine 8 00:00:30,560 --> 00:00:34,479 Speaker 2: and accused him of overseeing a monopoly. Cespan aired the 9 00:00:34,520 --> 00:00:36,120 Speaker 2: hearing in its entirety. 10 00:00:36,440 --> 00:00:41,520 Speaker 3: May I call on mister Malone, Yes, sir, I guess 11 00:00:41,560 --> 00:00:44,760 Speaker 3: it's warnings like this that I wish I had studied 12 00:00:44,760 --> 00:00:47,600 Speaker 3: public speaking instead of thermodynamics in school. 13 00:00:48,600 --> 00:00:52,640 Speaker 2: Malone studied electrical engineering at Yale, and while he started 14 00:00:52,640 --> 00:00:55,360 Speaker 2: his career at Bell Labs, it didn't take long for 15 00:00:55,440 --> 00:00:58,640 Speaker 2: him to pivot to business. Malone has a gift for 16 00:00:58,720 --> 00:01:02,360 Speaker 2: making deals. Estimates He's done more than one thousand of 17 00:01:02,360 --> 00:01:06,360 Speaker 2: them during his lifetime mergers and acquisitions, and at that 18 00:01:06,400 --> 00:01:09,840 Speaker 2: congressional hearing, he responded to one of his fiercest critics, 19 00:01:09,959 --> 00:01:13,720 Speaker 2: Al Gore, who said Malone was as ruthless as a 20 00:01:13,760 --> 00:01:14,760 Speaker 2: Star Wars villain. 21 00:01:15,000 --> 00:01:17,880 Speaker 1: I know, Senator Gore has referred to me in public 22 00:01:18,280 --> 00:01:23,720 Speaker 1: as Darth Vader, the cause of great humor, I guess 23 00:01:23,760 --> 00:01:27,039 Speaker 1: to a lot of my friends and employees. My wife 24 00:01:27,040 --> 00:01:29,520 Speaker 1: told me the other day that she found me to 25 00:01:29,560 --> 00:01:33,440 Speaker 1: be more like the Wizard of Oz, credited with a 26 00:01:33,440 --> 00:01:35,039 Speaker 1: lot more power. 27 00:01:34,640 --> 00:01:37,240 Speaker 4: And influence than I really wield. 28 00:01:39,800 --> 00:01:42,319 Speaker 2: But back then Malone was well on his way to 29 00:01:42,360 --> 00:01:46,160 Speaker 2: becoming the media mogul he is today, someone whose empire 30 00:01:46,240 --> 00:01:51,160 Speaker 2: grew from cable distribution to content. Malone helped launch channels 31 00:01:51,200 --> 00:01:54,880 Speaker 2: like CNN and BET, and the companies he's run have 32 00:01:55,000 --> 00:01:59,160 Speaker 2: invested in satellite TV and satellite radio, and live events, 33 00:01:59,200 --> 00:02:03,919 Speaker 2: including Formula One. Today, Malone is the chairman of Liberty Media, 34 00:02:04,160 --> 00:02:08,360 Speaker 2: Liberty Global, and Liberty Broadband, and he's chair emeritus of 35 00:02:08,440 --> 00:02:12,640 Speaker 2: Warner Brothers Discovery. Malone has written a new memoir, and 36 00:02:12,720 --> 00:02:16,400 Speaker 2: at eighty four, he's still on the lookout for new opportunities. 37 00:02:22,200 --> 00:02:24,040 Speaker 2: I'm David Gera, and this is the Big Take from 38 00:02:24,080 --> 00:02:27,400 Speaker 2: Bloomberg News Today. On the show, a conversation with John 39 00:02:27,480 --> 00:02:31,239 Speaker 2: Malone about the deals he's done, mistakes he's made. Malone's 40 00:02:31,240 --> 00:02:34,519 Speaker 2: appetite for risk, and how he sees the future of media. 41 00:02:38,280 --> 00:02:39,400 Speaker 5: Well. Thank you very much for doing this. 42 00:02:39,440 --> 00:02:40,040 Speaker 4: I pray you. 43 00:02:40,680 --> 00:02:42,280 Speaker 2: It strikes me as I look at the world today, 44 00:02:42,320 --> 00:02:45,640 Speaker 2: where there is broadband and five G and refrigerators are 45 00:02:45,639 --> 00:02:47,680 Speaker 2: connected to the Internet and I can watch any game 46 00:02:47,760 --> 00:02:49,919 Speaker 2: I want on my phone, that we tend to forget 47 00:02:49,960 --> 00:02:52,079 Speaker 2: what underpins all of that, what gave birth to all 48 00:02:52,080 --> 00:02:53,600 Speaker 2: of that, And that's the work that you and others 49 00:02:53,639 --> 00:02:57,200 Speaker 2: did really just a few decades ago, stringing coaxial cable 50 00:02:57,280 --> 00:03:00,120 Speaker 2: around towns and cities around this country. As you look 51 00:03:00,200 --> 00:03:02,160 Speaker 2: back on that, what do you think of that arc 52 00:03:02,440 --> 00:03:03,120 Speaker 2: of progress? 53 00:03:03,440 --> 00:03:08,520 Speaker 1: I just think evolution of technology is unstoppable and accelerating. 54 00:03:08,720 --> 00:03:11,440 Speaker 1: By the time I got through at Bell Labs, we 55 00:03:11,560 --> 00:03:17,639 Speaker 1: already had integrated circuits. My doctoral dissertation was artificial intelligence. 56 00:03:18,840 --> 00:03:26,000 Speaker 1: So these technologies have deep roots, but the technologies available 57 00:03:26,600 --> 00:03:29,840 Speaker 1: have paced really the industry. 58 00:03:30,440 --> 00:03:32,359 Speaker 2: I don't want to say that TV is in your DNA. 59 00:03:32,440 --> 00:03:34,240 Speaker 2: I think it's more nurture than the nature. But your 60 00:03:34,320 --> 00:03:37,800 Speaker 2: dad worked at General Electric on televisions a very seminal 61 00:03:37,800 --> 00:03:40,960 Speaker 2: moment in their development. What got you into cable made 62 00:03:41,000 --> 00:03:42,400 Speaker 2: you think it was something where there was a lot 63 00:03:42,400 --> 00:03:43,360 Speaker 2: of promise, just. 64 00:03:43,400 --> 00:03:47,280 Speaker 1: Luck, really, I went to work for Bell labs because 65 00:03:47,480 --> 00:03:50,520 Speaker 1: they would send you to graduate school and pay for it, 66 00:03:50,560 --> 00:03:53,040 Speaker 1: which allowed me then to get married and go to 67 00:03:53,040 --> 00:03:58,200 Speaker 1: graduate school. That put me into a certain category at 68 00:03:58,240 --> 00:04:04,840 Speaker 1: at and T went on to McKenzie consulting for technology companies, 69 00:04:05,200 --> 00:04:09,480 Speaker 1: ended up consulting for a company that offered me a job. 70 00:04:10,400 --> 00:04:14,120 Speaker 1: Took the job that put me into cable TV. 71 00:04:16,160 --> 00:04:20,719 Speaker 2: That company was Telecommunications, Inc. And at the time, Denver 72 00:04:20,800 --> 00:04:24,120 Speaker 2: based TCI was one of the largest cable operators in 73 00:04:24,120 --> 00:04:28,280 Speaker 2: the country. It wired towns and cities with coaxial cable 74 00:04:28,680 --> 00:04:31,560 Speaker 2: so customers could watch TV in better quality. 75 00:04:32,160 --> 00:04:37,440 Speaker 1: By the end of the seventies, stationary satellites had provided 76 00:04:37,440 --> 00:04:42,160 Speaker 1: the industry with scale, with the capability of scale and 77 00:04:42,240 --> 00:04:46,920 Speaker 1: to deliver a differentiated content. And that is really when 78 00:04:46,920 --> 00:04:50,560 Speaker 1: the industry took off, because once we had a product 79 00:04:50,600 --> 00:04:56,680 Speaker 1: the public wanted, the funding became available, and then it became. 80 00:04:56,400 --> 00:04:58,400 Speaker 4: A race for scale. 81 00:04:58,680 --> 00:05:03,800 Speaker 1: It was then ca you get big enough, fast enough 82 00:05:03,920 --> 00:05:05,320 Speaker 1: to have scale advantages. 83 00:05:06,240 --> 00:05:08,839 Speaker 2: Back then, the cable industry was what Malone called a 84 00:05:09,000 --> 00:05:13,520 Speaker 2: patchwork of tiny local operations rather than a handful of conglomerates. 85 00:05:14,120 --> 00:05:17,800 Speaker 2: Malone saw the potential of scale. TCI could grow and 86 00:05:17,839 --> 00:05:21,200 Speaker 2: make money by buying up these independent cable systems. 87 00:05:21,600 --> 00:05:24,320 Speaker 1: If you got a franchise, then you were essentially the 88 00:05:24,400 --> 00:05:28,680 Speaker 1: sole provider in that community for probably fifteen years. And 89 00:05:28,760 --> 00:05:33,120 Speaker 1: so the faster you could accumulate that, the more leverage 90 00:05:33,160 --> 00:05:37,400 Speaker 1: that gave you over the content suppliers, because you were 91 00:05:37,440 --> 00:05:41,039 Speaker 1: important became an important customer, and the more important customer, 92 00:05:41,200 --> 00:05:44,120 Speaker 1: the better deal you could cut, the better economics you 93 00:05:44,200 --> 00:05:47,480 Speaker 1: had to go to the next acquisition. And we found 94 00:05:47,520 --> 00:05:50,360 Speaker 1: ourselves doing an acquisition about every two weeks. 95 00:05:50,440 --> 00:05:51,159 Speaker 5: Every two weeks. 96 00:05:51,200 --> 00:05:55,440 Speaker 1: Some were large and I would personally do and many 97 00:05:55,480 --> 00:05:58,640 Speaker 1: of them were virtually pro forma as long as they 98 00:05:58,680 --> 00:05:59,680 Speaker 1: could check the box. 99 00:06:00,520 --> 00:06:02,880 Speaker 4: We delegated the ability to buy the guy next to. 100 00:06:02,839 --> 00:06:06,080 Speaker 1: You, And I think I made the comment it's the 101 00:06:06,120 --> 00:06:09,080 Speaker 1: most fun in life in businesses to have a monoperai, 102 00:06:09,880 --> 00:06:13,160 Speaker 1: which we were sort of. Now, so was every cable operator, 103 00:06:13,200 --> 00:06:15,120 Speaker 1: I have to say, in his territory. 104 00:06:15,360 --> 00:06:18,160 Speaker 2: You mentioned scale a moment ago. Economics at scale that 105 00:06:18,200 --> 00:06:20,279 Speaker 2: was certainly the driving factor at the beginning. As you 106 00:06:20,320 --> 00:06:23,240 Speaker 2: look at sort of how you've built your portfolios over 107 00:06:23,279 --> 00:06:26,960 Speaker 2: the years since, is that still your biggest motivators or 108 00:06:27,000 --> 00:06:28,239 Speaker 2: how do you approach growth? 109 00:06:29,279 --> 00:06:33,719 Speaker 1: I had a great mentor most of Shapiro at General, 110 00:06:33,960 --> 00:06:37,320 Speaker 1: he was the chairman and he was a tough old bird, 111 00:06:37,440 --> 00:06:40,640 Speaker 1: but he would teach me about the Talmud, and he said, 112 00:06:40,640 --> 00:06:42,960 Speaker 1: one of the things that Talmud teaches you is ask 113 00:06:43,000 --> 00:06:44,440 Speaker 1: yourself the question if. 114 00:06:44,240 --> 00:06:44,960 Speaker 5: Not, if not? 115 00:06:45,279 --> 00:06:45,599 Speaker 4: If not? 116 00:06:46,320 --> 00:06:50,320 Speaker 1: So if your model, if your business plan works, great, 117 00:06:50,680 --> 00:06:52,960 Speaker 1: but ask yourself the question, well, what if it doesn't. 118 00:06:53,000 --> 00:06:55,400 Speaker 1: What if your assumptions are wrong? What if this doesn't 119 00:06:55,440 --> 00:06:58,560 Speaker 1: work but that doesn't work? Where are you at that point? 120 00:06:58,760 --> 00:07:02,159 Speaker 1: What's the downside? How much risk are you really taking? 121 00:07:02,240 --> 00:07:05,200 Speaker 1: So you really try and look risk very hard. In 122 00:07:05,240 --> 00:07:08,440 Speaker 1: terms of how you finance something. Do you have partners 123 00:07:08,480 --> 00:07:11,720 Speaker 1: in it? The government's always your partner from a tax perspective, 124 00:07:11,880 --> 00:07:16,560 Speaker 1: So don't forget that you can deduct your failures from 125 00:07:16,640 --> 00:07:20,960 Speaker 1: your successes. Don't ever get to where you can't. You're 126 00:07:21,000 --> 00:07:23,840 Speaker 1: going to have lenders. They're going to help you make 127 00:07:23,880 --> 00:07:27,120 Speaker 1: sure that you're not taking too much risk. So you 128 00:07:27,200 --> 00:07:31,680 Speaker 1: become good partners and assessing risk and if you structure 129 00:07:31,720 --> 00:07:35,760 Speaker 1: it properly, if you do get in trouble thereby and launch, 130 00:07:35,840 --> 00:07:40,000 Speaker 1: you're not right kind of an attitude, you know, don't 131 00:07:40,840 --> 00:07:46,040 Speaker 1: ever count on it anything being for sure, and so 132 00:07:46,120 --> 00:07:50,840 Speaker 1: that has colored the structure of the organizations that I've 133 00:07:50,840 --> 00:07:52,200 Speaker 1: put together over time. 134 00:07:53,120 --> 00:07:55,320 Speaker 2: We could talk about any number of successes, but let 135 00:07:55,400 --> 00:07:58,560 Speaker 2: me ask you about Serious XM, where you made an 136 00:07:58,600 --> 00:08:02,080 Speaker 2: incredible amount of money on that bett and on that investment, 137 00:08:02,120 --> 00:08:04,040 Speaker 2: and in the book you write the way music is 138 00:08:04,040 --> 00:08:07,840 Speaker 2: owned and monetized is undergoing continuous evolution. Begs the question 139 00:08:08,040 --> 00:08:10,440 Speaker 2: where do you see opportunity in that space today? 140 00:08:11,160 --> 00:08:13,400 Speaker 1: Well, a couple of points I want to make there. 141 00:08:13,520 --> 00:08:16,560 Speaker 1: First of all, on Serious ExM, we were an early 142 00:08:17,000 --> 00:08:21,040 Speaker 1: founding investor in EXAM, but when we saw the competitive 143 00:08:21,120 --> 00:08:24,720 Speaker 1: environment emerge, we got out of it. Then we got 144 00:08:24,720 --> 00:08:29,280 Speaker 1: the phone call that said, are you interested in Serious 145 00:08:29,960 --> 00:08:33,800 Speaker 1: They've had their deal with EXAM approved for merger, but 146 00:08:33,920 --> 00:08:37,200 Speaker 1: we're in the middle of the financial collapse, and we said, 147 00:08:37,240 --> 00:08:39,920 Speaker 1: we don't have to have control, but we want options 148 00:08:39,960 --> 00:08:42,680 Speaker 1: for forty percent cheap options, and we'll loan you enough 149 00:08:42,720 --> 00:08:45,360 Speaker 1: money to get you over the hump. And it worked 150 00:08:45,360 --> 00:08:48,200 Speaker 1: out great. So that was a great a great transaction. 151 00:08:48,920 --> 00:08:52,480 Speaker 1: But the home run in music, frankly is live nation, 152 00:08:53,080 --> 00:08:58,560 Speaker 1: live performance in a world of random access, where you 153 00:08:58,920 --> 00:09:03,199 Speaker 1: can bay sickly have anything at any time and generally 154 00:09:03,240 --> 00:09:08,400 Speaker 1: affordable live has become a very important component. 155 00:09:10,520 --> 00:09:13,680 Speaker 2: After the break, I asked Malone about Rupert Murdoch and 156 00:09:13,800 --> 00:09:16,280 Speaker 2: Fox News and what lies ahead in. 157 00:09:16,280 --> 00:09:17,440 Speaker 5: The age of streaming. 158 00:09:29,120 --> 00:09:33,040 Speaker 2: Billionaire John Malone was a fencer in high school and 159 00:09:33,200 --> 00:09:36,800 Speaker 2: in business, He's crossed swords with many other big name 160 00:09:36,880 --> 00:09:40,640 Speaker 2: media mobiles, including Barry Diller and Charlie Ergin. He was 161 00:09:40,679 --> 00:09:44,080 Speaker 2: a key advisor to David Zaslov in Discovery's acquisition of 162 00:09:44,120 --> 00:09:48,040 Speaker 2: AT and t's Warner Media. You categorize Rupert Murdoch as 163 00:09:48,080 --> 00:09:51,320 Speaker 2: someone you have been friends in business with and occasionally 164 00:09:51,360 --> 00:09:54,240 Speaker 2: kind of a corporate adversary of, and I wanted to 165 00:09:54,280 --> 00:09:56,480 Speaker 2: ask you just about why you think the Fox News 166 00:09:56,559 --> 00:09:58,720 Speaker 2: channel has been successful as it has been. 167 00:09:58,920 --> 00:10:01,120 Speaker 4: Well, I can tell you. Rupert called me up. 168 00:10:01,400 --> 00:10:06,280 Speaker 1: I was already heavily in television news at TCI. We 169 00:10:06,360 --> 00:10:10,439 Speaker 1: had McNeil Lair, which we actually owned, We owned I 170 00:10:10,440 --> 00:10:14,400 Speaker 1: think eighty percent of it, and we supported that in 171 00:10:14,440 --> 00:10:20,560 Speaker 1: the public interest. I had helped start CNBC, and not 172 00:10:20,600 --> 00:10:24,880 Speaker 1: only did we carry CNN, but we had bailed Ted 173 00:10:24,920 --> 00:10:28,720 Speaker 1: Turner out when he got a little bit of financial distress, 174 00:10:28,920 --> 00:10:32,280 Speaker 1: and I was on Ted's board then from that point forward, 175 00:10:32,360 --> 00:10:36,120 Speaker 1: so I knew that that side of it. Rupert called 176 00:10:36,120 --> 00:10:38,040 Speaker 1: me up and he said, John, do you think there's 177 00:10:38,080 --> 00:10:39,800 Speaker 1: a place in America. 178 00:10:40,040 --> 00:10:43,040 Speaker 4: For another video news channel? 179 00:10:43,559 --> 00:10:46,480 Speaker 1: And I said, in all honesty, Rupert, I think if 180 00:10:46,520 --> 00:10:50,640 Speaker 1: you came down on the conservative side of the middle, 181 00:10:52,240 --> 00:10:55,280 Speaker 1: I think there is an appetite for a video news 182 00:10:55,280 --> 00:10:59,000 Speaker 1: service because Ted and CNN are tending to go a 183 00:10:59,080 --> 00:11:04,040 Speaker 1: little more liberal culturally and politically. And I said, the 184 00:11:04,080 --> 00:11:07,560 Speaker 1: reason I think that is Rush Limbaugh has got a 185 00:11:07,640 --> 00:11:13,439 Speaker 1: massive radio audience. It's extremely loyal, and he mixes politics 186 00:11:13,679 --> 00:11:17,680 Speaker 1: with humor and he's been very successful. After giving up 187 00:11:17,720 --> 00:11:20,400 Speaker 1: the advisory role, I put my financial hat on, said 188 00:11:20,800 --> 00:11:23,360 Speaker 1: you know, we'd be happy to carry you, but we 189 00:11:23,440 --> 00:11:27,360 Speaker 1: need an economic interest in its success. And so we 190 00:11:27,440 --> 00:11:31,000 Speaker 1: cut a deal that we had warrants to purchase twenty 191 00:11:31,040 --> 00:11:36,680 Speaker 1: percent of Fox News at whatever the net invested capital 192 00:11:36,840 --> 00:11:40,360 Speaker 1: was at the time. We chose to exercise that warrant. 193 00:11:40,440 --> 00:11:41,280 Speaker 4: And that was the deal. 194 00:11:42,240 --> 00:11:43,880 Speaker 1: And he said, well, why don't you go talk to 195 00:11:43,960 --> 00:11:46,160 Speaker 1: Limbaugh and see if we can make him our anchor. 196 00:11:47,000 --> 00:11:47,480 Speaker 4: And I did. 197 00:11:47,520 --> 00:11:52,080 Speaker 1: I had two delightful luncheons with Rush, and I was 198 00:11:52,280 --> 00:11:57,440 Speaker 1: unsuccessful in talking rush into going on television again. 199 00:11:57,800 --> 00:12:00,120 Speaker 4: But he suggested Roger Ayles. 200 00:12:00,480 --> 00:12:04,880 Speaker 1: And so we recruited Roger. But the deal from the 201 00:12:04,920 --> 00:12:08,480 Speaker 1: beginning was there's going to be successful because it's a 202 00:12:08,600 --> 00:12:11,679 Speaker 1: hybrid of entertainment and news. 203 00:12:12,520 --> 00:12:16,000 Speaker 2: We're at this moment where Newsmax is suing Fox News, 204 00:12:16,040 --> 00:12:20,040 Speaker 2: alleging that Fox News has used hardball tactics, and I 205 00:12:20,120 --> 00:12:23,679 Speaker 2: thought of how in the book you detail how Fox 206 00:12:23,720 --> 00:12:26,600 Speaker 2: News at the beginning was paying distributors to carry the channel. 207 00:12:27,120 --> 00:12:29,439 Speaker 2: There's also this kind of delicious inversion of what's happening here, 208 00:12:29,480 --> 00:12:33,720 Speaker 2: which is Rupert Murdoch soon time Warner, if I remember correctly, 209 00:12:33,720 --> 00:12:35,000 Speaker 2: for not carrying the station in. 210 00:12:35,160 --> 00:12:36,640 Speaker 5: Los Angeles and New York? 211 00:12:36,679 --> 00:12:37,040 Speaker 4: Correct? 212 00:12:37,200 --> 00:12:38,960 Speaker 2: What do you make of that suit? Do you see 213 00:12:38,960 --> 00:12:41,280 Speaker 2: any foul play here? Or is this just kind of 214 00:12:41,280 --> 00:12:43,680 Speaker 2: a continuation of the tactics we've seen, kind of the 215 00:12:43,720 --> 00:12:45,720 Speaker 2: Murdock enterprise you use from the beginning. 216 00:12:46,559 --> 00:12:51,720 Speaker 1: I think you know the issue of exclusivity and carriage 217 00:12:52,120 --> 00:12:56,440 Speaker 1: and bundling. To me, okay, I got to take you 218 00:12:56,520 --> 00:12:59,800 Speaker 1: back in Notch. There was a time when John McCain 219 00:13:00,280 --> 00:13:05,520 Speaker 1: he sponsored the concept that programming above a certain cost 220 00:13:05,720 --> 00:13:11,840 Speaker 1: should be alacrte, right, which I wholeheartedly believed in. And 221 00:13:12,840 --> 00:13:16,640 Speaker 1: his idea was his grandmother is paying for a lot 222 00:13:16,679 --> 00:13:20,240 Speaker 1: of sports she doesn't watch, and so if anything over 223 00:13:20,480 --> 00:13:23,760 Speaker 1: fifty cents a month was going to be on, it 224 00:13:23,800 --> 00:13:27,520 Speaker 1: should be on optionally as an ala carte service, which 225 00:13:27,559 --> 00:13:28,680 Speaker 1: I totally believed in. 226 00:13:29,360 --> 00:13:31,880 Speaker 4: We could not convince the bulk of. 227 00:13:31,880 --> 00:13:35,200 Speaker 1: Our industry to get behind McCain and support him, and 228 00:13:35,280 --> 00:13:37,920 Speaker 1: I think that was the beginning of the end, frankly, 229 00:13:38,440 --> 00:13:43,120 Speaker 1: of the cable industry's success as a video distributor. 230 00:13:43,200 --> 00:13:45,360 Speaker 2: It's funny because in the book there's a chapter in 231 00:13:45,360 --> 00:13:47,520 Speaker 2: which you say you were surprised that DJ never went 232 00:13:47,600 --> 00:13:50,280 Speaker 2: after came bundling at a bundling, and yet I think 233 00:13:50,280 --> 00:13:53,439 Speaker 2: of you as the father of the cable bundle in 234 00:13:53,520 --> 00:13:56,240 Speaker 2: somebody who's decried a lot of government regulations. So just 235 00:13:56,240 --> 00:13:59,240 Speaker 2: to explain that to me, your surprise and why it 236 00:13:59,240 --> 00:14:01,480 Speaker 2: sounds like you might be in favor of that happening. 237 00:14:02,080 --> 00:14:02,840 Speaker 4: Oh, I was. 238 00:14:03,960 --> 00:14:08,400 Speaker 1: Yes, we bundled, of course, but the ability to al 239 00:14:08,559 --> 00:14:12,600 Speaker 1: cart in order to control cost, to me was an 240 00:14:12,679 --> 00:14:16,400 Speaker 1: essential ingredient. And what happened to the industry was that 241 00:14:16,480 --> 00:14:19,640 Speaker 1: once these guys, these big guys, could bundle you couldn't 242 00:14:19,680 --> 00:14:25,280 Speaker 1: say no, and so there was never a successful new 243 00:14:25,600 --> 00:14:28,560 Speaker 1: cable channel that wasn't owned by somebody. 244 00:14:28,320 --> 00:14:29,280 Speaker 4: Who had market power. 245 00:14:30,800 --> 00:14:35,000 Speaker 1: And the crime for the cable guys was allowing their 246 00:14:35,120 --> 00:14:38,160 Speaker 1: video bundle cost to get so high. When I was 247 00:14:38,320 --> 00:14:40,960 Speaker 1: sharing DirecTV, I don't know what the numbers are now, 248 00:14:41,360 --> 00:14:44,080 Speaker 1: but we were up to one hundred and eighteen dollars 249 00:14:45,080 --> 00:14:50,720 Speaker 1: was our charge for service based service, and it was 250 00:14:50,760 --> 00:14:53,520 Speaker 1: at a point where a big percentage of Americans couldn't 251 00:14:53,520 --> 00:14:59,600 Speaker 1: afford it. So Netflix succeeded really because the big bundle 252 00:14:59,680 --> 00:15:03,720 Speaker 1: was too expensive. You bought it all or you didn't 253 00:15:03,720 --> 00:15:07,280 Speaker 1: get any of it right, which to me was suicidal 254 00:15:08,080 --> 00:15:13,800 Speaker 1: for the industry, especially as sports bidding became so aggressive. 255 00:15:14,320 --> 00:15:16,560 Speaker 4: So I think we just as an industry. 256 00:15:16,120 --> 00:15:20,200 Speaker 1: Got caught ourselves with a product that was just too 257 00:15:20,320 --> 00:15:22,400 Speaker 1: highly priced with too little margin. 258 00:15:24,200 --> 00:15:27,680 Speaker 2: According to Deloitte's Digital Media Trends Report, the average American 259 00:15:27,720 --> 00:15:29,840 Speaker 2: spends close to seventy dollars. 260 00:15:29,480 --> 00:15:30,640 Speaker 5: A month on streaming. 261 00:15:31,200 --> 00:15:33,120 Speaker 2: That's less than the one hundred and twenty five dollars 262 00:15:33,200 --> 00:15:36,080 Speaker 2: a month that cable or satellite TV subscribers say they 263 00:15:36,120 --> 00:15:39,480 Speaker 2: spend on those services, But almost half of those streaming 264 00:15:39,480 --> 00:15:42,840 Speaker 2: customers say they pay too much. We have seen the 265 00:15:42,880 --> 00:15:46,359 Speaker 2: proliferation of streaming services, now the bundling of streaming services. 266 00:15:46,760 --> 00:15:48,560 Speaker 5: How do you see all of that play out? 267 00:15:49,400 --> 00:15:49,720 Speaker 4: Well? 268 00:15:49,760 --> 00:15:56,000 Speaker 1: I think other than live sports and maybe news, this 269 00:15:56,120 --> 00:16:00,320 Speaker 1: random access capabilities, particularly if it can be curated by 270 00:16:00,440 --> 00:16:04,080 Speaker 1: an intelligent curator, an AI curator, I think is a 271 00:16:04,160 --> 00:16:10,320 Speaker 1: huge public service. It gives enormous flexibility, quality, and potentially 272 00:16:10,520 --> 00:16:16,479 Speaker 1: efficiency to it. With sports, I've got a big hostility 273 00:16:16,600 --> 00:16:22,520 Speaker 1: toward network neutrality as it's applied to live because to 274 00:16:22,560 --> 00:16:27,920 Speaker 1: send out a NFL game is one channel, right, linear 275 00:16:29,040 --> 00:16:33,920 Speaker 1: cold Country one channel, and yet streamed it's forty or 276 00:16:33,920 --> 00:16:38,920 Speaker 1: fifty million channels. Why does that exist other than government intervention? 277 00:16:39,800 --> 00:16:42,000 Speaker 1: And the answer is well, for the big tech guys, 278 00:16:42,080 --> 00:16:45,400 Speaker 1: it gives them a chance to sell advertising at a 279 00:16:45,480 --> 00:16:48,600 Speaker 1: higher because they know more about the customer at a 280 00:16:48,680 --> 00:16:50,000 Speaker 1: higher price. 281 00:16:51,360 --> 00:16:55,840 Speaker 2: Malone is chair emeritus of Warner Brothers Discoveries Board. Now 282 00:16:55,880 --> 00:16:59,119 Speaker 2: that company is planning to split into two separate companies, 283 00:16:59,360 --> 00:17:02,360 Speaker 2: one that'll be studios and streaming, the other that'll be 284 00:17:02,400 --> 00:17:07,320 Speaker 2: its networks. Earlier this month, Warner Brothers Discoveries CFO announced 285 00:17:07,359 --> 00:17:10,040 Speaker 2: it could sell a twenty percent stake in its studios 286 00:17:10,040 --> 00:17:12,680 Speaker 2: and streaming business. Before that split happens. 287 00:17:13,440 --> 00:17:14,760 Speaker 5: Who do you see as a buyer of that? 288 00:17:14,880 --> 00:17:17,080 Speaker 2: Where would the interest be in that kind of equity 289 00:17:17,080 --> 00:17:18,320 Speaker 2: stake in public investors? 290 00:17:18,359 --> 00:17:19,160 Speaker 5: Public investors? 291 00:17:19,280 --> 00:17:23,720 Speaker 1: Yes, I think that the reality is the Warner Studio 292 00:17:23,880 --> 00:17:28,800 Speaker 1: library and rapidly growing streaming business will have a much 293 00:17:28,880 --> 00:17:33,359 Speaker 1: higher valuation than it is attributed in the combined company. 294 00:17:33,400 --> 00:17:35,000 Speaker 4: And the reason is it's overlevered. 295 00:17:36,240 --> 00:17:40,840 Speaker 1: You have a declining a linear video business and you 296 00:17:41,000 --> 00:17:45,919 Speaker 1: have a growing streaming business. I think the public investors' 297 00:17:45,960 --> 00:17:51,240 Speaker 1: institutional investors will value that quite highly, that growth and 298 00:17:51,280 --> 00:17:54,560 Speaker 1: that potential. Once that I laugh about it, But once 299 00:17:54,640 --> 00:17:58,080 Speaker 1: that pickle is out of that jar, there are going 300 00:17:58,119 --> 00:18:00,920 Speaker 1: to be a lot of people interested in doing business 301 00:18:00,960 --> 00:18:02,320 Speaker 1: deals with that pickle. 302 00:18:03,119 --> 00:18:07,920 Speaker 4: People asked me, was I stupid to do the Time 303 00:18:07,960 --> 00:18:08,960 Speaker 4: Winner deal? 304 00:18:09,080 --> 00:18:13,040 Speaker 1: And the answer is, Discovery, while it was doing great, 305 00:18:13,640 --> 00:18:19,760 Speaker 1: was facing exactly the same future that Warner Brothers was. 306 00:18:20,640 --> 00:18:23,840 Speaker 1: We were both confronted with having to make a transition 307 00:18:24,480 --> 00:18:28,960 Speaker 1: to a new technological platform and a completely different form 308 00:18:29,119 --> 00:18:33,640 Speaker 1: of consumer behavior, and Discovery would have found itself way 309 00:18:33,680 --> 00:18:38,880 Speaker 1: too small in that trajectory. If you actually had sat 310 00:18:38,920 --> 00:18:43,280 Speaker 1: there even last year and looked at the economics of 311 00:18:43,760 --> 00:18:48,199 Speaker 1: Netflix in the US and the economics of HBO in 312 00:18:48,240 --> 00:18:48,800 Speaker 1: the US. 313 00:18:49,119 --> 00:18:50,400 Speaker 4: They look almost identical. 314 00:18:51,200 --> 00:18:54,760 Speaker 1: One trade sit two hundred billion, in the other trades 315 00:18:54,920 --> 00:18:58,399 Speaker 1: at twenty billion. You know, I mean, it's about growth, 316 00:18:58,520 --> 00:19:03,040 Speaker 1: right future, because the real secret of Netflix is global, 317 00:19:03,160 --> 00:19:05,240 Speaker 1: is international seventy percent. 318 00:19:05,359 --> 00:19:08,240 Speaker 4: I believe their customers. 319 00:19:06,680 --> 00:19:11,720 Speaker 1: Are outside the US, and that's where the growth has 320 00:19:11,800 --> 00:19:16,400 Speaker 1: to come. And you know, we think Discovery's brand, which 321 00:19:16,480 --> 00:19:21,520 Speaker 1: is well known, combined with Warner Brothers content, which is 322 00:19:21,560 --> 00:19:25,840 Speaker 1: pretty well known, should succeed in growing internationally much faster 323 00:19:26,800 --> 00:19:28,480 Speaker 1: than people generally think. 324 00:19:29,440 --> 00:19:32,840 Speaker 2: Last question in the book, you address legacy and retirement. 325 00:19:32,880 --> 00:19:36,480 Speaker 2: You write retirement is going to be an imperceptibly slow transition. 326 00:19:37,400 --> 00:19:38,120 Speaker 5: Is it happening? 327 00:19:38,480 --> 00:19:43,159 Speaker 2: Are you simplifying the business shying away from. 328 00:19:42,920 --> 00:19:45,040 Speaker 1: She says, You've been planning. You've been telling me you're 329 00:19:45,040 --> 00:19:48,399 Speaker 1: going to retire since you were thirty. No, it is 330 00:19:48,520 --> 00:19:52,879 Speaker 1: slow because I've been involved in so many things to me, 331 00:19:53,040 --> 00:19:58,119 Speaker 1: and retirement is primarily extricating myself from the public corporate 332 00:19:59,119 --> 00:20:02,760 Speaker 1: roles that I play. I have a ton of private businesses, 333 00:20:03,160 --> 00:20:09,240 Speaker 1: everything from ranching, farming, forestry, multifamily, horse racing. 334 00:20:09,560 --> 00:20:11,720 Speaker 4: You know, I got a lot of things that I'm. 335 00:20:11,520 --> 00:20:16,240 Speaker 1: Still saying grace over, and I intend to continue with 336 00:20:16,320 --> 00:20:21,480 Speaker 1: my control positions in the various enterprises from which I 337 00:20:21,560 --> 00:20:24,280 Speaker 1: will be slowly leaving the boards. 338 00:20:29,080 --> 00:20:30,760 Speaker 2: This is the Big Take from Bloomberg News. 339 00:20:30,800 --> 00:20:31,840 Speaker 5: I'm David Gerrat. 340 00:20:31,880 --> 00:20:34,280 Speaker 2: To get more from The Big Take and unlimited access 341 00:20:34,359 --> 00:20:37,680 Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg 342 00:20:37,680 --> 00:20:41,200 Speaker 2: dot com slash podcast offer. If you'd liked this episode, 343 00:20:41,320 --> 00:20:43,359 Speaker 2: make sure to follow and review The Big Take wherever 344 00:20:43,359 --> 00:20:45,760 Speaker 2: you listen to podcasts. It helps people find the show. 345 00:20:46,160 --> 00:20:48,000 Speaker 2: Thanks for listening. We'll be back tomorrow.