Friday, October 11, 2013

John Malone Still Wants Cable Consolidation

John Malone and Liberty Media are keeping real busy.  Despite announcing more stock splits, Malone also sees consolidation.  He continues to press that a merger of cable operators like Time Warner Cable and Charter Cable makes a lot of sense.  Of course Liberty owns a sizable chunk of Charter stock and Malone constantly seeks opportunities to increase the returns on his investments. 

According to Malone at their investor meeting, he was "touting the benefits of consolidation to bring the industry together to solve its high cost and over-the-top competitive problems."  As Charter is smaller in size than TWC, a merger would see them benefiting from TWC better licensing agreements, the ones that lower the per sub cost for exceeding subscription benchmarks.  Of course, a potentially larger MSO could get better rates for the TWC systems too.  And while Malone likes to talk about his own companies, other cable operators like Cablevision could also benefit from merging with Time Warner Cable, a deal TWC has been wanting for quite some time. 

John Malone seems to have the knack for unlocking value from its properties.  He continues to grow businesses, then split them off as tracking stocks and then independent companies.  He announced at the same meeting plans to spin out QVC and other businesses from the Liberty Interactive company.   So keep your eye on Liberty and John Malone.  He continues to be a force in the economics of cable.