Following are excerpts from the unofficial transcript of a CNBC exclusive interview with Liberty Media Chairman John Malone on CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET) today, Thursday, November 13.
Malone On Potential Sale Of Warner Brothers Discovery
Part I
DAVID FABER, CNBC ANCHOR: I did sit down yesterday with John Malone for our annual interview from Liberty's headquarters in Englewood, Colorado. We had a wide-ranging conversation, as we often do. And all of it will be available next week. Liberty has its investor meeting next week. But I did want to use small parts of the interview in which we did discuss the future of Warner Brothers Discovery. Malone is no longer even a board member there, but he is an advisor. He is a board member, emeritus or chairman emeritus. And he still has great influence and is very much involved in the process that I have been reporting on, of course, every week here, namely the competition potentially between the likes of Paramount, which bid three times, ending at 23.50. Netflix, which continues to show interest, and our parent company, Comcast, which also, as I have reported previously, is very much interested. Here is at least the way Malone is looking at this competition.
JOHN MALONE: This is like an Aesop's fable, "The Blind Man and the Elephant." We have three or four aggressive bidders. They each are seeing a different elephant because of where they come from and why this asset would be important to them in their future and the future of their companies. So, that really makes it very interesting. Larry Ellison sees this as a global technology platform play that could, that could really use AI to dramatically change the whole ballgame in the social networking and streaming. You know, the Netflix guys just see it as a great way to have the best library and the best production studio and in movies and television.
FABER: Although it would be a disruptive move for them in a way. But Reed Hastings, as you point out in the book, is willing to disrupt his own business.
MALONE: Yeah, he automatically is disruptive. I think they would add rather than take away. So, in many ways, a Netflix deal would be much less disruptive to Hollywood. You'd have essentially more activity than less. You put it together with another studio. You're going to try and find synergies. You're going to have perhaps compression of activity. So, politically, you could look at it a lot of different ways.
Part II
DAVID FABER: Had a chance yesterday to sit down, it's an annual interview that John Malone, of course the chairman of Liberty Media, for a bit longer, he's becoming emeritus fairly soon, that he and I have been doing for years, many, many years, obviously a wide range of topics. The author recently was Malone of a book about his business career as well, certainly talked a bit about that. But given Warner Brothers' discovery sale process, something obviously our viewers know I've been focused on because it is happening right now, and Malone's influence and advisory capacity to both the board as chairman emeritus of the company, not to mention his relationships with so many of the players who may bid, we did focus in part on where he is right now in terms of handicapping the potential bidders. Politics obviously also plays a role here in terms of the perceived ability of each of the parties, should they actually bid, to get a deal done, given the antitrust review that they all will require. And here's sort of Malone talking about the politics of it and a lot more.
JOHN MALONE: These are very hard to handicap because there is a political element in it. There's also, you know, different ways of looking at concentration and the public interest. You also have a global regulatory regime, not just domestic. So, while one approach might work domestically, it might not work internationally.
FABER: And Discovery, as we've discussed through the years, has plenty of—
MALONE: Right.
FABER: European assets that are not unimportant?
MALONE: Now, you know, my view was that David and his team did a wonderful job of getting the company organized so that it could split. And I was certainly hopeful that that split would take place without interference. The offers from Paramount really were perhaps completely unexpected, but really kind of interrupted what I thought was a routine process of splitting this company, fixing the balance sheet and taking time to figure out what the best strategic moves were post that split. It would also separate, let's say, the burr under the saddle of CNN, perhaps from the studio.
FABER: But that's not happening anymore. Now, you've got Paramount, my parent company for at least a couple more months, Comcast and Netflix—
MALONE: Yeah.
FABER: Who, as I've reported, certainly are taking a close look at. We know Paramount wants to.
MALONE: And perhaps others.
FABER: Others too?
MALONE: Perhaps others.
FABER: Yeah, perhaps others.
MALONE: Looking at it, the elephant a different way.
FABER: At the, you know, Netflix is interesting to me in the sense of and I'm curious, they get a great library. You seem to think maybe antitrust wise. They aren't running a huge risk. But do they really? It's not a must have for them, right?
MALONE: No, but it might be a slam dunk. You know, this is our business in entertainment. And we're going to be so strong and so good at it that it's a creative at almost any price for them because of where their equity trades.
FABER: I know. But do they accept a lower multiple than on the whole? Are they trading? You know, does that become a risk for them?
MALONE: I don't think so. I think it would accelerate growth and stabilize profitability. So, I think it's really a creative a lot of different ways for Netflix. So, you know, I'm sure they're studying the heck out of, they’re smart guys.
