John MalonePosted: January 16, 2021
A man worth study.
At which point I discovered that there was a war about to explode on the scene for control of TelePrompTer between Cooke and Irving, and so I passed on the opportunity and Hub Schlafly ended up getting stuffed into that job for a while. Then I got an inquiry from Steve Ross at Warner and did I want to go do that? And unfortunately, the first thing I would have had to have done is have a difficult posture with the fellow that they had just bought a big company from and I didn’t really like that too much. Plus, the other issue there was New York headquarters. And while Steve said, “Well, you can live in Connecticut and have a limo” and all that kind of stuff, I didn’t think that was the life I was looking forward to. And then the third guy was Bob Magness, who was out here in Denver and Bob was just an intriguing kind of a guy and TCI was my kind of a company. They were so broke at the time that Bob used to say, “We’re so broke we’ve go to look up to see bottom. Lower than whale shit.” Very colorful expressions, but it was the opportunity I thought, in my mind, to get the family out of the New York metro and into clear and clean and beautiful Colorado, and so that’s the direction that… Oh, I took a 50% pay cut and agreed to buy a bunch of stock, which turned out to be underwater, very quickly, before I even got on the scene, but that brought me out to Denver. But they were guys that I had gotten to know over the prior couple of years – Sparkman and Bill Brazile and Carter Paige and Larry Romrell, Donne Fisher and I kind of liked them. I liked the attitude, it was a laid back kind of group.
from this conversation with Trgyve Myhren at The Cable Center
The first thing you learn is, once you make a guy rich, don’t expect them to work hard. Very unusual people do that.
How about this, from a 2012 lecture at the University of Denver:
I think the best example of vertical integration is, for instance, I get a phone call from Rupert Murdoch. He says, “CNN exists. I’ve got a company called News Corporation. I would love to have a cable television news channel in the United States. What do you think?” I say to him, “There’s probably room for another one, but you got to come down in terms of your political posture, a little bit to the right of center because CNN is going a little bit to the left of the center.” In the opinion of certainly people on the right [inaudible 00:19:32]. He says, “I think that’s great. Will you help me? i.e., will you invest with me?” and so we say, “Yes. What do you want us to do?” He said, “Why don’t you A, agreed to distribute our channel. B, I want you to go see if you can recruit Rush Limbaugh to be on my channel because I know him. C, how about 20% of this thing if it works?”
We launched Fox News Channel. We own 20% of it. We distribute it. He programs it. We take relatively little risk because we don’t put any money up. What we agreed to do was carry the channel, pay a fee per customer, an affiliate fee. It depends on him to do a good job of promoting it and creating. We end up owning 20% of what turns out to be a valuable asset. That’s the most no-brainer of the things you can do.
There was a company called BlueMountain, traded for one and a half billion dollars, zero revenue. It was in the online greeting card business. You could go to BlueMountain and you could download a greeting card and you could send it off to your friends. It was free; had lots of traffic; never made the transition to economic viability. The Internet world was full of those bubble phenomenon, vaporware companies, we called them. They came and they went.
MCN: What about the threat of over-the-top players such as Netflix?
JM: I don’t know. I mean his (Netflix CEO Reed Hastings’) business model, of course, was to buy flat into the future and hope he grows into it. And if he doesn’t grow he’s got serious cash flow problems facing him. His stock has reflected debt, to some degree. I mean he’s got what, a couple-billion-dollar market cap? But that’s pretty low for 24 million subs.
I don’t see how Reed gets scale. That’s the curse for him. I mean he needs 40 million to 50 million households. I don’t see how he gets it if it’s split four ways.
MCN: Do you think Netflix, or any over-the-top player for that matter, can be a true competitor to cable?
JM: It all has to do with access to content. It really is about access to content.
The content that people care about, the content that will really move people, is pretty much controlled by big programmers like Disney, who are not about to shoot themselves in the foot. And so they are going to exploit it across all platforms in a very orderly and well thought through way. You know, right now cable has been a very effective monetization scheme for cable networks …
I was screaming at the Discovery [Communications] guys and the Starz guys about don’t shoot yourself in the foot with your Netflix thing. And ultimately, of course, Starz pulled back and Discovery was able to do a limited extension. Reed’s money is good, but I don’t know if he’s got a business model that really works for him.