Liberty chief John Malone predicts streamer consolidation after ‘land rush’

John Malone

Liberty Media chairman John Malone used his company’s annual investor day to give a frank assessment of the “mad Oklahoma land rush” towards streaming. He summarised: “There is a lot of blood flowing down the gutters of people who are streaming. Some of them can afford it, and some of them can’t. So my guess is the ones who can’t will have to look for some kind of consolidation or exit.”

Malone is a major shareholder in the newly-merged Warner Bros Discovery, one of the front-runners in the pivot to streaming. Although WBD is losing significant sums of money, Malone expressed his confidence in CEO David Zaslav and his team, “having seen the integration of Scripps with Discovery a couple of years ago”. He also expressed faith in the fundamentals of the WBD business, saying: “even in its absolutely worst year, it is generating a 10% cash return on its equity value”.

Malone praised for Netflix CEO Reed Hastings, “who saw the opportunity and went for scale.” However he was not convinced by Netflix’s ability to continue to buy market leadership through massive content investment. Streaming profits, he said, would depend on discipline, cost control and rational growth expectations. Coming back to the consolidation theme, Malone said: “There are tons of small streamers, who are very specialised, who… might have to consolidate into the bigger guys.”

He echoed Zaslav’s recent skepticism about the ability of sports rights to win the streaming war: “If you can buy a sports event exclusively you can always gain users. But given marketing costs and churn, in the long run the service with the best bundle and the lowest costs will be the most profitable,” he opined.