“The odds that we at Liberty will participate other than through Starz [which Malone controls] in some big content consolidation — I don’t see an easy path for that,” Maffei told the Deutsche Bank Media, Internet & Telecom Conference. “We have been in the movie business several times, but to no avail. … We’re not really into a content play today. We’re not really in that game.”
When you think about traditional entertainment content, “it’s not obvious what the play is for Liberty from here.”
He added, though, that he “can’t say that there’s no chance that Charter [Communications]” — the cable company in which Liberty owns a controlling stake — “won’t get into the content business in one form or another.”
Asked if he might be interested in buying a minority stake in a studio — which Viacom is offering at Paramount — Maffei said “it would be tough for anyone.”
The comments suggest that Malone might be content with his current supporting role in Hollywood following his stock swap last year with Lionsgate that gave him a seat on its board.
The deal inspired a lot of speculation that he might want to take control of the studio. That belief intensified in November when Discovery and Liberty Global each bought a 3.4% stake in Lionsgate. Malone controls 28.7% of Discovery and 25% of Liberty Global, making him each company’s dominant share holder.
Liberty has made it clear that it would like to see someone buy Starz, possibly Lionsgate. The studio said in February that it was talking to Starz. But the conversations cooled later in the day when Lionsgate shares plummeted after it released an earnings report for the last three months of 2015 that fell far short of Wall Street’s expectations, due in part to disappointing results for The Hunger Games: Mockingjay, Part 2.
“I give Lionsgate a lot of credit” for building its TV production operation on top of its movie studio, Maffei said. “It’s a good time to be in that space with more distributors, more people competing, more people wanting to make a name for themselves. There were 200 original shows four years ago, 400 original shows last year. And Netflix going from six hours of originals in 2012 to 600 hours in 2015. It sounds like you’re on the right side of the angels if you’re in the content production business.”
And Maffei still sees a promising role for Starz to play in alliances with content makers and pay TV distributors.
When satellite companies struggled to compete with cable, which also offered broadband, “they sold the heck out of premium [networks] and made a lot of money,” the Liberty CEO said. “That’s the real opportunity in the premium space, to work with distributors and make a better product with our originals and sell it together with them. Both of us would make more dough.”
He also likes Starz’s recent decision to offer subscriptions through Amazon.
“The opportunity to flip the pyramid to people who are not cable subscribers, people who don’t have money for all of that sports programming and other stuff that they may not want, the opportunity to put it in front of them on a reasonable basis is very attractive,” Maffei said. “We would like to do that with many more distributors” including cable and telco distributors.”
A challenge for Starz, he adds, is “having enough scale and reach to make sure our content is wanted, desired, and recognized for the quality it is.”
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