Cable pioneer John Malone said that cable companies should team up to create a rival to Netflix

U.S. cable companies should create Netflix rival: Malone

5:10pm EDT

By Liana B. Baker

NEW YORK (Reuters) – Cable pioneer John Malone said on Thursday that cable companies should team up to create a rival to Netflix Inc (NFLX.O: QuoteProfileResearchStock Buzz) that would deliver programming over the Internet on a national basis. Cable companies could “solve the problem” of high programming costs by acquiring content for an Internet-based service under one brand that they would sell in a bundle with broadband, Malone said at Liberty Media Corp’s (LMCA.O: QuoteProfileResearchStock Buzz) annual investor conference.Malone, who is chairman of Liberty Media, used the example of Comcast Corp’s (CMCSA.O: QuoteProfile,ResearchStock Buzz) Xfinity video streaming product one day being shared with the rest of the cable industry to become a national brand.

He added that another alternative would be for Hulu to “be bought and syndicated” by cable companies or for an entrepreneur to create a new product from scratch that the cable industry can get behind. He had said previously that cable companies should make a joint bid for Hulu, the Internet streaming service that was for sale at one point.

The cable industry has a history of working together, and he pointed the creation and funding of HBO, saying it “made us all rich.”

A national Internet-based TV service could help the cable industry get back market share from satellite and telecommunications competitors, and also give a boost to smaller cable companies that lack infrastructure.

When asked about whether he still has an appetite for a merger or acquisition, Malone said that, if cable came up with a transformational product to rival Netflix, it would “increase my appetite as an investor to be willing to invest in the business through consolidation.”

Malone, whose media holding company has an investment in cable provider Charter Communications Inc (CHTR.O: QuoteProfileResearchStock Buzz), made an offer for Time Warner Cable Inc (TWC.N: Quote,ProfileResearchStock Buzz) over the summer, but it was rejected, Reuters has reported.

Time Warner Cable shares closed up $6.68, or 6 percent, on Thursday at $116.95 per share.

During a question and answer session with investors, he praised Netflix Chief Executive Officer Reed Hastings and launched into an analysis of Netflix’s business model, saying it was big enough to buy exclusive national content at good prices, something the cable industry has struggled with.

“The cable industry has been very slow (which has) created a window of opportunity to the over the top guys,” he said, referring to Internet based TV services such as Netflix.

Wunderlich securities analyst Matthew Harrigan said that Malone’s cooperation idea was a good one. But he added it would be difficult to get all the players on the same page because the large companies such as Comcast and Time Warner Cable have more advanced technology than the smaller players.

“It’s kind of like herding cats,” Harrigan said about cable companies working together

Earlier on Thursday, another one of Malone’s companies, Liberty Interactive Corp (LINTA.O: QuoteProfile,ResearchStock Buzz), said it would split into two tracking stocks, and also create a new company made up of its stake in TripAdvisor Inc (TRIP.O: QuoteProfileResearchStock Buzz).

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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