On November 21, Media mogul John Malone gave an interview with CNBC during the Liberty Media Corp investor meeting. In the past, John Malone had predicted: a) Disney will be a winner in the streaming war, b) Apple would launch its own OTT services, and c) Charter Communication worth at least $450 per share. All seemed to have come true in 2019. We watched the interview and provided some of John Malone’s valuable insights below. But, if you have time, we insist our readers should at least watch it once.

Overall Trend

• Consolidation: John Malone believes that consolidation, which has swept through the traditional cable distribution business largely at his own hand, will come to streaming video.

• A new type of bundler: Tech platforms (Amazon) and cable operators (Charter) will likely be the winners in the consolidation as they start to bundle other companies' services into their offerings. 

Top Five Players (Ranked by # of subscribers)

• Netflix: still far ahead in the competition, but the company may not be as profitable as projected. Content costs going up and revenue pie split by big competitors.

• Amazon: may evolve to be “a bundler of other people’ services and let the other guys waste their money on content”. The IRR of Amazon's original shows is far less attractive than one-day shipping.

• Disney: still lacks the massive number of global credit cards or direct consumer relationships. Will likely form more partnerships like the Verizon deal. The progress would be “area by area” and “group by group”.

• HBO: will have trouble scaling up to be an international player. May lose out in the streaming war.

• Apple: may surprise everybody to become a winner in the streaming war as it can leverage its “460 million direct-to-consumer relationships and give them away for free”

Cable/TV Distributors 

• Charter Communication/Comcast: In contrast to the conventional view, cable operators such as Charter or Comcast would benefit from the streaming war for four reasons: a) favorable economics on broadband subscribers, b) cord-cutting starts to level off, c) less capital investment for traditional big bundle such as ESPN, d) addition revenue for selling packages of OTT services to customers

• AT&T/Verizon: Incumbents such as AT&T are in a worse situation as a) losing terrestrial broadband subscriber to Charter and Comcast, and b) continuing to support linear TV

• DISH/Direct TV: Satellite TV would eventually shrink to rural areas where the only way for TV is through Satellite. DISH is better positioned than DirectTV

Wireless

• Charter Communication/Liberty Global: Implement MVNO first, test the synergies between cable and wireless, and then decide whether to acquire a wireless network outright

• Altice: Altice New York can already offload heavy cellular traffic onto its own radio tower. Altice is now optimizing their MVNO relationship with Sprint

Programmers

• Disney EPSN: Sports content in the big TV bundle will eventually blow up. Not sure about when. “The big sport is the only reason that holds up the big bundle”

• Discovery: strong headwinds for pure linear TV programmers. Hybrid solutions such as resell OTT services to platforms such as Roku may help drive up the “targeted advertising revenue” over time. Discovery is massively undervalued, and John Malone bought $75 million at $28.03 on November 18.

• CBS/Viacom: worry about the sustainability of the business model of the combined company: a) US only businesses, b) CBS depends too much on sports, c) tough to raise affiliate fees, and d) Viacom under-investing for too long

• Lionsgate: sold Lionsgate due to disagreement over the OTT strategy. Starz OTT subscribers start to show encouraging signs. Think CBS should buy Lionsgate and combine Showtime and Starz to achieve a larger scale