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CNBC Exclusive: CNBC Excerpts: Liberty Media Chairman John Malone Speaks with CNBC's David Faber Today

WHEN: TODAY, WEDNESDAY, NOVEMBER 19TH

WHERE: CNBC'S BUSINESS DAY PROGRAMMING

In a CNBC EXCLUSIVE interview, CNBC's David Faber sat down with Liberty Media Chairman John Malone today, Wednesday, November 19th. Excerpts of the interview will run during CNBC's Business Day programming.

All references must be sourced to CNBC.

MALONE ON NET NEUTRALITY:

http://video.cnbc.com/gallery/?video=3000331544

MALONE: IT IS A BIT OF A RACE CONDITION. IT WOULD BE UNFORTUNATE IF THE GOVERNMENT INTERVENED TOO HEAVILY BECAUSE REALLY LETTING THIS CAPITAL MARKETPLACE PLAY OUT WILL SEE MULTIPLE TERRESTRIAL PROVIDERS AT LEAST TWO SINCE THE TELEPHONE INDUSTRY IS PRETTY MUCH COMMITTED TO BUILD OUT AND UPGRADE THEIR NETWORK.

MALONE ON MEDIA'S CHANGING LANDSCAPE:

http://video.cnbc.com/gallery/?video=3000331569

MALONE: I SUSPECT THAT WHEELER REALLY DOESN'T WANT TO GO THERE. HE WANTS TO GO TO SOME KIND OF NEGOTIATED SOLUTION THAT WILL SUFFICE UNTIL THERE IS COMPETITION. MORE COMPETITION. AND EFFECTIVELY ALLOW THE COMCAST DEAL TO GO FORWARD ON SOME NEGOTIATED CONNECTIVITY BASIS WHICH THEN COULD BE SUPERCEDED IF IN FACT TITLE TWO OR SOMETHING LIKE TITLE TWO IS PERSUED THAT WILL BE A BIG COURT CHALLENGE AND WE WON'T KNOW THE ANSWER TO THAT FOR PROBABLY A COUPLE OF YEARS.

FABER: DO THE ECONOMICS OF A COMCAST ACQUISITION OF TIME WARNER CHANGE DRAMATICALLY IF WE WERE IN A TITLE TWO ENVIRONMENT?

MALONE: WELL IT DEPENDS ON WHAT TYPE OF REGULATORY INTERVENTION. IT COULD BE VERY LIGHT IT COULD REALLY JUST BE A NONDISCRIMINATORY. I MEAN THE BOTTOM LINE OF THIS IS THAT AS SPEEDS ON THE INTERNET AND THE AMOUNT OF DATA ON THE INTERNET THE CONSUMERS USE OF THE INTERNET CONTINUES TO EXPLODE SOMEBODY HAS TO PAY FOR THE CAPACITY THAT IT TAKE TO DO THIS CONNECTIVITY. AND IT IS EITHER GOING TO BE THE PEOPLE WHO HAVE A RELATIONSHIP WITH THE CONSUMER INDIRECTLY THROUGH THE TRANSPORT OF THE INTERNET OR IT IS GOING TO BE THE INTERNET COMPANIES THEMSELVES. THE COMCAST CHARGING FOR VOLUME USAGE AT THE CONSUMER END. BUT THE ECONOMICS HAS TO WORK BECAUSE THIS CAPACITY IS NOT CHEAP.

FABER: DO YOU THINK COMCAST TIME WARNER CABLE IS GOING TO HAPPEN?

MALONE: YES I GIVE IT AN 80%.

FABER: IS THAT LOWER THAN YOU STARTED OUT WITH?

MALONE: YEAH I PROBABLY WOULD HAVE SAID 90% WHEN IT WAS ANNOUNCED. I THINK THIS NEW THEORY THAT HIGH SPEED CONNECTIVITY IS A MARKET UNTO ITSELF IT BOTHERS ME A LOT THAT THAT THEORY IS BEING PROPOSED.

FABER: WHY DOES THAT BOTHER YOU?

MALONE: WELL THAT IS LIKE SAYING THAT CADILLAC HAS A MONOPOLY OVER THE SALE OF CADILLACS. RIGHT.

FABER: OF CARS YOU MEAN?

MALONE: IT IS PARSING. THERE'S NO BARRIER TO ENTRY IN HIGH SPEED. OK IT IS A QUESTION OF SPENDING CAPITAL AND THE CABLE GUYS WHO HAVE GONE FORTH AND UPGRADED THEIR NETWORK HAVE A TIME LEAD, AN EDGE OVER SOME OTHER PURVEYORS WHO HAVEN'T YET SPENT THE MONEY. BUT THERE IS NO BARRIER TO ENTRY. AND SO WHEN THOSE KIND OF SITUATIONS THE FACT THAT ONE INDUSTRY THREW ITS INVESTMENT HAS GOT AN EDGE FOR A PERIOD OF TIME OVE ANOTHER THAT'S CAPITALISM TO ME THAT'S NOT ANTITRUST. IT BECOMES ANTITRUST IF THERE'S BARRIERS TO ENTRY AND THERE NEVER IS OR COULDN'T BE A NUMBER TWO.

FABER: SOME WOULD SAY A BARRIER TO ENTRY IS SIMPLY THE ENORMOUS AMOUNT OF CAPITAL THAT I AM GOING TO HAVE TO SPEND TO WIRE UP THE STREETS ALTHOUGH VERIZON HAS DONE IT.

MALONE: YEAH LOOK THESE PHONE COMPANIES ARE NOT TINY. NOR IS GOOGLE. THEY HAVE MASSIVE AMOUNTS OF CAPITAL AND REALLY IF IT IS DAVID AND GOLIATH IN THIS SITUATION THE CABLE INDUSTRY IS DEFINITELY DAVID.

FABER: CHARTER ALSO IS IN A POSITION IT WOULD SEEM PERHAPS MORE THAN ANY OTHER COMPANY TO ACTUALLY CREATE MORE SCALE OVER THE NEXT FEW YEARS DO YOU AGREE?

MALONE: YES CHARTER BECAUSE OF ITS STRUCTURE ITS HISTORY AND ITS MANAGEMENT TEAM IS PROBABLY IN THE BEST POSITION TO CONSOLIDATE SMALLER OPERATORS EFFICITENTLY. AND ALSO DO THE KIND OF RESTRUCTURING OF OWNERSHIP THAT'S NECESSARY IN ORDER TO MAKE THE WHOLE INDUSTRY MORE EFFICIENT IN THE U.S. NO QUESTION.

FABER: DO YOU THINK THAT IS GOING TO HAPPEN? OBVIOUSLY IT STARTS WITH THE SWAPS AND THEN THE SUBS THAT ARE TAKEN ON IF AND WHEN THE COMCAST TIME WARNER DEAL CLOSES BUT THERE'S BRIGHTHOUSE THERE'S SUDDENLINK, THERE'S CABLEVISION.

MALONE: I THINK IT IS HIGHLY LIKELY THAT CHARTER WILL BE THE GRAVITATIONAL CENTER OF CONSOLIDATION BECAUSE COMCAST IF THIS DEAL IS APPROVED IS PRETTY MUCH MAXED OUT. OKAY IN TERMS OF THE U.S. AND SO CONSOLIDATION SCALE EFFICIENT CONSOLIDATION WILL PROBABLY MOVE TO CHARTER IS MY GUESS. MY ARGUMENT IS THAT THIS NOW NEEDS TO GO FROM DOMESTIC TO GLOBAL.

FABER: IT IS FUNNY WHEN I HEAR YOU SAYING CONTINUING TO TALK ABOUT GLOBAL AND OF COURSE COMCAST BEING TAPPED OUT, OUR PARENT COMPANY IF AND WHEN THE TIME WARNER DEAL GOES THROUGH MAKES ME WONDER ARE YOU ONE DAY GOING TO SELL LIBERTY GLOBAL TO BRIAN?

MALONE: OR MAYBE LIBERTY GLOBAL WILL BUY BRIAN.

FABER: WOULD LIBERTY GLOBAL BE LARGE ENOUGH TO BUY COMCAST?

MALONE: YOU NEVER KNOW. DO YOU?

FABER: NO YOU DON'T. I MEAN THAT WOULD IMPLY A LONG-TERM VIEW HERE WHICH I KNOW YOU HAVE BUT THAT WOULD BE AWHILE I WOULD THINK DOWN THE ROAD THAT LIBERTY GLOBAL WOULD BE LARGER THAN COMCAST UNLESS I AM MISSING SOMETHING?

MALONE: WELL IN TERMS OF FOOTPRINT LIBERTY GLOBAL IS BIGGER THAN COMCAST. IN TERMS OF VERTICAL INTEGRATION LIBERTY GLOBAL HAS NEVER VERTICALLY INTEGRATED YET. SO IF LIBERTY GLOBAL WERE TO START VERTICALLY INTEGRATING FOR INSTANCE WHICH IS POSSIBLE THE TWO WOULD LOOK VERY SIMILAR IN MIX AND IN SIZE. SO A LOT OF PEOPLE THOUGHT WHEN LIBERTY GLOBAL TOOK A STEAK IN ITV FOR INSTANCE THEY MIGHT BE GOING IN THAT DIRECTION.

FABER: RIGHT WELL YOU SEEM TO BE IMPLYING THAT IT'S A REAL POSSIBILITY.

MALONE: EVERYTHING IS A POSSIBILITY DAVID I MEAN YOU KNOW YOU'D HAVE TO FOLLOW YOUR NOSE BASICALLY ON OPPORTUNITY. IN THE CASE OF LIBERTY GLOBAL THEY STILL HAVE A PRETTY GOOD RUNWAY AHEAD. THE U.S. MARKET IS MORE MATURE IN VIDEO, DIGITAL, SO ON. THE EUROPEAN MARKET STILL HAS A LOT OF GROWTH OPPORTUNITY EMBEDDED IN IT SO I THINK FOR THE MOMENT LIBERTY GLOBAL IS GOING TO STICK TO THEIR KNITTING FOR THE MOST PART AND VERTICAL INTEGRATION IS MORE THEORETICAL THAN REAL IN THE SHORT RUN.

FABER: WELL I MEAN COMCAST OBVIOUSLY IS THE ONLY DISTRIBUTED SO TO SPEAK THAT HAS CHOSEN TO GO BACK, I MEAN WE USED TO HAVE A LOT OF THEM.

MALONE: YEAH TIME WARNER CHOSE TO GO THE OTHER WAY

FABER: RIGHT. DO YOU THINK IT HAS WORKED OUT FOR COMCAST. DO YOU THINK IT HAS BEEN A SMART MOVE?

MALONE: OH I THINK PARDON THE EXPRESSION I THINK BRIAN TOOK THE PANTS OFF GE WHEN HE BOUGHT NBCUNIVERSAL. IT WAS A BRILLIANT MOVE FOR BRIAN. IT WAS WELL TIMED AND IT IS A GREAT ASSET AND IT GIVES BRIAN ENORMOUS FLEXIBILITY IN DEVELOPING U.S. BUSINESS SO YEAH I THINK IT WAS A BRILLIANT MOVE.

FABER: YOU DO?

MALONE: I DO

FABER: BUT WHEN YOU THINK ABOUT LIBERTY GLOBAL WHICH YOU CONTROL YOU DON'T NECESSARILY THINK ABOUT IT THE SAME WAY.

MALONE: WELL THERE ARE NO BIG VERTICAL ASSETS THAT ARE IN THE KIND OF DISTRESS. I MEAN BRIAN TOOK ADVANTAGE OF DISTRESS IN GE

FABER: HE DID AND OF THE CYCLE AND A LOT OF OTHER THINGS

MALONE: AND THE CYCLE AND THEN THE STRUCTURE THAT HE PUT TOGETHER WAS BRILLIANT. YOU KNOW OBVIOUSLY TIME WARNER DIVESTED THEIR CABLE BUSINESS AND SEPARATED IT INTO TWO YOU KNOW PERSONALLY HAVING A HISTORY IN THE BUSINESSI NEVER WOULD HAVE DONE THAT.

FABER: I'VE GOT AN IDEA FOR LIBERTY GLOBAL WHY NOT TIME WARNER ITS GLOBAL ITS CONTENT? YOU JUST BUY THAT ONE

MALONE: STRANGER THINGS HAVE HAPPENED.

MALONE ON RUPERT MURDOCH:

FABER: WERE YOU SURPRISED WHEN MURDOCH SORT OF STOOD DOWN ON TIME WARNER AS QUICKLY AS HE CHOSE TO?

MALONE: A LITTLE BIT I MEAN I KNOW THOSE GUYS PRETTY WELL.

FABER: I KNOW YOU DO

MALONE: AND I WOULD HAVE IN FACT MY VIEW AT THE TIME AND I WAS TALKING TO BOTH SIDES WAS THAT IF RUPERT PERSISTED HE WOULD SUCCEED. BUT IT WAS GOING TO TAKE A WHILE AND WHEN JEFF DECIDED TO PLAY A SCORCHED EARTH RESISTANCE I THINK THAT RUPERT ON HIS OWN PROBABLY WOULD HAVE HUNG IN THERE CAUSE THAT'S RUPERT HE WOULD HAVE BEEN A BULLDOG ON IT.

FABER: THAT'S WHAT EVERYONE ASSUMED.

MALONE: BUT I THINK THAT THE PEOPLE AROUND RUPERT SAID YOU KNOW DO WE REALLY WANT TO TIE OUR COMPANY UP FOR A YEAR TO 18 MONTHS WITH THIS UNCERTAINTY. WITH NO GUARANTEE WE ARE GOING TO WIN SO I THINK ESSENTIALLY THE BALANCE OF JUDGEMENT IN IF I HAD TO GUESS WAS WE HAVE TOO MANY OTHER THINGS TO DO. YOU KNOW JAMES IS COMING INTO HIS OWN AS A MANAGER DOES HE REALLY WANT TO SPEND THE FIRST 18 MONTHS IN COURT IN DEPOSITIONS AND SO ON

FABER: IN BATTLES THEY ALSO SEEM TO WANT TO SHOW SOME PRICE DISCIPLINE PERHAPS WHICH MIGHT HAVE PERCLUDED THEIR ABILITY TO BID A 100 OR MORE

MALONE: I KNOW RUPERT BELIEVES HAD THEY GONE TO 100 JEFF WOULD NOT OF HAD A CHOICE. BUT THEN THAT WOULD HAVE SAID SOMETHING ABOUT AS YOU SAY PRICE DISCIPLINE. SO IN THE END I THINK THEY BACKED OFF FOR NOW.

JOHN MALONE ON BUNDLING:

JOHN MALONE: THE GLUE IN THE BUNDLE IS SPORTS. AND YOU KNOW, THE ROUGH ARITHYMATIC I THINK IS 30 OR 40 PERCENT OF HOUSEHOLDS WOULD ACTUALLY ELECT, IF THEY WERE GIVEN THE CHOICE, TO BUY THE SPORTS PROGRAMMING AT THE WHOLESALE PRICE. NO MARKUP. JUST AT THE WHOLESALE PRICE. SO YOU REALLY HAVE A WORLD WHERE 60 PERCENT OF HOUSEHOLDS THAT ARE PAYING FOR SOMETHING SO THAT THE OTHER 40 PERCENT HAVE ACCESS TO IT. AND THAT PHENOMENOM IS REALLY DRIVING THE BUNDLE AND THE COST OF THE BUNDLE. SO THERE HAVE BEEN EFFORTS AT CREATING ALL ALTERNATE TO THE BIG BUNDLE. MY GUESS IS, EVENTUALLY, THE CABLE WORLD, THE DISTRIBUTOR WORLD, LET'S NOT – SATELLITE AND CABLE – WILL TRY TO BUILD AN ALTERNATIVE BUNDLE AROUND BROADBAND. AND THE DIFFERENTIATOR WILL PROBABLY TURN OUT TO BE RANDOM ACCESS. SO YOU CAN HAVE YOUR LINEAR STUFF AND YOUR DVR, RIGHT, SO YOU CAN RECORD YOUR OWN AT HOME IN THE TRADITIONAL WAY. OR YOU CAN HAVE THIS ALTERNATIVE BUNDLE THAT IS CLOUD BASED INTERACTIVITY ALSO CONTRACTUALLY SET UP WITH THE CONTENT OWNERS, BUT MAY NOT INCLUDE THE SPORTS. AND SO, YOU KNOW, NETFLIX IS SORT OF THAT IF YOU THINK ABOUT IT. IT IS AN ENTERTAINMENT BUNDLE SUBSCRIPTION

FABER: THAT I CAN HAVE ACCESS TO WHEREVER I WANT.

MALONE: ACCESSED OFF THE INTERNET. SO I THINK WHAT YOU WILL SEE IS MORE NETFLIX, NETFLIX CLONES, AND THEN YOU WILL SEE SOME OF THOSE NETFLIX CLONES CLUSTER INTO BUNDLES. I DON'T THINK LES MOONVES HIMSELF BELIEVES THAT CBS ALONE IS GOING TO HAVE A BIG SUBSCRIPTION AUDIENCE. BUT IF IT IS PART OF YOU KNOW, FIVE OR SIX OTHERS, AND THOSE ARE AVAILABLE TO THE CONSUMER ON THE INTERNET ALTERNATIVELY AND IT IS DELIVERED WITH FULL RANDOM ACCESS, ALL PLATFORMS, ALL TECHNOLOGIES KIND OF THING, THEN THAT WILL PROBABLY START TO GROW AS AN ALTERNATIVE TO THE BIG BUNDLE.

FABER: HOW FAR ARE WE FROM THAT?

MALONE: WELL, I THINK A LOT OF IT HAS TO DO WITH THE PROGRAMMERS, THE NATURE OF THEIR EXISTING DISTRIBUTION CONTRACTS, SO THE FLEXIBILITY THAT THEY HAVE AND THE FLEXIBILITY THAT THE DISTRIBUTORS HAVE UNDER THEIR CONTRACTS WITH SUPPLIERS. AND I THINK THAT IS ONE OF THE ISSUES THAT THE FCC IS LOOKING INTO WHICH IS THEY AGREE TO WHICH CONTRACTUAL LIMITATIONS ARE INTERFERING WITH A MORE COMPETITIVE –

FABER: WITH THE EVOLUTION OF –

MALONE: THE EVOLUTION OF THIS ALTERNATIVE. BUT I THINK IT IS WRONG FOR PEOPLE TO THINK THAT THE DISTRIBUTORS WON'T BE IN THAT WORLD. IE THAT IT WILL BE A NETFLIX OVER THE TOP AND YOU CAN IGNORE THE DISTRIBUTION BECAUSE THE REALITY IS YOU KNOW, IF NETFLIX DIDN'T HAVE FREE TRANSPORT, THEY WOULDN'T EXIST. SO MY GUESS IS THAT THEY WON'T END UP AT THE END OF THE DAY WITH FREE TRANSPORT. SOMEBODY IS GOING TO PAY. IT IS EITHER GOING TO BE THE CONSUMER –

FABER: WE GET BACK TO OUR ORIGINAL CONVERSATION –

MALONE: WE GET BACK TO THE ORIGINAL CONVERSATION.

JOHN MALONE ON CHARLIE ERGEN:

DAVID FABER: YOUR neighbor there in Colorado, Charlie Ergen, has a lot OF people wondering what in God's name he's up to. These AWS auctions are going on right now. His stock has been going up, by the way, because the numbers seem to be pretty big. What do you think he does with that spectrum? You know, if you were in his shoes, because you're an iconoclast, like he is –

JOHN MALONE: Yeah. I mean, I think Charlie is very hard to understand or predict. I'm not entirely sure he knows what he wants to do. He knows they're valuable, right. He knows they're increasingly valuable. The question is and Charlie really doesn't want to cash out. He's having too much fun. So, the question is what combination can he come up with that essentially increases the value of the assets he's sitting on, but keeps him involved? I think that's what Charlie's looking for.

DAVID FABER: You don't think he's ready to sell it, then, per se? Maybe not Dish overall, but the spectrum?

JOHN MALONE: I know only if he had another place to put the proceeds that was fun and exciting for Charlie. You know, he's very creative. And he's a poker player. So, you know, I don't know what he's going to come up with. But I'm sure it'll be interesting when he does. You know, as you know, when we were controlling DirecTV, we had many meetings about putting the businesses together. And the synergies would have been huge. But we never believed the government would let us do it. And, you know, so –

DAVID FABER: That ship has sailed now, of course.

JOHN MALONE: That ship has sailed. And as you know, Charlie had an opportunity to sell his company into AT&T some years ago. And his comment to me was he doesn't want to sit around and spend all of his time getting hit up for donations by philanthropies. He wants to be actively doing things and he is still a young man.

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