CNBC News Releases

CNBC Exclusive: CNBC Excerpts: Liberty Media Chairman John Malone & Charter Communications CEO Tom Rutledge Speak with CNBC’s David Faber Today

WHEN: Today, Thursday, November 12th

WHERE: CNBC's "Squawk on the Street"

Following are excerpts from the unofficial transcripts of CNBC EXCLUSIVE interviews with Liberty Media Chairman John Malone and Charter Communications CEO Tom Rutledge today with CNBC's David Faber. Following are links to the interviews on,, and

All references must be sourced to CNBC.

John Malone, Liberty Media Chairman:


All the entities that have traditionally been distribution or aggregation businesses you know, have to look up the food chain to see if there is value to be created by sitting in distribution and involving yourself in content creation as opposed to just aggregation or licensing.


I've always taken the position – for instance in DirecTV, you know, when my ownership and participation in DirecTV became an issue, an antitrust issue, right, I negotiated an exit for me so that DirecTV could go forward without these issues. So, you know, my phone number is well known.

David Faber: Yeah, but you aren't going to exit Discovery to allow Charter to buy Time Warner Cable.

John Malone: No, but I could exit Charter. I mean, why would I exit Discovery when that is a double bank shot, if you want to call it that.

Faber: I know. Well, I would never expect you to. I just wanted to understand what you were saying.

Malone: But if Charter has – if the problem of Charter being able to do this transaction is me, I don't have to be part of Charter controller ownership.


I would say that the segment, the media if you want to call it, that segment – if you compare, say the size and scale of the players, say on the internet side and then on the communication service side, and I'm talking U.S., I mean, you've got these huge companies on the internet, on the technology side, right? With massive balance sheets and massive cash availability. And there's really only four of them that dominate, right? And then you get over into the cell phone world and you've got you know, really two giants, massive balance sheets, you can throw Comcast into the giant category now.

Faber: Brian will be happy to hear that.

Malone: Ok. Well they are. He's done a wonderful job, but – and then you've got, even Disney is small in market cap when you compare them with Apple or now Amazon or Facebook.

Faber: Or Google. Right.

Malone: Or Google. So you've got these giant guys, you've got these traditional guys who are still quite big in the telco world like AT&T does DirecTV, and now they've got some pretty good scale and ubiquity. You've got Comcast with NBCUniversal, has got some pretty good verticality and some scale. These are getting to be big companies. And then over here you have the traditional media companies who are looking very small by comparison – even the big ones are looking pretty small by comparison. So you could argue that there is going to be some combinations because if you believe scale is important, and in the content world whether it is computer software or television content, scale is very important. You make it once, you distribute it enormously. And stability comes from scale and so on. So it wouldn't surprise me to see consolidation in that space.


Faber: We talk about content these days, we can be talking about any number of things. I mean, from a movie to a television show to something of course that has nothing to do with either one that is a short clip done by somebody that is sent over and owned by Verizon. You seem to be more focused though on the traditional side, at least with some of these stakes recently taken in, for example Lions Gate.

Malone: My involvement in Lions Gate got a lot of publicity, but there's a lot going on. There's a lot of cross investment going on as people try and understand what social networking, internet connectivity, portable devices are going to do to content and information consumption.

Faber: Right. What have you learned so far? I mean, since you have started dabbing your toe in the content waters.

Malone: You know, it is just a brave new world. Not so much the creative process, but trying to integrate that into some kind of a global distribution mentality.


Faber: The day that Disney reported there might have been some ESPN subscriber losses. And media just got shellacked. What were you thinking?

Malone: I was cursing Bob for generalizing because we weren't seeing this kind of attrition. I mean, I'm sitting at Charter, we're growing video subs. I'm sitting at Discovery, we're not seeing any meaningful sub count attrition. In fact, we are seeing a strong advertising quarter right now. So, the numbers I'm looking at are going this way. And Bob is doom and gloom going this way. I think what he is experiencing is that there are a lot of operators who think ESPN is quite expensive and they have, the bigger guys, have a little bit of latitude to offer packages that don't include ESPN. And so I think ESPN was experiencing more than the rest of the industry in terms of loss of big bundle video customers.


Faber: Zaslav makes an awful lot of money. Maffei makes an awful lot of money. You pay your guys so much money. Why do you pay them so much money?

Malone: Whoa. This is black-scholes models. My philosophy is I give them large stock option grants up front that are meant to compensate them for the next five years. They vest over four and five years out. Stock performs, they can make a lot of money. If the stock doesn't perform, they don't make anything. Okay? So I want my CEOs to be just like me. Invested in the company in its long-term success…I won't apologize to anybody and I think the black-scholes model sucks as a mathematician. You know, how many executives do you know that really want their options to be granted when the stock is at an all-time high?


The reality was from our side, okay, did we want to go from 90% of our assets being in businesses we grew up with and understood and 10% being our move into wireless, which you know is pretty broad. But still only represents, and is on a learning curve. If we did a Vodafone deal on an all-equity basis we would be switching to 60% going into a wireless business that frankly, had not been doing well in Europe for the last few years. Had a lot of issues that we instinctively didn't understand. So that was a big move in terms of comfort, right? And so the net of that, as you know, when you have those kind of discussions, it almost always comes down to okay, we are willing to take the risk, but there has to be some kind of a premium inducement in order to take the risk. And I just don't think we were able to agree on what that premium inducement should be…Is it a deal that could come back? Sure.

Tom Rutledge, Charter Communications CEO:


Even from an economic perspective it is not rational for his ownership to if he could control the company to damage one of his video services like Discovery by giving it exclusively to Charter and not selling it to satellite and phone companies it would really be a net economic loss so I think even the economic arguments don't hold water. The other thing to remember is his personal ownership stake in the new company will be about 1.7% not that significant so while he is famous and people follow him and I love having him on our board and I love his input he is not in a control situation.


If you look at our data business we'll still be smaller than Comcast when this deal is completed and we're smaller than AT&T, we're smaller than Verizon we're about the same size as Sprint and T-Mobile in terms of data customer relationship so I would argue that it is a pretty competitive environment.


Tom Rutledge: You know it is a good deal it is good for the country, it is good for the industry

David Faber: Why is it good for the country?

Rutledge: Well you are going to have a better operator in a larger footprint that will be a source of innovation in the industry it will be smaller relatively speaking than Comcast it will be smaller than AT&T from a video perspective


If you're a content company you don't want your product disaggregated from the big bundle because it means you're going to have less customers. Our view is different than content companies. A lot of people think we're a monolithic industry and we're not. We have a completely different attitude. We like over-the-top television because it makes our broadband product look better. We like it because it pressures the price of video. I mean obviously if consumers are unwilling to pay for video at a certain price we are unwilling to pay for that as well so our cost structure is positively impacted by over the top.

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