WHEN: TODAY, THURSDAY, NOVEMBER 10
WHERE: CNBC'S "SQUAWK ON THE STREET"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Liberty Media Chairman John Malone from Liberty Media Investor Day. The excerpts aired during CNBC's "Squawk on the Street" (9AM-11AM ET) today, Thursday, November 10. Following is a link to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000567007.
All references must be sourced to CNBC.
MALONE ON THE ELECTION:
SINCE THE REPUBLICANS NOW EFFECTIVELY CONTROL CONGRESS AND THE PRESIDENCY GOING FORWARD, I WOULD EXPECT TO SEE FAIRLY QUICK ACTION ON TAX REFORM, ON REGULATORY REFORM, ON OBAMACARE. THOSE ARE THE THREE THINGS I THINK IF THEY GET ADDRESSED QUICKLY AND RATIONALLY COULD BE VERY STIMULATIVE TO THE ECONOMY. AND THE MARKETS. AND THERE SEEMS TO BE BROAD AGREEMENT BETWEEN WHAT TRUMP'S PLATFORM LOOK LIKE AND WHAT PAUL RYAN HAS BEEN ESPOUSING.
MALONE ON AT&T AND TIME WARNER:
MALONE: IF I WAS RANDALL STEPHENSON I WOULD DO WHAT HE'S JUST DONE.
FABER: YOU WOULD?
MALONE: I WOULD IN MY MIND IT REPRESENTS A PRETTY SUBSTANTIAL DIVERSIFICATION FOR AT&T IT IS ONE OF THE FEW LARGE GROUPS THAT COULD BE BOUGHT THAT HAS A FINANCIAL STRUCTURE THAT PERMITS ENOUGH FREE CASH FLOW THAT AT&T CAN BUY IT AND SUSTAIN THEIR DIVIDEND
FABER: OR EVEN ACTUALLY HELP SUSTAIN THE DIVIDEND
MALONE: OR PERHAPS HELP SUSTAIN THE DIVIDEND SO FROM A SHAREHOLDER POINT OF VIEW IT IS ONE OF THE FEW DIVERSIFICATIONS AT&T COULD DO THAT WOULD HAVE THOSE PARAMETERS. NUMBER TWO THERE IS DEFINITELY SYNERGY BETWEEN OWNING THE CONTENT AND HAVING THE LARGEST DISTRIBUTOR THE WAY I LOOK AT IT IT IS NOT SO MUCH THAT IT WILL DRIVE AT&T CONNECTIVITY SERVICES DISPROPORTIONATELY I THINK THE BIGGER OPPORTUNITY IS TO MAKE THE CONTENT BUSINESSES MORE PROFITABLE AND MORE CERTAIN. BECAUSE IF IN AN AGE OF CORD CUTTING
FABER: IN AN UNBUNDLED WORLD
MALONE: RIGHT IN A WORLD THAT IS TRYING TO UNBUNDLE IF YOU HAVE THE LARGEST DISTRIBUTOR DEFENDING THE BUNDLE AND DEFENDNG THE COMPONENTS THAT IT OWNS THE BUNDLE EVERYONE IN DSTRIBUTION IS LIKELY TO FOLLOW SUIT. SO IF HBO GETS STREAMED BY AT&T THEY'RE NOT GOING TO DO IT EXCLUSIVELY AND THEY ARE NOT GOING TO BE ALLOWED TO DO IT EXCLUSIVELY BUT EVERYONE WILL THEN BE WANTING TO STREAM HBO. THE TRANSFER PRICES WHICH THE LARGEST DISTRIBUTOR HAS WITH ITS OWN SUBSIDIARY WILL BE THE MINIMUM PRICES
FABER: MANY PEOPLE LOOK AT THESE PORTFOLIOS OF CHANNELS AND SAY WELL TNT AND TBS WHAT IN THE WORLD IN AN UNBUNDLED WORLD WOULD ANYONE CARRY THEM?
MALONE: YEH
FABER: AT&T IS GOING TO OWN THEM AND THEY ARE GOING TO START RUNNING OFF IN TERMS OF SUBS NOT TO MENTION OF COURSE ON THE OTHER SIDE DIRECT TV WHERE YOU ARE GOING TO START TO SEE SUB EROSION
MALONE: WELL ARE THEY GOING TO RUN OFF IN SUBS
FABER: YOU ARE SAYING NO
MALONE: WHAT I AM SAYING IS THE EVOLUTION OF THIS DISTRIBUTION BUSINESS IN MY OPINION IS THAT YOU GO FROM ONE BIG BUNDLE TO A WHOLE BUNCH OF SMALLER BUNDLES AND I'LL GUARANTEE YOU IN THE SMALLER BUNDLES ALL OF THOSE TIME WARNER SERVICES WILL BE IN THE SMALLER BUNDLES WHETHER THEY'RE DELIVERED STREAMING OR A LA CARTE, RANDOM ACCESS WHATEVER THE EVOLVING SCHEME IS AT&T WILL MAKE SURE THAT THOSE TIME WARNER SERVICES ARE IN THOSE PACKAGES.
MALONE ON DISNEY:
MALONE: I THINK WHAT HAPPENS IS DISNEY IS THE ONLY BIG VERY ATTRACTIVE CONTENT OWNING DISTRIBUTION COMPANY.
FABER: IT IS NOT CONTROLLED EITHER.
MALONE: IT IS NOT CONTROLLED. OKAY. IF SOMEBODY WENT AFTER DISNEY, MY GUESS IS APPLE WOULD HAVE TO FINALLY MAKE A DECISION.
FABER: YEP.
MALONE: BECAUSE THEY'RE VERY CLOSE WITH, YOU KNOW, DISNEY --
FABER: IGER ON THE BOARD OF APPLE.
MALONE: CORRECT. IF I HAD TO GUESS WHAT YOU WILL SEE IS A SPLIT OF DISNEY WITH ESPN SPUNOFF, AND PROBABLY ESPN COULD BE OWNED AND PROTECTED BY A DISTRIBUTOR IN THE U.S. AND APPLE WOULD BE MORE INTERESTED AND THEY WOULD HAVE A LOT MORE IN COMMON IN TERMS OF INTERNATIONAL BRANDING. BECAUSE FUNDAMENTALLY TIM COOK'S A GLOBAL PLAYER.
FABER: RIGHT.
MALONE: AND FUNDAMENTALLY ESPN IS A DOMESTIC SERVICE. YOU MAY WELL AT SOME POINT SEE THOSE SEPARATE.
FABER: DISNEY WILL BE SEPARATED CONCEIVABLY INTO ESPN, WHICH WILL BE OWNED BY A DISTRIBUTOR. AND THE OTHER CONTENT ASSETS, THE THEME PARKS --
MALONE: AND MAYBE OTHER U.S.-FOCUSED ASSETS, LIKE ABC.
FABER: NOW, WHY DO YOU BRING THIS UP, JOHN? DO YOU THINK THEY'RE UNDER PRESSURE THERE?
MALONE: NO.
FABER: DO YOU THINK DISNEY'S UNDER PRESSURE?
MALONE: NO. WHEN THESE TECTONIC PLATES START MOVING, IT'S FUN TO SPECULATE. WE'RE JUST LITTLE GUYS NOW. WE'RE LOOKING AT THESE GUYS WITH MASSIVE BALANCE SHEETS WHO ARE IN AND AROUND OUR SPACE. AND IT'S ALWAYS INTERESTING TO SPECULATE WHEN THEY ACTUALLY GET INVOLVED. IS ZUCKERBERG, IS MARK GOING TO WITH HIS MASSIVE REACH AT WHAT POINT IS HE GOING TO WANT TO STEP IN TO THIS VIDEO SPACE IN A MEANINGFUL WAY?
FABER: I KNOW, BUT THEY BENEFIT SO MUCH FROM EVERYBODY ELSE'S CONTENT WITHOUT PAYING FOR IT AT ALL. IT'S A GREAT MODEL.
MALONE: BEST MODEL EVER CREATED, RIGHT?
FABER: YEAH.
MALONE: SO THE QUESTION IS THOUGH WHEN HIS GROWTH SLOWS AND HE'S LOOKING FOR HIS NEXT THING, WHAT'S HIS NEXT THING? AND MY GUESS IS HE STARTS LOOKING AT VIDEO MORE SERIOUSLY.
FABER: HE SAID VIDEO IS THE KEY TO THE FUTURE FOR THE COMPANY, BUT --
MALONE: YEAH. BUT WHAT KIND
FABER: NOT NECESSARILY PRODUCING THEIR OWN CONTENT.
MALONE: I'M NOT SAYING HE HAS TO PRODUCE CONTENT, BUT MAY MAKE SENSE FOR HIM TO OWN SOME. ALL I'M SAYING IS THIS GAME HAS MIGRATED FROM BEING A DOMESTIC GAME TO BEING A GLOBAL GAME. THE SCALE -- ANY TIME YOU GET INTO SOFTWARE, WHETHER IT'S ENTERTAINMENT OR COMPUTER, IT'S ALL SCALE. IT'S ALL ABOUT SCALE. THE GUY WHO HAS THE BIGGEST SCALE. THAT'S WHY REED HASTINGS, WHO IS BY THE WAY A TERRIFIC BUSINESSMAN.
FABER: YOU THINK HE'S A TERRIFIC BUSINESSMAN?
MALONE: I THINK HE'S TERRIFIC.
FABER: WHY DO YOU THINK REED HASTINGS IS A TERRIFIC BUSINESSMAN?
MALONE: BECAUSE HE SAW EARLY ON THAT IF HE COULD DRIVE A BUSINESS ON TOP OF THE INTERNET, HE HAD A GLOBAL BUSINESS. OKAY. WHAT HE'S GOING FOR IS GLOBAL SCALE. AND HE GETS GLOBAL SCALE, HE'S THE ONLY GUY THAT'S GOING TO BE ABLE TO WRITE THE CHECK TO CREATE THE CONTENT AT THE LEVEL AND AT THE QUALITY THAT PEOPLE ARE GOING TO GET USED TO. SO HE'S TRYING TO GET THERE.
FABER: RIGHT.
MALONE: AND HE'S GOT A BIG LEAD. AND THE QUESTION IS CAN ANYBODY CATCH HIM?
FABER: I WANT TO GET BACK TO DISNEY FOR A SECOND. PEOPLE ARE SPECULATING AS YOU ARE ABOUT WHAT HAPPENS TO THIS INDUSTRY GIVEN THE CHANGE THAT IS GOING ON PARTICULARLY IN LIGHT OF THE AT&T/TIME WARNER DEAL. SO YOU BRING UP THIS IDEA OF DISNEY. DO YOU THINK IGER IS UNDER PRESSURE? DO YOU THINK HE'S LOOKING AT THAT SUB EROSION AT ESPN AND SAYING I'VE GOT TO FIGURE SOMETHING OUT? OR IS THAT MAKING WAY TOO MUCH OF IT?
MALONE: NO, I THINK THE EQUITY MARKET HAS GOT -- BECAUSE GOT THAT BUG IN THEIR HEAD THAT THIS IS A LONGER TERM PROBLEM THAT HE HAS. AND SOMEHOW OR ANOTHER THERE'S GOING TO BE SOME SOLUTION BECAUSE, YOU KNOW, OTHERWISE DISNEY SHOULD BE TRADING AT A SUBSTANTIALLY HIGHER MULTIPLE.
FABER: YES.
MALONE: LET'S FACE IT. I MEAN, THEY ARE FABULOUS STUDIOS. THEY OWN THEATRICAL.
FABER: GLOBAL BRAND, TO YOUR POINT. THEY'VE GOT THEME PARKS ALL OVER THE WORLD INCLUDING THIS ONE IN SHANGHAI NOW.
MALONE: IT'S A GLOBAL BRAND. QUALITY GLOBAL BRANDS, OKAY. SO HE'S DONE A GREAT JOB. BUT ESPN, YOU KNOW, IN ORDER TO SOLVE, YOU KNOW, THE ISSUE OF HAVING TO PAY MORE EVERY TIME THE CONTRACT COMES UP, THEY WENT LONG. AND AT THE MOMENT THAT LOOKS ADVERSE. NOW, THEY MAY BE ABLE TO FIGURE OUT HOW TO TURN THAT.
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