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CNBC Exclusive: CNBC Transcripts: CNBC's David Faber's Interviews from Liberty Media Investor Day Today

WHEN: Today, Thursday, November 21, 2019

WHERE: Across CNBC's Business Day programming live from Liberty Media Investor Day

The following is the unofficial transcript of CNBC EXCLUSIVE interviews from Liberty Media Investor Day across CNBC's Business Day programming today, Thursday, November 21st. CNBC's David Faber sat down exclusively with Liberty Media Chairman John Malone (excerpts), Liberty Media President & CEO Greg Maffei, Sirius XM CEO Jim Meyer, and Charter Chairman & CEO Tom Rutledge. Videos from the interviews are linked to below.

All references must be sourced to CNBC.

Liberty Media Chairman John Malone (Excerpts)


DAVID FABER: Yeah, you know, it's the annual time for me to sit down with John Malone. We tape our interview. We just finished it, actually, guys. Where we talk about all things, of course, in terms of the landscape. And this morning, as you might imagine, of course, dealing with what we talk so often about: the streaming services. A year ago, we were talking about what Disney + might actually look like. Now, we have a better sense for that. And for HBO Max. So much of the competition going on. We focused on that. But I'll tell you, man, I encourage everybody when we get it online to watch the entire interview. Because Mr. Malone went all over the map in terms of, not just the landscape, but so many different companies, whether it's Charter or Discovery or Expedia, or Lionsgate or Uber, or Softbank. We talked about them all. But we did talk a lot, as you might expect, about AT&T given its HBO Max entrance into the streaming services and how important that conceivably that will be for the company. Malone has some reservations.

JOHN MALONE: HBO is the king of the hill, spending about $2 billion a year on content. Domestic, primarily domestic, a little bit of international, not much. You know, that was the biggest budget, you know, and had been the biggest budget in pay TV for years. All of a sudden, bang, right? So, the way I look at I, in the U.S., if you wanted HBO, you already have HBO. Right? So, I don't see that they gain a lot of new customers. They might transition some existing ones, so that they don't have the wholesale discount. Right? But in exchange for that, they have maybe a little more churn and a little more overhead. But, I don't see the growth of – for HBO in going this route. And, in fact, you could see attrition.


JOHN MALONE: And they certainly don't have the budget to defend and protect their content supply long-term. And they don't own the rights to international distribution. And it will take them years to develop, you know, and hold on to enough content so they can be a real player internationally. So, I have problems seeing the scale. I really have trouble seeing HBO being able to get to scale to be at the top of the chart in terms of direct consumer subscribers.

DAVID FABER: Guys, so much more from Malone on so many different things. But that's certainly some of his key takeaways when it comes to what was an introduction just a couple weeks ago. I was in L.A. of course interviewing John Stankey, when they rolled out HBO Max, or told us what it will be. It won't roll out until the Spring of next year. AT&T shares, by the way, as you both know, down sharply the last couple of days on that downgrade from Craig Moffett a couple days ago, questioning the ability of both the DirecTV and Warner Media assets to perform well and be able to sort of keep things steady while they also are relying on AT&T on significant growth and wireless to meet their overall target of one or so percent revenue growth. So, a lot more to share with you as this day goes on from Malone.

CARL QUINTANILLA: David, let's get back to some Malone sound.

DAVID FABER: Alright, yeah, let's do it. Carl, of course, it's our annual sit down with John Malone here at the Liberty Media Investor Day, where they go through so many different companies. Don't forget, they own a significant stake in Charter. Malone, himself, owns a significant stake in Discovery. Formula 1, the old QVC, LiveNation, TripAdvisor. So many different names connected to this company. And we talked about a lot of them during the course of our hour or so talk with Mr. Malone. But we also talked about the changing landscape of the media business. Of course, it's a business, by the way, that he helped to create. Right? The distribution model that we all know so well when he controlled TCI, the largest cable company in the country. Took significant stakes in the content company, the programmers and set up that distribution model that has made so many people very wealthy. It's going away. And the question is, what is going to replace it? And who are the winners going to be? I asked Mr. Malone for his thoughts.

JOHN MALONE: I think, if you are asking me, who is going to be around and strong five years from now, I would say, for sure, Disney and Netflix. Okay. Disney because they have terrific content and tons of it and a great brand globally. So, i think their challenge is to get people's credit cards. They have no large direct consumer relationship. So they're going to have to piggyback on the backs of people who do. Like Verizon or--so, that's going to be an area by area, group by group, in order to get that direct consumer relationship in scale. Netflix, you know, is so far in the lead. They have such a big base and revenue stream that they'll be around. They may not be as profitable as they would have been if there was no big competition driving up the cost of content and dividing, to some degree, the available revenue stream. I think Apple is going to surprise everybody with the numbers they achieve in a short period of time.

DAVID FABER: You do. Why do you think that?

JOHN MALONE: Well, I think even though they're thin on content.

DAVID FABER: Really thin.

JOHN MALONE: Their distribution strategy of, essentially anybody who buys anything from Apple gets a free trial for a year. And, of course, Apple already has their credit card. So, when you start with 460 million credit cards or 460 million consumer relationships.

DAVID FABER: 1.4 billion devices or something.

JOHN MALONE: And you give them something for free. And they get to use it for a year and then they put it on your bill. That's a very interesting way to get large numbers fast. And, of course, it's chicken and egg. As they get large numbers, then they can gauge what people like, what people don't like. They can go out and acquire or build more content. So, their approach is content light, wonderful, mass distribution strategy. Disney content heavy. Right. Needing some way to get consumers to take an action that gives them a relationship. So, those are the two entrants going at each other. I'm concerned that HBO will continue to be a decent service in the U.S., but I don't see that they have the revenue stream potentially to match what Netflix can spend. Obviously, Amazon with Prime has an entirely different monetization approach. So, you could expect Jeff to step on the accelerator or the brake in terms of how much content he is willing to buy and give away to support Prime. And, you know, I think it's not his primary business. I mean, it's not. So, you know the free shipping is very powerful, a lot of glue, content that's unique is kind of a marketing tool for that. And I think --

DAVID FABER: They are spending an awful lot of money on content right now.

JOHN MALONE: Well, as a percentage of the value of Prime. You know.


JOHN MALONE: But actually if you believe that they don't need to sustain it indefinitely.

DAVID FABER: No. I mean, I know there is factions within the company who say this could all go to the bottomline—would we really lose any Prime customers?

JOHN MALONE: I think Amazon evolves to be a bundler of other people's services, with less of their own and more of other people's. So, you know, i think ultimately everybody, all of the tech guys, would really like to be the platform and let everybody waste their money on content. Right? Because, the real pay day is the relationship with the customer and the information about the customer and being a gateway. And that's where I think ultimately the tech companies want to go.

DAVID FABER: You know, a year ago, you were talking to me, at the time, about Apple and your expectation, that they would – because it was before we had seen anything really -- that they would come to play. They started with I don't know, 13, 14 shows. I mean, it's virtually nothing. But do you think that they're going to continue to ramp up spending to your point that as they watch in terms of how many relationships they actually get? Are they committed to this, do you think?

JOHN MALONE: Well, I think it's they have optionality with this. Right? I mean, they're going to get out there six, eight months down the road, they're going to look at how many people have signed up or potentially signed up. They'll do the arithmetic backwards and decide, you know, how much they can afford to spend on content. And if it look likes go for them, like that they can include video in some kind of a bundle that includes music and all their other games and, you know, I think they want to be a bundler and a platform. Right? And video could be an important component to that and this gives them a relatively inexpensive look at whether or not adding a video component adds value to the bundle that they can offer and glue and pricing power and if it does, then they can step on the accelerator.

DAVID FABER: A lot more from Malone throughout the morning, guys. Of course, that's just one part of this. We talked a lot about so many other aspects of not, just media business but a lot of things as well. Carl.

DAVID FABER: Hey, Carl. Yeah, of course, as we do every year here, we sat down with John Malone earlier today. We tape an interview, it typically goes at least an hour, we try to cover so many different things and make that available to everybody at As you might imagine, of course, we spent a lot of time talking about the changing landscape of the way programming is distributed, the way it's produced and what that means for the existing players and for the newer entrants that we have seen over the number of last years. One name we came to as well and something that you, Carl and Jim and I have talked about a lot is ViacomCBS. The deal will close in the not too distant future, putting these two companies back together. Jim has often commented on how cheap it is and how he regrets owning it in his charitable trust. We did talk to Malone about that as well. And I asked him he whether or not thinks that company given it is certainly still dependent on linear cable networks for much of its livelihood and potentially as an arm supplier of content to so many of the streaming services, whether Malone thinks it's well positioned right now.

JOHN MALONE: I think it's cheap at the moment. What they don't have is global presence. While they make a lot of their own content and own a lot of their own content, a lot of it is bought, and the real locomotive in that whole collection in CBS. And CBS is totally dependent, in my opinion, on sports rights. And the guys who own sports rights know that. So, I'm not sure about long-term profitability or whether or not CBS has enough market power to carry all of those channels. Right? And so, my guess is at least at the affiliate level, what Shari is going to face is fights over prices on affiliate fees.

DAVID FABER: As they face ever increasing rates from the NFL or the NCAA.

JOHN MALONE: Yeah. And so, kind of the threat that you won't get CBS and the New York Giants game, you know, if you don't agree to carry 12 channels and pay for them, at some point that rubber band breaks, right? And I think, in my own opinion, now, Shari is going to be mad at me for saying this, but I think Viacom underinvested in the content on their channels for a number of years while they were spending their money buying back stock at high prices. And I think that was kind of a tactical mistake. In fact, I think -- I think Sumner made a mistake when he split the two companies. Because they really always belonged together. And had it evolved together, there would have been more juice invested in those niche categories that really are sticky. Now, you know, you've got to say, how important is MTV to a distributor? How important is Nickelodeon to a distributor? You know, when I see them essentially licensing SpongeBob, their best program, to other people, I worry about, you know, the sustainability of the model. And the fact that they are U.S. only. So, they don't get a lot of support internationally to help them pay for their content. So, you know, yes, historically they are very cheap.

DAVID FABER: Cheap, but cheap for a reason, Carl. Now, he had a very different take, as you might expect, on Discovery which also is very cheap but which he recently bought. We will share more on his thoughts on that company later in our program. For now, I will send it back to you.

DAVID FABER: Welcome back to "Squawk on the Street." I'm David Faber at Liberty Media's Annual Investor Day. We have a chance here to sit down with the company's Chairman John Malone. You heard my interview just now with Liberty's CEO Greg Maffei in which we were discussing the proliferation of content, the enormous amounts that are being spent by companies such as Netflix, Disney, Amazon and Warner to amass content for their direct to consumer platforms. Maffei says it may have years to go in terms of these inflated prices. I did ask Mr. Malone as well, when he thinks things will start to rationalize.

JOHN MALONE: I think that the number of people trying to do scripted programming on a global basis and buying this content away from each other will thin out as some people make it and some don't. At some point some of the players are going to look at the numbers and they're going to say, you know, we no longer have belief that if we -- that hail mary passes are going to keep working. Reed, you know, who has been brilliant –

DAVID FABER: Reed Hastings.

JOHN MALONE: Yeah, he has been throwing hail mary passes since he started, right, and it's worked for him. And now he has a budget that's huge, bigger than anybody else's. Over time he will have to -- he will have to turn the dials to modulate that spend to where he has a really good business that doesn't churn out on him. People will start experimenting with bundling with other services to reduce churn to make it more sticky. Distributors will start bundling on behalf of some of these people if, in fact, that reduces churn and makes the composite more desirable, more sticky. And so, it will evolve the same way that the cable business did and the big bundle is created, right? And as those new packages are created, the guys who have uniqueness will start extracting more and more share, the prices will go up and we will see this play again.

DAVID FABER: Exactly. Well, I mean, I'm not -- for our viewers, of course, to understand, you are not just talking about this idly, you obviously own a significant stake in Charter. So, you see it from the distribution side. Significant stake in Discovery. So, you see is from the content side.

JOHN MALONE: Internationally we see it.

DAVID FABER: And internationally with Liberty Global as well.


DAVID FABER: When you think of cord cutting right now--


DAVID FABER: You know, everybody is like, 'Oh, my god, it's just going to continue at this rate.' We've watched the losses at Direct and at Dish in particular.


DAVID FABER: Does it start to level off at some point?

JOHN MALONE: Yes, I think it does. It doesn't stop -- the erosion doesn't stop completely. But it will make a transition to where, in my opinion, these distributors will start becoming where you go for a bundle of other services. So, you may not buy the big bundle but you might end up buying a service from HBO or Netflix. Netflix already is distributed by most cable operators, right, as an incremental service. Certainly, Prime is talking to the distributors about a similar relationship. My guess is Disney will eventually, you know, be willing to provide some split in order to be in a bundle, if that reduces churn or helps distribution. You know, Discovery will be in that situation over time. So, you know, this will be a transition. It won't be a black and white thing. Right at the moment, because the video margins for the U.S. cable distributors are thin and getting thinner as more and more retrans pressure and sports pricing pressure comes in, it's been sort of discovered that actually margins improve as you lose video customers and you become less capital intensive. And so, if you shrink the video base and don't try and innovate the video platform, right, your margins go up.


JOHN MALONE: Your cap ex goes down, your leverage free cash flow goes up and your stock takes off.

DAVID FABER: What about these companies -- I mean, does Discovery have enough scale. Does CBSViacom have enough scale? Do we need to see one more round of sort of consolidation among content providers?

JOHN MALONE: Well, I mean, if you go back a couple years, you know, Discovery is the one I'm most familiar with.

DAVID FABER: Of course.

JOHN MALONE: 32 years, I think, now. But we saw in Scripps, for instance, a consolidation opportunity that would give us scale, increase optionality, brands that we understood, talent in the organization, opportunity for synergies of consolidation. Didn't solve the direct consumer issue, but gave us a lot more firepower. So, that's worked out really well and now Discovery has got an investment grade balance sheet, deleveraged quickly. Generating give or take $3 billion a year in leverage-free after-tax cash. Right? So, they have a lot of juice with which to solve their issues. They own all their content worldwide in all platforms. And they're pretty much the only global company right at the moment whose products are in front of audiences on a global basis. So, they've got a lot of the pieces, right. They need to make the transition from linear to interactive, IP, direct-to-consumer.

DAVID FABER: Which is wat we were talking about in terms of --

JOHN MALONE: Correct. That's correct.

DAVID FABER: The hybrid approach.

JOHN MALONE: They need that hybrid approach. And they're reaching out in a lot of different ways. They brought in some extremely highly talented people from -- ex-Amazon guys to help them with this direct consumer opportunity. And I personally am willing to bet that they are going to make this transition.

DAVID FABER: You bet a little more earlier this week.


DAVID FABER: Well, actually, it was a pretty big purchase for you, 2.6 million shares.

JOHN MALONE: 75 million bucks. I wrote the check. Yeah.

DAVID FABER: Why did you do it now?

JOHN MALONE: I believe -- I believe that they will solve these issues and that they are dramatically undervalued right now. When I put my screen up and I look at companies based upon market cap versus leverage-free cash flow, they were the cheapest thing on the screen. And I said, wait a minute, you know, they're growing in a world where everybody else is shrinking. They're -- they own all their content. They're generating a ton of cash. They're an investment-grade balance sheet. Why are they cheap?

DAVID FABER: What is the multiple on -- it's really low, right?

JOHN MALONE: Probably 5.5 times cash. So, that's giving them like 16, 17 percent cash return. Right. After tax. That's pretty darn cheap for a good company. So, I said, yeah, I think I will buy some more. I started buying it when the Scripps deal was -- got a thumbs down from the market, so I bought some in the teens. Then I bought some more in the very low 20s. And now I'm buying some – I think I paid $28.03 for the shares that I bought. So, I've increased my exposure to Discovery. And I did it because I believe I'm going to make money.

DAVID FABER: Lionsgate.


DAVID FABER: Why did you sell it?

JOHN MALONE: I sold it because I -- I didn't see them execute a strategy of using their library and content capabilities to drive Starz. I really thought the opportunity was to take Starz, use Lionsgate's creative skills to drive Starz globally, aggressively, and they got -- in my opinion, they got hung up on selling our content to somebody else versus putting in our own distribution. My concept originally when I went into it was that they were going to drive their own distribution. I also thought that if they were successful in that they would make themselves much more valuable to other people. Okay. And I think that they didn't do that. And I became discouraged with their ability to do that. Now, they seem to be gaining some traction now outside the U.S. In distribution, and they've gained some traction in the U.S. with Amazon as a marketer for Starz. It was just, you know -- it was the question you started with.


JOHN MALONE: You know, who is going to win in the streaming game? And I didn't see a path for that company to be a winner in that space. If they didn't merge with somebody else –

DAVID FABER: They were close to -- I mean, CBS before the Viacom deal was pretty close.

JOHN MALONE: And may be still. May be still Showtime and Starz should get together because there's enormous synergy in that combination and that would provide scale.


JOHN MALONE: But this is a scale game and you've got to be global to get scale.

DAVID FABER: You know where he's coming from. He's always talked about it. Global scale. So important to this business model. Back to you, guys.


Liberty Media CEO Greg Maffei


DAVID FABER: Welcome back to "Squawk on the Street." I'm David Faber at Liberty Media's Annual Investor Day. And it is an annual tradition as well to be joined by Greg Maffei, the company's CEO. There was a time when you would come on more than once a year. I don't know what happened.

GREG MAFFEI: I don't get invited, I think.

DAVID FABER: That's not true at all. You've made yourself scarce. So many different things to talk to you about in terms of the portfolio. It's funny, we started a year ago the same place I'm going to start now which is Sirius. Which has been doing very well, I know you will point out –

GREG MAFFEI: I don't have to. You're doing it for me, thank you, David.

DAVID FABER: There's always that discount and you guys continue to buy back shares of the tracker. You are at 71.5%. Are you just going to keep buying it back?

GREG MAFFEI: Well, two things are happening. You noted Sirius is buying its shares back and actually we today are issuing an exchangeable – exchangeable in a series stock and they are buying the underlying shares for the hedge fund buyers who are hedging the stock out. So, they're continuing to buy back. That's pushing our 71.5% or something up. But, in addition, as you rightly noted our tracking stock trades at a discount. We bought back, through the end of the quarter, $860 million of the stock, we have a $350 million profit if you look at the underlying Sirius shares. So, we like that. We own about $22 billion worth of Sirius stock. And the cumulative or the absolute discount is about $6 billion. So, we are going to keep attacking that and buying that. If the market is going to give us the Liberty shares – the Liberty SXM shares cheap we are going to buy them back.

DAVID FABER: But it has--it persists. It just doesn't seem to go away.

GREG MAFFEI: Thank you. Just keep--

DAVID FABER: Do you wonder why, though?

GREG MAFFEI: I think we've talked about it. You know, Siri has more share buyback. It's a harder borrow to borrow against the Liberty Siri. To orbit out. You know, a bunch of things like that. But, I – you know, we just take advantage of it. We try.

DAVID FABER: You're Chairman of Sirius still, as well.


DAVID FABER: Let's talk a bit more about the business itself. Everybody wants to talk about podcasts right now. I mean, even Daniel Eck joined us on set six months ago to talk about Spotify's efforts when it comes to that. They're spending a lot of money. You guys are moving into it at Sirius.

GREG MAFFEI: Pandora is big in it.

DAVID FABER: Pandora is big in it. What does it look like in terms of the spending going on? I mean, some people want to equate it to the streaming wars right now, in terms of the spending on content and the profitability that it will bring.

GREG MAFFEI: Well, as you know, we have our Investor Day going on and I usually try to give a think piece. Last year's think piece was why the video scripted content business is a horrible business. This year is why the audio business is not like that. Not only is there upside in viewership -- listenership and the types of content including podcasts. But they're under monetized, I think there is an opportunity to see increases in how podcasts and other forms of audio content are monetized. But to your point, the cost structure is way more attractive. Yes, there is a little bit of a bidding war for audio content. But you can't spend on audio. You know, a great podcast might be $250,000 a year, an hour of one of these high-end shows could be $10 million. So, your -- the numbers are so far apart. And the war is way less. And the good news for us is we are a serious player in audio.

DAVID FABER: Yes, you absolutely are. So, has the music become almost a commodity at the point? And then the differentiator is the podcast?

GREG MAFFEI: Your point is right, exclusives are what you want to have and there are different forms of that. We have exclusives obviously in things like Howard Stern. We have exclusives in the fact that you want to listen to CNBC in the car, we are the way to do it. ESPN and the like. But you're right, podcasts are a piece of that. And more and more, we have an exclusive with Marvel. We have an exclusive with Lebron James called Uninterrupted. Lots of things that are unique just to us.

DAVID FABER: I don't want to steal all the Jim Meyers thunder because he is going to join us as well. The CEO of Sirius. So--move on to some of the other parts of the portfolio. One that hasn't been as good, TripAdvisor. I was talking to Malone about this as well, you know, Google changes their algorithm and suddenly everybody is discombobulated. What can you tell investors there in terms of the hotel click-based auction system not working as well as it has, experiences not growing as quickly and what your expectations are for Trip to turn around?

GREG MAFFEI: Well, I think a couple things are happening. I think, Trip has always had an enormous audience of interested people who want to travel. Historically, our best monetization method was that hotel auction, as you point out. Google has made that a lot harder. Why? They've pushed free search results down the page, particularly as you went desktop to mobile. And they put their own travel on top so we're competing with them directly. And that has happened, you've seen reduced results therefore, for everybody, the OTAs and people like ourselves. But we've seen growth in other forms. We've seen growth in our direct advertising business, we've seen growth in our restaurants and our experiences business. And, yes, there's competition in that space but we're growing nicely there. And, you know, despite the challenges we have great strength in the audience and we have great strength in, you know, how much free cash flow that business is still generating.

DAVID FABER: But should it be viewed as a free cash flow generating business as opposed to a growth business at this point?

GREG MAFFEI: We have growth in certain aspects but we are going to fight challenges in the auction market.

DAVID FABER: You expect that to continue.

GREG MAFFEI: Yeah, I don't think Google is going away. I'd like to see the government something about them but I'm not sure I'm counting on that.

DAVID FABER: Because the platform is so powerful and changes like that can take billions of market capital away interest Expedia, Trip, and--

GREG MAFFEI: And the platform is their platform and they are putting their app on top. When I was at Microsoft we went through this. I know, the government if it gets to be involved, it will be a different matter.

DAVID FABER: Right. And particularly, again, you made this point but you're doing it on this now, as opposed to your desktop so you just don't have the room.

GREG MAFFEI: Screen space a lot smaller, exactly.

DAVID FABER: Formula 1.


DAVID FABER: What can you tell us there in terms of what investors should look for the year ahead that's going to continue to add value to the company?

GREG MAFFEI: Well, Chase Carey just spoke, and he made some great points. We invested, when we bought this in about business in 2017, we invested in a whole bunch of initiatives around marketing, around research, about building the fan experience. And that's really begun to pay off. And you can see, you know,the leverage is down because of our free cash flow. We have just cut a new deal with the FIA, the regulator, that will set forth we think better on-track performance that we think equalizes some of the payments. All of that is going to be benefit. I believe Formula 1 is poised for success.


GREG MAFFEI: Well, because we're seeing growth in fan interest, we've seen attendance up, we've seen viewership up, we've stabilized and set forward a much better regime going forward to make it more compelling than it already is. We see opportunities to monetize it better. I'm excited.

DAVID FABER: You're excited about the future for Formula 1.

GREG MAFFEI: Absolutely.

DAVID FABER: And Chase Carey, I mean, he is planning on staying with the company, for the foreseeable future?

GREG MAFFEI: As long as I can keep.

DAVID FABER: How about yourself? You've been doing this for a long time, as well.

GREG MAFFEI: I can't get another job.

DAVID FABER: No? You can't find another one.

GREG MAFFEI: No. Have you got any ideas?

DAVID FABER: I don't know. Is Malone going to keep you around? I assume he will.

GREG MAFFEI: You know, did you ask him? He was on the list. You should have asked him.

DAVID FABER: Yeah, I didn't ask him that. The Atlanta Braves another thing people may not realize--

GREG MAFFEI: Better than the Mets, again.

DAVID FABER: Although the Mets did not have a bad season.

GREG MAFFEI: That's true, if you don't mind not winning.

DAVID FABER: Braves had a great season. Unfortunately, it ended very early.

GREG MAFFEI: It did. Wait a minute. But you, Mr. Mets fan, don't even go there.

DAVID FABER: I really don't like the Braves. I'm sorry.

GREG MAFFEI: I understand. I really don't like the Mets.

DAVID FABER: I don't blame you. You own the stadium, too. What are the trends there that you're seeing? I mean, are you going to have to spend each more in free agency to make that last leap into the World Series?

GREG MAFFEI: Well, you know, we are well set up, as you know, with great young talent, observing in a Ron Acuña Jr., Yordan Alvarez, obviously Freddie Freeman. But, in addition, we just Signed Will Smith, probably the best reliever in baseball. Yeah, we're going to spend some money. And we have relative freedom under the cap and in our payroll compared to most people, including the Mets.

DAVID FABER: Okay. We will move through the portfolio. iHeartRadio, passive investment, you guys owned the debt, they came out of bankruptcy. Is that something you could see taking control of?

GREG MAFFEI: You know, we have no plan or intent on that today. We look at the radio business, terrestrial radio business, as being interesting. Respect, have a lot of respect for what Bob Pittman and Rich Bressler are doing there. So, we'll watch.

DAVID FABER: Just going to keep watching. Do you mean it? Because, so often you hear, well, the Liberty guys might get more active here. What are you watching?

GREG MAFFEI: Their performance, how that market trends. You know, some people think terrestrial radio is going to slide the way linear video was. Others think, including Mr. Pittman and Mr. Bressler, they have got a good future. So, we'll watch.

DAVID FABER: How do you view it?

GREG MAFFEI: Well, we own 4.8%. So, we're rooting for them.

DAVID FABER: Right. You have a pretty darn good view, given Pandora and Sirius, in terms of the way audio is distributed around the world or certainly in this country.

GREG MAFFEI: They have a big funnel that's very interesting.

DAVID FABER: Big funnel.

GREG MAFFEI: Yeah, a lot of users, a lot of listeners.

DAVID FABER: What do you guys own, by the way?

GREG MAFFEI: What do you mean?

DAVID FABER: What's your economic?

GREG MAFFEI: Just under 5%.

DAVID FABER: Just under 5%. Speaking of very small--you can look at your watch --

GREG MAFFEI: I was wondering what time –

DAVID FABER: What's the problem?

GREG MAFFEI: Places to be.

DAVID FABER: Got to run somewhere?

GREG MAFFEI: I have an Investor Day to do.

DAVID FABER: It's all right, you can just wait a second. Speaking of small positions, you guys still own a little bit of Viacom.


DAVID FABER: Why not get rid of the rest of that?

GREG MAFFEI: Well, we'll see.

DAVID FABER: Did you wait too long? Should you have sold it earlier?

GREG MAFFEI: Absolutely, we missed the window. But, no, we're fine.

DAVID FABER: By the way, Malone is not doing you any favors. He was not particularly positive on the prospects for the company. How about you?

GREG MAFFEI: I think the stock has performed less well than we thought it would under the merger conditions. Yeah.

DAVID FABER: Why did you think it would perform better?

GREG MAFFEI: There are synergies between the two businesses. And we thought it would trade better than it had. We were wrong.

DAVID FABER: Finally, back to the big picture, you said a year ago you presented on what the future of why scripted television is not necessarily the way to go.


DAVID FABER: Do you still feel that way?

GREG MAFFEI: Only more so. I think we are here a year later, the OTT players, you know, Over-the-Top players, are going to put a big hurt on linear television and they are going to put a big hurt on each other, somewhat of a circular firing squad.

DAVID FABER: I know. So, when does it end? When do content prices start to rationalize?

GREG MAFFEI: You know, it's only going to end when these large players, some of them decide to reduce or not give up but reduce their efforts. I don't see that happening for, you know, several years. The winner here is the viewer. They're getting an unbelievable amount of content, probably too much. No one can consume it all. But, they are getting a lot of inexpensive content.

DAVID FABER: Greg, always appreciate your taking ten minutes or so for us every year.

GREG MAFFEI: For you I will go to 12, David.

DAVID FABER: Alright, we look forward to it.

GREG MAFFEI: Thank you.

DAVID FABER: Maybe we can do it twice a year. Greg Maffei, the CEO of Liberty Media. Back to you guys.


Sirius XM CEO Jim Meyer


MORGAN BRENNAN: We're going to head back uptown to David Faber at Liberty Media's Investor Day, sitting down in an exclusive with Sirius XM CEO Jim Meyer. David.

DAVID FABER: That's right, Morgan. Yeah, we get these chances usually just once a year. It's always nice to do it. Jim, it's nice to see you.

JIM MEYER: Good to be here.

DAVID FABER: One year later. It's been a good year for your company, I think that's fair to say. Let's start with Pandora. Last year, we were talking about the prospects of the deal, because, of course, it hadn't really -- you hadn't really yet brought it all together. That's not the case any longer. What synergies can you tell our viewers about that you've seen in terms of two platforms, Sirius and Pandora?

JIM MEYER: Well, I'll start with first I'm probably more excited about strategic rationale for Pandora today than I was, and I was excited, trust me, a year ago. But now I really feel that it is absolutely the right thing for our company. We've owned it about nine months. The integration has gone well. We have done what I call easy but hard things, which is combine corporate functions and frankly exceeded what we thought were the kind of cost synergies we could get there, and the speed we could get them. We have been very careful about leaving product development and marketing alone. We're now beginning to integrate those into one team with -- so, we have one team focusing, for instance, on both the Sirius XM app and the Pandora app. I expect that to generate real benefit down the road. You know, if you look at Sirius, for instance, two years ago, we probably had, you know, 250 people maybe working on digital transition. Take that now combined with Pandora, we're at a thousand. And, when those road maps kind of converge, it will give us the opportunity to use those thousand for even more powerful things. So, I'm really, really, pleased about that.

DAVID FABER: Well, also. Cost is not easy but easier sometimes to identify in terms of taking out revenue synergies, harder to come by. I mean, are there any real benefits in terms of either platform benefitting from having the other that will generate higher revenue growth and otherwise would have been the case--

JIM MEYER: So, I definitely believe there will be. And we're continuing to test a lot of things. We have began just recently moving and testing some Sirius content as part of Pandora offering, creating windows perhaps when it's available at payroll and when it is available free. And we're learning a lot. I do believe it will yield big results. We're, you know, we're big in digital advertising. We're the leader in digital audio advertising with well over a billion dollars. I tell you why I think that's really important, David. One thing I'm sure of, I have two grandchildren. I'm positive they're going to consume audio. I'm positive of it. You know, one of the great things about what we do is we know people love our product. What I'm not positive is what the revenue models will be five years or ten years from now. So, in my opinion, you have to get really good at subscription. We are. You have to get really good at digital advertising. We now are. And you have to get really good at cross promotion between the two. And that's the part where we're going to have to work hard over the next 18 months.

DAVID FABER: Podcasting is something we seem to be talking more about than a year or two years ago. I've had a conversation with Daniel Ek at Spotify about it. And they're spending big on it. You guys also—I mean, Sirius, obviously, you have the shows, you have the personalities already, in terms of Howard Stern and so many others. But does podcasting become a more important part of the value proposition of Pandora as well?

JIM MEYER: Yes, without question. I mean, there are debates on what the slope of the lines will be on podcasting. There's no question where the north is. It is going to grow exponentially.


JIM MEYER: Because people have always loved talk content. It is good for you, by the way. They've always loved talk content. Younger people consume it differently than people from my generation. By the way, I continue to believe in talk. There will always be shows, there will always episodes, and there will always be ways to cut it in snippets for different attention spans and you know, different intentions. And so, we're in the middle of that whole thing getting mixed together and where are we going to end up. One of the podcasts I'm really excited about is we announced in the last earnings call an association with Marvel. And, you know, these guys, everything they touch just seems to be magic. They're creative geniuses. We're really excited about the effort they're putting forward. And I think what you're going to see is kind of what I just described. You're going to see an effort with Marvel kind of on a channel, you're going to see an effort with Marvel that's episodic and you're going to see an effort with Marvel that's more podcast oriented. And then we'll put it out there and we'll see which way, you know, consumers go. The beauty is today, by the way, with the combination, we now have 100 million listeners. We have 38 million self-paying customers between both platforms in North America. Another 65 million that are in the free service in Pandora or in a trial somewhere with Sirius XM. It gives us tremendous leverage to take things, test them across and find out which way people enjoy them more. I think we're going to find they enjoy them multiple ways.

DAVID FABER: Right. So, we can expect a proliferation of podcasting listening opportunities.

JIM MEYER: Yes. We have a little work to do to catch up on some of the technology side. And I think you'll see us very focused on that in the next three to six months.

DAVID FABER: What does that mean? What are you lacking, in in terms of technology? What do you need to do?

JIM MEYER: You need to be very good, and it's one thing I learned in the last nine months. Ad tech, advertising technology, is crucial, and you need to be very good at it, as it relates to particular--

DAVID FABER: So, being able to, what, insert different ads at different times in different ways with podcasts?

JIM MEYER: Yeah, we're great at it in music. We're great at it in music. We've got a transition that Pandora never did it for spoken word, we have to get that bridged in the next couple months.

DAVID FABER: Well, something we always have to talk about is just automotive in general, and what you are seeing in terms of trends--both new, used, you know, anything alarming to you? I know, car is staying pretty much – fairly high.

JIM MEYER: It's a great country.


JIM MEYER: I know with what's going on in Washington this week, it's hard to believe. But it is the American customer, at least in our opinion, is really feeling really good. The car business is great. Sure, it is going to moderate between 17.3. Do I like 17 better than low 16s? But even at low 16, it's still fabulous. The business right now, I can tell you, is really good. I mean, what we're seeing, kind of for what we saw in October and then my contacts in the car industry are still fairly bullish, the used market is really good now. And so, I just don't see, I'm not, maybe I won't see the wave, but I'm just not worried what that business looks like. When you look at the car business itself, the retail and wholesale inventories are in fabulous shape, which is always, you know, a good sign of health to me. So, I don't see the storm clouds right now.

DAVID FABER: Right. And, finally, we end every interview with the same question. You keeping Stern happy?

JIM MEYER: Keeping him happy, and we just love him. I don't know if you saw, he opened our brand new studio out in Hollywood three weeks ago. And I think even Howard impressed himself with what a big star he is. Because the quality of the shows, and the lineup of stars we had to support him was outstanding. We're just -- we love Howard. And we want Howard with us as long as he wants to be.

DAVID FABER: Quite a lucrative partnership for you both.

JIM MEYER: Thank you very much.

DAVID FABER: Yeah. You're welcome. Jim, thank you. Always appreciate you taking some time. Jim Meyer, CEO of Sirius. Back to you guys.


Charter Chairman & CEO Tom Rutledge


DAVID FABER: Alright. And I will take it. Thank you, Dom. You know what, we'll start with cord cutting. You didn't hear the introduction, but that was one of the questions, of course, that we have. Tom, first of all, thanks. It's nice to see you again.

TOM RUTLEDGE: Glad to be here.

DAVID FABER: It's been a while. Cord cutting. We talk about it all the time, endlessly, a huge important trend in your business—in our business--but there are some people who believe that sort of things are going to become a little less severe, I guess. Are you one of them?

TOM RUTLEDGE: Yeah, I actually think that's right. You know, what cord cutting is, it's actually a bad term because we're actually adding lots of cords. Broadband subscription connections that we sell, mobile, broadband, they're increasing in terms of the rate of growth. But television viewing, the big bundle of services that people historically bought, those have-- that's been under a lot of pressure for a lot of reasons. But I think some of that has been slowing down. And one of the reasons is because a lot of the damage from the high-priced environment we've been in and the lack of security with password sharing and everything, you know, kids going to college with their parent's passwords, that whole college market's gone and the second home market's gone to a certain extent and high transaction multiple dwelling units with young people in them. You know, new behaviors –

DAVID FABER: Most of the costs, most of the losses to be fair have been at the direct broadcast satellite companies to begin. Not that you haven't – not that we don't follow closely your video sub losses each year.

TOM RUTLEDGE: Right. Ours are relatively minor comparatively speaking. But I think in aggregate, they're going to slow down.


TOM RUTLEDGE: Because most single-family homes have big TVs in them and that's where you get sports, that's where you get news, that's where you get live TV, like this. And, you know, it's going to still be under price pressure. Not saying the category's not under pressure, but I think the rate of decline will slow.

DAVID FABER: That gets me to another question. Which is this theory that's been out there and actually, in speaking to John Malone earlier, he brought it up as well, which basically goes something like this. You're better off actually getting out of the video business. I'll quote him to you, so you can respond. Because he's not alone in this. 'It's been discovered that margins improve, as you lose video customers and you become less capital intensive. So, you shrink the video base, your margin goes up, cap ex goes down, stock takes off.'

TOM RUTLEDGE: Yeah. Well, that is the narrative. And it's true. But I actually still think there's margin in the video business. And it's as great as it is in the broadband business and yes, the it's more capital intensive but becoming less so. So, I think that having a lower margin video business attached to a higher margin broadband business makes a lot of sense, as long as there's margin in the business. And so, I think you can have it both ways. But, it is true that capital intensity's come down. And it's come down for a lot of reasons. You know, we have over 4 million app based services now in the marketplace. Meaning people with a big TV that's app-based don't need a set top box. So, our customer premises hardware capital has come down, and IP technology has allowed capital costs to come down. So, the whole business is less capital intensive going forward for a variety of reasons. But it is true video has been more intensive than--

DAVID FABER: It is, but there's this theme that says you're happy to see them go. That's not really true.

TOM RUTLEDGE: No, I don't think that's really true. It would be true if they had no margin but they still do. And it's less than it was ten years ago, it's less than it was five years ago. But, it's still a good business on the margins.

DAVID FABER: How much of your revenue growth right now is coming from price increases? There have been rate hikes. I'm a Spectrum customer in one place and I've seen it as well for broadband. And how much from volume?

TOM RUTLEDGE: The majority is volume.

DAVID FABER: It is. Not price.

TOM RUTLEDGE: That's right. Our strategy has been not to raise prices significantly and we have not, as a proportion of revenue. The bulk of our revenue growth is volume.

DAVID FABER: Can you continue that?



TOM RUTLEDGE: Because we're still underpenetrated. We have about a little over 50% broadband penetration and 31ish video penetration. And we have almost a million mobile customers. So, minor -- we have almost 1 million mobile customers. So, we have 51 million homes that we pass with our infrastructure. So, we still have an opportunity to grow customers and customer relationships and that's our primary strategy. And most interestingly about that growth strategy and not using price to drive our revenue is that every customer we create on our fixed network costs us less to operate than the current customers. Because you have a fixed capital investment that's being spread over a bigger base. So, we think it's a virtuous growth cycle that we're in and we don't want to use price to knock it down even though in the short run, it looks attractive from a revenue perspective.

DAVID FABER: We're already running out of time, Tom, but you mentioned a million mobile customers. There's a thought that perhaps the MVNOs that you're using, the capacity agreements, won't be enough eventually. That you would need to actually buy a wireless player down the road. Is that a possibility?

TOM RUTLEDGE: Well, look, I think there are a variety of ways to get the owner's economics through time. And we've done a bunch of experiments using the new spectrum that's available – C-band spectrum. And we found a way to actually use that to take traffic that's currently on the MVNO and move it to us. So, does that mean we have to buy a wireless carrier or we can invest our own capital in converging our network? I think both of those things are alternative pathways, but today, we're using the MVNO and it's perfectly satisfactory. It's margin positive and it's driving customer relationships. But as time passes and our penetration goes up, we'll be more interested in owner's economics.

DAVID FABER: Future interviews. Finally, wouldn't be a Rutledge interview if I didn't ask you about M&A, but it won't be about past, whether it's Verizon or Softbank. Malone brought up this morning that Patrick Drahi, who controls Altice USA, calls him all the time. And says I want to get these two companies together. It's hard to imagine how they could buy you, but would you be interested in buying them?

TOM RUTLEDGE: Well, look, we think cable assets properly run are really good assets and really a great business. We buy a lot of our own stock back because we think the business is good and its future is good. And I think that way about all cable companies. There's obviously price issues and how you run the company and where it is. I've run those assets myself.

DAVID FABER: That's right. The old Cablevision assets.

TOM RUTLEDGE: So, I know what they are. And I know what they can be. And, but you know, getting price discovery and getting to an agreement is a really complicated thing. And all of the companies in our industry that are left from an M&A perspective are controlled companies.

DAVID FABER: Right. As is Altice. But you certainly don't seem to be saying it's not a possibility.

TOM RUTLEDGE: No, but it's a price problem and a timing problem.


TOM RUTLEDGE: As most M&A is.

DAVID FABER: So much of life is like that, too.


DAVID FABER: And speaking of time, we're out of it unfortunately, but tom, always appreciate you're taking some with us.

TOM RUTLEDGE: Thank you, David.

DAVID FABER: Tom Rutledge, Charter.

For more information contact:

Jennifer Dauble
t: 201.735.4721
m: 201.615.2787

Emma Martin
t: 201.735.4713
m: 551.275.6221