John Malone interview (2009)

[saltybit]

Not sure if this was posted before, but a 3-part interview with John Malone in April 2009.

 

http://www.bizjournals.com/denver/stories/2009/04/20/daily97.html?page=all

http://www.bizjournals.com/denver/stories/2009/04/27/daily24.html?page=all

http://www.bizjournals.com/denver/stories/2009/04/27/daily45.html?page=all

[gary17]

saltybit, thank you so much for sharing this - very insightful.

 

i really like how he says the cable industry is more like real estate than manufacturing - makes a ton of sense...  i think one could probably extend that to any capital intensive industry .... also really like this quote:

 

I used to say in the cable industry that if your interest rate was lower than your growth rate, your present value is infinite. That’s why the cable industry created so many rich guys.

[saltybit]

I found it quite interesting to read given what's currently transpiring with his companies.

[gary17]

what is transpiring in his companies? can you please elaborate -      or is there a news article somewhere that i can catch up with the reading  ;D

[jay21]

what is transpiring in his companies? can you please elaborate -      or is there a news article somewhere that i can catch up with the reading  ;D

 

Down the rabbit whole:

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lmca-liberty-media/

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/liberty-interactive-linta/msg151570/#msg151570

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lvnta-liberty-ventures/msg128101/#msg128101

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/liberty-media/

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/siri-sirius-xm-radio/msg140769/#msg140769

 

There's more but those will get you started

 

[yadayada]

it is sort of a scummy industry tho. I mean look at what they are doing now with netflix. Purely looking at the bottom line, everything else doesn't matter. If you have an industry where competition are actually friends with each other and leave each other alone, that is not a very healthy industry (for everyone but investors really). It is all kind of grey area.

[Liberty]

it is sort of a scummy industry tho. I mean look at what they are doing now with netflix. Purely looking at the bottom line, everything else doesn't matter. If you have an industry where competition are actually friends with each other and leave each other alone, that is not a very healthy industry (for everyone but investors really). It is all kind of grey area.

 

I don't see it as scummy. They just don't overlap geographically. It's the nature of cable; the economics wouldn't work if you had a bunch of companies wiring up the same town, running wires in parallel. So they can't pretend to compete with each other if they aren't operating in the same places. Might as well try to work together when it makes sense.

 

There's plenty of competition with cable from telecos, satellite, and netflix & other streamers, as well as lots of arm-wrestling with content owners. All these have national scale, so by cooperating on some things, cablecos are basically working their way up to a level playing field.

[yadayada]

well if you want decent internet, often you dont really have a choice, and are forced to go with one. When local towns tried to install fibre, they pretty much shut it down by lobbying. They offer a shitty service, and when competition comes in, they play pretty much cut throat. And didnt they get huge subsidy to upgrade their systems, and that pretty much didnt happen?

 

And then stuff like this:

http://www.alternet.org/story/148785/cable_companies'_$46%2B_billion_robbery_--_subscribers_have_been_ripped_off_for_$5_a_month_since_2000

 

Whenever I hear about cable companies, it sounds like half these guys are the type of people to dump toxic waste in a river if they can get away with it, and if it improves their bottom line by a little bit. Not to say malone is like that tho. But when I read cable cowboys, looked like that business attracted quite alot of scum. With the backstabbing culture at AT&T. But I supose that could be true in almost all industries.

[Liberty]

Oh I'm sorry, I was lacking some context. When you said "look at what they're doing with netflix" and mentioned competition, I didn't realize you were talking about the net neutrality stuff, I thought you were just talking about how cablecos are cooperating to try to compete against them (and other national players like DTV).

 

That does kind of suck, but I guess it's a sign that the current model of unlimited download isn't sustainable. It might have worked back when most people just did a bit of email and web, but now that streaming HD movies is mainstream, it probably doesn't. Malone has been saying for a while that he thinks the industry will switch to a different model where heavier users pay more than light users (which is how it is in most other things). That might solve the problem without needing to secretly throttle and do other things that customers dislike.

 

The cable industry certainly doesn't always seem to provide great service and transparency, though I think their rising prices are mostly due to rising content costs (which they have to pass to their customers). Some operators seem pretty good, while others seem pretty terrible (same applies to  airlines, restaurant chains, retailers, etc).

[saltybit]

Netflix performance on Verizon and Comcast has been dropping for months

http://arstechnica.com/information-technology/2014/02/netflix-performance-on-verizon-and-comcast-has-been-dropping-for-months/

 

[yadayada]

Oh I'm sorry, I was lacking some context. When you said "look at what they're doing with netflix" and mentioned competition, I didn't realize you were talking about the net neutrality stuff, I thought you were just talking about how cablecos are cooperating to try to compete against them (and other national players like DTV).

 

That does kind of suck, but I guess it's a sign that the current model of unlimited download isn't sustainable. It might have worked back when most people just did a bit of email and web, but now that streaming HD movies is mainstream, it probably doesn't. Malone has been saying for a while that he thinks the industry will switch to a different model where heavier users pay more than light users (which is how it is in most other things). That might solve the problem without needing to secretly throttle and do other things that customers dislike.

 

The cable industry certainly doesn't always seem to provide great service and transparency, though I think their rising prices are mostly due to rising content costs (which they have to pass to their customers). Some operators seem pretty good, while others seem pretty terrible (same applies to  airlines, restaurant chains, retailers, etc).

Isn't that what they are doing already? I kinda don't get it tho. Most places in europe you get cheap internet with no limits on data. That only seems to be a US thing. Probably because businessmen can yield so much influence through lobbying. It is interesting to read that GNCMA is laying  out fibre, that seems the best solution. Enough data for everyone. But I guess not as good for the bottom line of cable companies. Seems hard to credibly charge more with fibre networks ,since there is enough for everyone.

[Liberty]

Isn't that what they are doing already? I kinda don't get it tho. Most places in europe you get cheap internet with no limits on data. That only seems to be a US thing. Probably because businessmen can yield so much influence through lobbying. It is interesting to read that GNCMA is laying  out fibre, that seems the best solution. Enough data for everyone. But I guess not as good for the bottom line of cable companies. Seems hard to credibly charge more with fibre networks ,since there is enough for everyone.

 

Netflix is not available in most of Europe (only UK and scandinavia, afaik), and I don't think streaming is as popular as in North-America. Once it is, it might change things. There's a huge difference in average data consumption between someone who streams HD content for hours each day and someone who doesn't, especially when everybody streams at the same time (evening peak hours).

 

Cablecos will use more and more fiber too, but they don't have to bring it to people's homes, just to various hubs. The last mile can be coax, which Malone is confident should be able to go to gigabit speeds cost-effectively.

[FiveSigma]

Have you seen this:

 

"Today, the deployed DOCSIS 3.0 cable modems have eight downstream channels (6 or 8 MHz) and four upstream channels (6.4 MHz). This provides an aggregate downstream data capacity of about 300 Mbps and an aggregated upstream data capacity of 100 Mbps.

 

Next year (2013), the market will see cable modems that have on the order of 24 downstream channels and 8 upstream channels. DOCSIS 3.0 defines a mid-split upstream that takes the upstream spectrum up to 85 MHz and could contain at least 10 channels. That provides an aggregate data capacity of almost 1 Gbps in the downstream and 300 Mbps in the upstream."

 

http://www.dslprime.com/docsisreport/163-c/4844-gigabit-cable-close

 

Per CableLabs it may be possible to reach 1 Gbps downstream speed on the coaxial last mile.

 

I think their work is why Malone believes that cable can achieve speeds competitive with fiber at low marginal costs to the plant.

 

If my memory of Cable Cowboy book serves me correctly CableLabs was one of the initiatives Malone had his hand in back in the TCI days.

[Liberty]

Thanks FiveSigma. I had seen similar things about the future roadmap.

 

Another piece of the puzzle is dropping entirely the analog signal (something that Charter is working on), freeing up tons of bandwidth. It's actually impressive to see how much bandwidth analog signal is using -- there's a Charter presentation that has a graph.