LMCA - Liberty Media

[Liberty]

Five minute interview with Greg Maffei:

 

http://video.foxbusiness.com/v/4199291096001/liberty-media-ceo-industry-facing-pressure-to-scale-and-unbundle/?#sp=show-clips

 

It's funny when she asks him about Time Warner cable, he's speaking for Liberty Media, so he says they wouldn't  be interested.  But of course broadband and charter is another  story ...

[Liberty]

SIRI Q1:

 

http://investor.siriusxm.com/releasedetail.cfm?ReleaseID=909034

 

• Subscriber growth off to a strong start. SiriusXM added 431 thousand net new subscribers in the first quarter, a 61% increase from the 267 thousand net new subscribers added in the first quarter of 2014. Self-pay net subscriber additions were 394 thousand in the first quarter of 2015 compared to 173 thousand in the first quarter of 2014. Marking the strongest first quarter for self-pay subscriber growth since 2008.

 

• First quarter EBITDA climbs 19%. Adjusted EBITDA of $399 million in the first quarter of 2015 was the highest quarterly amount in the company's history, an increase of 19% over the $335 million reported in the first quarter of 2014. Adjusted EBITDA margin was 37%, also the highest in the company's history.

 

• Free cash flow per diluted share climbs strongly. Free cash flow of $276 million was up 24% from $223 million in the first quarter of 2014. Driven by higher cash flow and a lower share count from the share repurchase program, free cash flow per diluted share climbed an even stronger 36% to 4.9 cents in the first quarter of 2015, up from 3.6 cents in the first quarter of 2014.

 

"We repurchased 144 million shares for $534 million during the first quarter and continue to see our shares as an attractive investment. With our growing free cash flow, the successful placement of $1 billion of 5.375% Senior Notes in March, and $1.25 billion of unused revolver capacity, we have plenty of liquidity to continue returning capital to shareholders while maintaining prudent leverage. In just over two years since we began our capital return program with a special dividend, we have paid our shareholders nearly $5.3 billion and retired nearly 22% of our then outstanding shares," noted David Frear, Chief Financial Officer, SiriusXM.

 

FCF/share up 36%!

[loganc]

I feel like Rodney Dangerfield would be sympathetic with the market response to the SIRI quarter.  Also, I found the question from the BAML analyst about LMCA selling SIRI to be quite humorous.  It seems to me that LMCA would be significantly more likely to pursue the complete opposite path (i.e. pulling in the rest of SIRI), based on the letter in the AR and other commentary. 

 

Also, Maffei on a panel at Milken:

 

 

I am only ~3 minutes in, but he makes some comments about the CMCSA-TWC deal. 

[Liberty]

Thanks for the link, Loganc.

 

LMCA definitely wants to buy the rest of SIRI if at all possible. But here again, time is one their side, as the buybacks are helping them by increasing their stake.

 

Maffei recently said that the last time they tried to buy SIRI, part of what made them do it was that the NAV discount of LMCA had closed significantly. I wouldn't be surprised if they tried again the next time this happens.

 

Edit: That Deloitte guy starts out like a MBA fortune cookie ;)

 

Edit 2: Not finding much that I like so far. Mostly skipping ahead to when Maffei speaks to see if he says anything interesting. Trivia: The Symantec BOX guy is wearing an Apple Watch.

 

Edit 3: Interesting part around 40 mins in about the nature of technological change.

[loganc]

Thanks for the link, Loganc.

 

LMCA definitely wants to buy the rest of SIRI if at all possible. But here again, time is one their side, as the buybacks are helping them by increasing their stake.

 

Maffei recently said that the last time they tried to buy SIRI, part of what made them do it was that the NAV discount of LMCA had closed significantly. I wouldn't be surprised if they tried again the next time this happens.

 

Edit: That Deloitte guy starts out like a MBA fortune cookie ;)

 

Edit 2: Not finding much that I like so far. Mostly skipping ahead to when Maffei speaks to see if he says anything interesting. Trivia: The Symantec BOX guy is wearing an Apple Watch.

 

Edit 3: Interesting part around 40 mins in about the nature of technological change.

 

To your Edit comments, the panel would have been much improved if it was just Levie and Maffei.  The other panelists are insufferable.   

[Picasso]

Agreed, I don't know why they had some RIA lady on the panel.  These types of incoherent panels result in people talking vaguely about things they know very little about.

[Liberty]

Live Nation release Q1. Haven't had a chance to dig in yet, but Mr. Market seems to like it (up 7.5%).

[benchmark]

 

 

http://www.nytimes.com/2015/05/17/business/for-the-highest-paid-ceos-the-party-goes-on.html

[wbr]

http://www.nytimes.com/2015/05/17/business/for-the-highest-paid-ceos-the-party-goes-on.html

 

If you are invested in a company with a shareholder that owns the majority of votes you have exactly two options: Be quiet or sell your stock. If Malone wants to pay his CEOs an ungodly amount of money he actually pays the largest part of it himself because he owns the largest percentage of equity capital in the company.

 

Also I like how the article - instead of carefully reviewing absolute and relative past performance of specific executives and checking whether the compensation is justified - just assumes right from the start that these salaries can never ever be justified and then goes on to describe just how greedy these basterds are.

 

I agree that entrenched management teams with bad incentives and no skin in the game are problematic, but if you as a journalist don't discriminate between cases and simply use the the journalistic equivalent of a shotgun instead of a sniper rifle (while we're at it let's also mention hedge funds, cause their numbers are even higher...) you are not very credible.

 

One could write so many well researched stories about specific companies where board members and executives enrich themselves while delivering subpar performance, but I guess it is way easier to look up different compensation numbers and getting some superficial quotes from a couple of experts.

 

 

[Jurgis]

just assumes right from the start that these salaries can never ever be justified and then goes on to describe just how greedy these basterds are.

 

These salaries can never ever be justified. :)

 

Nobody needs 50M salary to live well. Even assuming a person does not work a single day for the rest of their life, 10M in one year is enough for the rest of their lives.

 

If a person is not motivated enough to do job well for $1M or $5M per year, it's very doubtful that $50+M will motivate them much more.

 

There is also a simple way to earn much more than a salary: partial ownership of business (purchased by person themselves - not given to them for free). And it would/should motivate much more than a salary.

 

I vote against all excessive compensation. I know that I won't change anything, but it is a matter of principle.

[Hielko]

Whether a salary is justified doesn't depend on whether or not it is enough to live well.  Using your logic logic you could also say that $5M or $1M a year is excessive. Perhaps $100,000 year is already excessive...

 

In my opinion a justified salary depends on how unique someone's skill set is and how much value he can add. If employing someone can add $1 billion in value, and no-one else can do this: how much should he get paid? Would it be fair that the company gets 99.9% of the value that he adds, while he gets 0.1%? What if a competitor is willing to pay $100 million for this person: wouldn't that be justified?

 

[Jurgis]

Whether a salary is justified doesn't depend on whether or not it is enough to live well.  Using your logic logic you could also say that $5M or $1M a year is excessive. Perhaps $100,000 year is already excessive...

 

In my opinion a justified salary depends on how unique someone's skill set is and how much value he can add. If employing someone can add $1 billion in value, and no-one else can do this: how much should he get paid? Would it be fair that the company gets 99.9% of the value that he adds, while he gets 0.1%? What if a competitor is willing to pay $100 million for this person: wouldn't that be justified?

 

The company can make whatever decision they want. I as a shareholder make whatever decision I want. You can too.

 

I stay with what I said in my previous post.

 

No person is an island and saying that they contributed $1B of value is contrived. Other people contributed majority of that value in pretty much all cases. They just got paid 0.00001% of the "superstar's" salary.

 

"Uniqueness of a person's skill set" does not justify extreme greed. (I put "Uniqueness of a person's skill set" in quotes since I believe this is a misnomer: most of the time there is nothing unique in the overpaid, there's only a specific market that allows greedy people to demand whatever money they want.)

 

Just for fun what salaries should be paid to Buffett, Watsa, Ajit Jain, Ted&Todd if they were greedy and wanted to get paid according to the "uniqueness of their skill sets"?

[thefatbaboon]

Whether a salary is justified doesn't depend on whether or not it is enough to live well.  Using your logic logic you could also say that $5M or $1M a year is excessive. Perhaps $100,000 year is already excessive...

 

In my opinion a justified salary depends on how unique someone's skill set is and how much value he can add. If employing someone can add $1 billion in value, and no-one else can do this: how much should he get paid? Would it be fair that the company gets 99.9% of the value that he adds, while he gets 0.1%? What if a competitor is willing to pay $100 million for this person: wouldn't that be justified?

 

The company can make whatever decision they want. I as a shareholder make whatever decision I want. You can too.

 

I stay with what I said in my previous post.

 

No person is an island and saying that they contributed $1B of value is contrived. Other people contributed majority of that value in pretty much all cases. They just got paid 0.00001% of the "superstar's" salary.

 

"Uniqueness of a person's skill set" does not justify extreme greed. (I put "Uniqueness of a person's skill set" in quotes since I believe this is a misnomer: most of the time there is nothing unique in the overpaid, there's only a specific market that allows greedy people to demand whatever money they want.)

 

Just for fun what salaries should be paid to Buffett, Watsa, Ajit Jain, Ted&Todd if they were greedy and wanted to get paid according to the "uniqueness of their skill sets"?

 

I'd gladly pay a young Warren Buffett or John Malone $6m a year to work for me for 50 years ;)

 

 

 

 

[adesigar]

Whether a salary is justified doesn't depend on whether or not it is enough to live well.  Using your logic logic you could also say that $5M or $1M a year is excessive. Perhaps $100,000 year is already excessive...

 

In my opinion a justified salary depends on how unique someone's skill set is and how much value he can add. If employing someone can add $1 billion in value, and no-one else can do this: how much should he get paid? Would it be fair that the company gets 99.9% of the value that he adds, while he gets 0.1%? What if a competitor is willing to pay $100 million for this person: wouldn't that be justified?

 

The company can make whatever decision they want. I as a shareholder make whatever decision I want. You can too.

 

I stay with what I said in my previous post.

 

No person is an island and saying that they contributed $1B of value is contrived. Other people contributed majority of that value in pretty much all cases. They just got paid 0.00001% of the "superstar's" salary.

 

"Uniqueness of a person's skill set" does not justify extreme greed. (I put "Uniqueness of a person's skill set" in quotes since I believe this is a misnomer: most of the time there is nothing unique in the overpaid, there's only a specific market that allows greedy people to demand whatever money they want.)

 

Just for fun what salaries should be paid to Buffett, Watsa, Ajit Jain, Ted&Todd if they were greedy and wanted to get paid according to the "uniqueness of their skill sets"?

 

Most US CEO's are overpaid but you say no person could've contributed $1b of value? Here are a few excluding company founders (Walton, Jobs, Zuckerberg, Gates etc)

1. JP Morgan - Dimon

2. G.E. - Welch

3. Mulaly - Ford

 

Just because Buffett wants to live a basic life, the whole world is supposed to? Buffett himself has said that the people who will manage the money after he is gone will be VERY WELL PAID. Im sure hes not thinking $100,000. Just because he is taking $100,000 now it seems like he isn't well paid. He was also taking the same $100,000 decades earlier. What were other CEO's earning decades ago when Buffett started taking 100,000? 

 

 

 

[Jurgis]

Most US CEO's are overpaid but you say no person could've contributed $1b of value? Here are a few excluding company founders (Walton, Jobs, Zuckerberg, Gates etc)

1. JP Morgan - Dimon

2. G.E. - Welch

3. Mulaly - Ford

 

Great examples of people who may pretend to have contributed $1B of value, but in fact most of the value was contributed by people working in their companies. None of these ever personally did anything that was worth $1B.

[Hielko]

Most US CEO's are overpaid but you say no person could've contributed $1b of value? Here are a few excluding company founders (Walton, Jobs, Zuckerberg, Gates etc)

1. JP Morgan - Dimon

2. G.E. - Welch

3. Mulaly - Ford

 

Great examples of people who may pretend to have contributed $1B of value, but in fact most of the value was contributed by people working in their companies. None of these ever personally did anything that was worth $1B.

That's not something you can know. You can't really measure the value of their decisions, and figure out what would have happened in an alternative universe where someone else would be the CEO. But for a large company getting one big strategic decision right could easily be worth many billions, and getting them wrong can be just as costly.

[Jurgis]

That's not something you can know. You can't really measure the value of their decisions, and figure out what would have happened in an alternative universe where someone else would be the CEO. But for a large company getting one big strategic decision right could easily be worth many billions, and getting them wrong can be just as costly.

 

OK, we agree that "You can't really measure the value of their decisions". So what next? You buy the snake oil they sell that their decisions are worth XX$M per year even though these decisions can't be measured. I don't.

 

You seem to assume that the decision quality is proportional to the salary of the CEO. From what I see, this is not true. There were tons of financial companies with overpaid CEOs that went bust in 2007-2008. Oil companies with overpaid CEOs do not seem to outperform the ones with less paid CEOs. Technology companies - same thing.

 

Like Buffett said: the basis of the salary is mostly envy. "CEO of BigaComp gets X$M, I have to get X+2$M since obviously I am better". I believe that envy and greed should not go unchecked.

 

Coming back to topic: I don't think that Maffei makes decisions worth 32M+24M (IIRC). My view is that Malone is the one making strategic decisions. But in any case I voted against all the compensations of Malone-affiliated companies. Yes, I know this does not mean jack.

 

P.S. If someone wants to continue the general CEO salary debate, can you start a new thread in general category? We are probably overstaying our welcome here.  :) Thanks.

[AtlCDore]

That's not something you can know. You can't really measure the value of their decisions, and figure out what would have happened in an alternative universe where someone else would be the CEO. But for a large company getting one big strategic decision right could easily be worth many billions, and getting them wrong can be just as costly.

 

OK, we agree that "You can't really measure the value of their decisions". So what next? You buy the snake oil they sell that their decisions are worth XX$M per year even though these decisions can't be measured. I don't.

 

You seem to assume that the decision quality is proportional to the salary of the CEO. From what I see, this is not true. There were tons of financial companies with overpaid CEOs that went bust in 2007-2008. Oil companies with overpaid CEOs do not seem to outperform the ones with less paid CEOs. Technology companies - same thing.

 

Like Buffett said: the basis of the salary is mostly envy. "CEO of BigaComp gets X$M, I have to get X+2$M since obviously I am better". I believe that envy and greed should not go unchecked.

 

Coming back to topic: I don't think that Maffei makes decisions worth 32M+24M (IIRC). My view is that Malone is the one making strategic decisions. But in any case I voted against all the compensations of Malone-affiliated companies. Yes, I know this does not mean jack.

 

P.S. If someone wants to continue the general CEO salary debate, can you start a new thread in general category? We are probably overstaying our welcome here.  :) Thanks.

 

Jurgis,

 

Malone claims that Maffei was the one who picked up SIRI.  Assuming that is correct, that was an excellent acquisition.  I can't disagree with you about the amount of compensation.  How much money does one need to live well?  With that being said, it's Malone's show and he's the one that makes the rules.  Given Malone's track record, I'm ok with going along for the ride.

 

AtlCDore

[Jurgis]

With that being said, it's Malone's show and he's the one that makes the rules.  Given Malone's track record, I'm ok with going along for the ride.

 

Yes, that's where I am too. I hold the shares and I vote against compensation. :) I am sure they will never invite me to BoD.  ;)

 

Good luck.

[thefatbaboon]

I think all you guys who criticize well earned salaries are crazy!

 

Why should all the benefit redound to the provider of capital?

 

The same argument can be made vis a vis the return on capital.  What have i done to "deserve" excess returns on my capital or what "need to live well" do I as a provider of capital have that Maffei doesn't.

 

This discussion is stupid and hypocritical.

 

Malone is especially sensitive to this given the relationship he had with Magness.  To work for most of your life building the cable industry for peanuts and making your boss a fortune to buy racehorses and leave to his wife and kids.  He is mindful to treat his executives better than he was treated.

 

So long as people aren't paid for bad work then I'm fine with it.  Maffei oversees a bunch of entities with an equity capital of roughly $40bn.  Most of these entities have made their investors returns in excess of 20%pa.  And he gets a bunch of options that will make him around $125m if he doubles the equity capital over the next 5 years.  So what.

 

Only a hypocrite thinks he can have it both ways.  If you want to cap salaries then you need to cap returns & excess agglomerations of capital. 

 

If it's alright with everyone here I propose that I be the one to decide what is deserved and reasonable.

 

yours,

 

Comrade Baboon

[Jurgis]

Comrade Baboon,

 

I will ignore your ad hominem attacks for now assuming they were meant as jokes. In the future, please either clarify via smileys or don't engage in such behavior.

 

I think all you guys who criticize well earned salaries are crazy!

 

Why should all the benefit redound to the provider of capital?

 

Actually, you are completely right. Except that for some reason you think that Maffei is the only one who deserves outlandish salary.

 

Let's then talk about all the other employees of TCI who really built "the cable industry for peanuts" so that their boss could enjoy racehorses. Are you saying that Malone was the only one who worked on it? Are you saying that he should have gotten even more millions while everyone else in the company probably did not even earn 100K per year? If Malone is so sensitive, perhaps he should pay higher salaries for everyone in his companies, which of course will lower return for shareholders. I am fine with that. Are you?

 

So I could throw you ad hominem adjectives back at you for saying that only the provider of capital and CEO need to get outrageous compensations. But I won't. :)

 

And, no, I disagree that Malone, Maffei, Dimon, Mullaly, etc. are single handedly responsible for their companies doing great. And therefore the salary ratio between them and other employees should be much lower than it is even if the company is very successful.

 

Take care

[Liberty]

Why are star athletes paid more than coal miners?

[Jurgis]

Why are star athletes paid more than coal miners?

 

Personally, I would not pay a cent to any "star athlete". Professional sports is entertainment based on barbaric past and has zero benefit for today's society. 8) Why don't we have cancer drug creation competitions instead of running on a field kicking a ball? 8) (this is OT though).

 

But I know what you are trying to imply and I have answered it in the past: I don't believe CEOs are as much stars as the salary ratios for greedy CEOs imply. They sell you the snake oil that they are stars and BoDs buy that wholesale.

 

Edit: BTW, it should be clear for everyone on this site that the market for coal miners is mostly efficient, since they are mostly fungible, while the market for CEOs is very inefficient because they are kinda unique and a bit difficult to replace even if the replacement might do the same quality work for less. So they have a moat haha and they are usually smart enough and greedy enough to abuse that moat. Maybe the BoDs should apply Moneyball to CEOs... 8)

 

Of course, you and everyone else are free to have different opinion.

 

Take care

[Picasso]

We have some hipsters on this board lately.  Suddenly star atheletes who draw in massive value for their teams and affiliations are worthless, CEO's who create massive value for shareholders above their peers are overpaid, the best investor of all time (Buffett) is a hypocrite and not that great, etc.  I guess everyone's time is worthless except for those hipsters.  Way to be edgy.

 

There should be a sidepost on this board saying "don't feed the trolls."  These are worthless opinions that tend to be completely off topic.

[Sportgamma]

I think Liberty was referring to the relationship between supply and demand...

 

And if people are willing to part with their hard earned money to consume sport then it might possibly have some value...or should we perhaps set up a governmental committee for valuable past time?