John Malone, billionaire Liberty Media chairman and architect of the Warner Bros Discovery merger, believes WBD’s mix of ad-free and ad-supported streaming under CEO David Zaslav will succeed “if he makes good stuff.”
Speaking to Liberty Global chief Mike Fries in a virtual session beamed into the Paley Center for Media in New York, Malone expressed reservations about the potential for new entrants to the streaming ad sector. But when Fries noted Zaslav’s comments last week on WBD’s earnings call about a reluctance to chase subscribers on HBO Max, but to instead focus on profitability, Malone said streaming programming at WBD will work if is made “efficiently” and in areas “that the broad public wants to consume. “He’ll do fine,” he said of Zaslav, “and how he ultimately monetizes that content, I think, will evolve over time.”
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Beyond WBD’s operations, the overall appetite for the public to both pay a subscription fee and also watch advertising on a general-entertainment streaming service is “yet to be figured out,” Malone said. “I’m questioning in my own mind, in my own habits, watching my wife’s consumption of entertainment television, it seems to me that subscription plus advertising for entertainment programming is a narrow choice.”
For decades, dating back to linear TV, delivering premium, ad-free entertainment programming and delivering it at no cost but with advertising “both work.” But combining the two is less certain in the streaming era, in Malone’s view.
Fries posed a related question he has asked Malone over the past two years in their annual Paley chats: Is Netflix overvalued? “I tend to think it is,” Malone replied, “because competition will limit profitability in the future.” Even though “the public clearly loves streaming,” they are also price-sensitive and “there’s just so much content out there.” The fact that Disney was able to launch Disney+ and surpass Netflix in terms of total direct-to-consumer subscriptions, “is a pretty good indication” that no player can “foreclose competition,” as Netflix appears to have been trying to do in its free-spending days in the 2010s.
Asked about Twitter’s radical makover under Elon Musk, Malone said it would be “a miracle” if Musk makes his money back on the $44 billion acquisition. As far as his flurry of early moves, including slashing half the staff, he said, “The thing we don’t know is how much visibility into the inner workings of Twitter did he have?” Nudged by Fries to specify why he thinks Musk took the plunge and bought Twitter, Malone reasoned, “He was a heavy user of it. He probably is fundamentally a believer in free speech and the First Amendment. He was offended, as many of us were, by arbitrary intervention” by Twitter’s previous ownership, which tagged posts and banned users like former president Donald Trump.
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