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Amid cord-cutting in cable industry, billionaire Malone returns to empire-building

By Alex Sherman and Edmund Lee
Bloomberg News

John Malone is empire building again.

The billionaire made his fortune by assembling the largest cable operator in the U.S. in the 1980s and 1990s. Now, companies backed by Malone have announced, or are preparing, more than $80 billion of acquisitions — including an offer by Liberty Media Corp. to fully own satellite radio network Sirius XM Holdings Inc., an expected bid for Time Warner Cable Inc. by Charter Communications Inc. and a likely agreement by Liberty Global Plc to purchase Dutch broadband provider Ziggo NV.

Dubbed the “cable cowboy” in Mark Robichaux’s 2002 biography, Malone is spending heavily to adapt to a new frontier as Netflix Inc. and other competitors have consumers turning off cable-television subscriptions in favor of online streaming, said Matt Harrigan, an analyst at Wunderlich Securities Inc. The bids show Malone is betting on digital media and high-speed broadband on a global scale, he said.

“The complexity of the tech road map necessitates consolidation,” Harrigan said.

In order to increase the size of his companies and to develop technology faster, Malone needs to take full control over his companies, Harrigan said. A spokesman for Malone didn’t immediately reply to requests for comment.

If all the deals are successful, the three companies will have spent more this year on acquisitions than they did in the decade through 2013, data compiled by Bloomberg show. That success is far from certain: Sirius rose above the value of Liberty Media’s offer last week, signaling that investors expect a higher price, and Charter may face competition from Comcast Corp. and Cox Communications Inc. for Time Warner Cable, which has its third-largest division based in Akron.

The largest previous deal by any of the three companies was the purchase of Virgin Media Inc. by Liberty Global last year for about $23 billion including debt.

Liberty Media has made an all-stock $10.6 billion offer for the 47 percent of Sirius XM it doesn’t already own. Liberty Media is also the largest shareholder in Charter, which may unveil a $62 billion bid for Time Warner Cable, people with knowledge of the matter have said.

The Sirius deal may help Liberty Media fund Charter’s offer for Time Warner Cable, because it will give the company more cash flow and additional assets to borrow against, Chief Executive Officer Greg Maffei said. Liberty owns 27 percent of Charter.

Using Sirius’ cash and lending capacity to combine Time Warner Cable and Charter would help cable compete with Netflix, satellite-TV providers, and telecommunications giants AT&T Inc. and Verizon Communications Inc., which provide TV and Internet services.


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