Over the last few years one name has kept popping up around any major corporate change in the music industry, Liberty Media. The firm already controls SiriusXM and Pandora (the dark horse of music streaming), is a major shareholder in Live Nation, is apparently eyeing up iHeartMedia and has been very public about its interest in Vivendi’s upcoming sale of a stake in Universal Music Group.
While Liberty trains its sights more and more on music, it’s already a major player across many other media and telecommunications sectors. Yet for one so influential, Liberty and the man behind it, John C Malone, are not very well known at all, especially outside of the US.
Among media mogul watchers John Malone has long held a deep fascination. Because he so rarely (ie basically never) does media interviews it’s not often you hear his views on anything, so all we have to go on are his actions. And boy are they something to behold, with countless twists and turns, swaps and trades that mark him out as one of the most strategic and long term thinkers and deal makers in the whole media and communications industry.
Now aged 78 and with a personal net worth of around $7 billion he’s made a career out of being multiple steps ahead of everyone else and shows no sign of stopping any time soon. As his growing forays into music show, quite the opposite in fact.
How best to describe Malone and Liberty? To coin a phrase, it’s complicated. Very very complicated.
In the beginning
To show what I mean, here’s the short explanation of the history of Liberty: Liberty Media begins in 1991 as a spinoff of US cable giant TCI (President - John Malone) under the leadership of Peter Barton. It contains TCI’s assorted programming assets which have few fans among analysts.
Barton does a tonne of media deals, sometimes one every 10 days, making Liberty now actually quite attractive, so in 1994 TCI buys it back. As the dot com boom grows media assets are in vogue so TCI issues a now fashionable ‘tracking stock’ for Liberty Media. Barton retires in 1997 and is succeeded as Liberty head by Malone, who also continues to run TCI. Over the next couple of years various TCI units such as its international programming assets are merged into Liberty so TCI is left as the cable provider and Liberty Media is its content unit.
In 1999 TCI, including Liberty Media, is sold to AT&T and Malone becomes very very rich from the sale. He joins the AT&T board and continues to run Liberty which retains its tracking stock and is given a budget of billions of dollars by AT&T to continue doing deals. In 2001, after much pushing from Malone and to satisfy regulators ahead of another big cable deal, AT&T spins off Liberty Media completely and the company becomes wholly independent with Malone owning a majority of its shares. Its assets include stakes in over 100 cable channels, including Discovery, and an 8 per cent stake in Murdoch’s News Corp.
The next few years involve various deals, acquisitions, mergers and sales and a number of restructurings, bringing into being corporate entities and tracking stocks such as Liberty Global, Liberty Capital Group, Liberty Interactive Group, Liberty Entertainment Group, Liberty Entertainment Inc and Liberty Starz Group. Assets Liberty buys (and sometimes sells) include DirecTV, Formula One Group, the Atlanta Braves, United Global Com, Virgin Media and Cable & Wireless. As well as its once sizeable shareholding in News Corp it builds up shareholdings in companies including Time Warner and Motorola (now sold) and Live Nation, SiriusXM, ITV plc, All3Media, Lionsgate and Saavn (all still held).
Today the Liberty family includes Liberty Global (with Malone as chairman since 2005), Liberty Media Corporation (chair since 2011), Liberty Broadband Corporation (chair since 2014), Liberty Expedia Holdings (chair since 2016), GCI Liberty (chair since 2018), Liberty Trip Advisor Holdings (chair 2014 to 2015) and Liberty Interactive Corporation which was renamed Qurate Retail in 2018 (chair 2004 to 2018).
And this account doesn’t even scratch the surface of countless other the deals Liberty has done in the last two decades. We’d be here all year if we tried that. Nor indeed does this get into how Malone built up his TCI empire in the first place in the 1970s and 80s.
So yes, it’s complicated. Very complicated. But one thing that isn’t, and this is the important bit, is what stays constant throughout all this change, what doesn’t alter. Namely that John C Malone never ever loosens his grip.
The real master of the deal
Malone is a master in acquiring stakes, and then waiting. He has incredible patience and long term outlook. Far beyond most or all of his competitors or peers, he understands the long game.
He often flips and trades these shareholdings into bigger and more influential stakes in larger entities, but equally he may hold tight and wait to see how things unfold. Less frequently he just cashes out, but even then there’s always a bigger strategic play on the horizon and he always demands a hefty premium. Because he can. As you would too.
Cutting through all the complexity the best way to understand Liberty and Malone is to go back to that AT&T-TCI deal in 1999. To re-cap - he sold TCI (including 100 per cent of Liberty) to AT&T for top dollar. This created a great return for TCI shareholders, of which he was the largest, and he joined the AT&T board while keeping control of all TCI’s exciting media assets. Two years later, AT&T spins off Liberty with him completely in control of its destiny.
In other words he sold and (along with all TCI shareholders) got paid handsomely for the media assets, but never actually gave up control of any them one iota. And then after just two short years he was back in complete control of them without having to buy them back. Come on. You’re impressed right? If not, you really should be.
And just to bring everyone fully up to speed, this is the same AT&T that subsequently struggled mightily and ultimately agreed in 2005 to be bought by its former progeny, SBC (originally one of AT&T’s enforced divestments, Southern Bell) who then instantly changed their name to AT&T recognising its far superior brand equity. It’s this new AT&T which has just felt compelled by evolving market forces to get directly into the content business itself big time by buying Time Warner (now renamed as AT&T’s WarnerMedia subsidiary). Basically getting AT&T back to a point rather close to where they were 20 years ago when they were already a major player in content through their ownership of Liberty.
You may have read my recent article about alternative histories in media, and on paper it’s fascinating to imagine if ‘old’ AT&T had managed to hold onto Liberty and its array of stakes and investments and how different things would now be. But this is one ‘What if’ that we need not spend too much time contemplating as the idea that Malone would ever have walked away from or let anyone else control or direct Liberty is impossible to imagine. Liberty is completely his creation. He built and shaped it and it was always only ever going to be him.
Malone is a corporate engineer unlike any other. Not surprising really when you consider that he has both bachelor’s and masters degree in electrical engineering, as well as another masters in industrial management and doctorate the very maths-heavy subject of operations research. Yes formally he’s Dr Malone.
And throughout all this he apparently works less than six hours a day and goes home every lunchtime to eat with his wife. Politically he’s a libertarian and was one of the biggest funders of Donald Trump’s inauguration.
Malone gave a rare public interview in 2016 when he was presented with the Steven J. Ross Humanitarian Award by the UJA-Federation of New York. He recalled some advice from one of his early bosses: “Always analyse the downside and structure everything so that you live to fight another day.”
The first part is what all good deal makers do. But the second bit, making sure you’re always covered and protected enough to fight another day if things don’t initially work out, that’s where he comes into his own. While those across the table are working on the latest deal, he’s putting what he needs in place for his future ones.
I’ve long been fascinated by Malone and seeing his strategic prowess which is how I know that if ever our paths do cross, I really hope we’re on the same side.