Malone Denounces All FCC Broadband Regulation
The federal government should “dissolve the FCC and go away,” Liberty Media Chairman John Malone said Wednesday at a Bank of America conference in California when asked what the commission should do about regulating broadband service. He said the U.S. political system is “for all practical purposes broken,” and he blamed the FCC for endowing the country with what he called the world’s worst cellular system. “The problem is, you can’t separate politics from the regulatory environment and it always becomes a short-term misallocation of assets,” he said. On broadband regulations, “I would much prefer the FCC stay out if it and allow competitive forces to evolve,” Malone said. “The cable industry is now back to where the only thing it has to worry about is regulation."
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Earlier at the conference, two finance chiefs at major cable operators took a more diplomatic view of the commission’s work on reclassifying broadband under Title II of the Communications Act. “I think the dialogue that’s been happening with different stakeholders and the FCC” has been “very constructive,” said Michael Angelakis, chief financial officer of Comcast. The agency isn’t out to hurt broadband providers’ business, he said. “The conversations have been very constructive, and we're hopeful there will be a consensus resolution” to eliminate the uncertainty that investors have concerning the matter. That Verizon and Google could work together on a proposal for a regulatory framework shows consensus can be reached, said Robert Marcus, Time Warner Cable CFO.
Comcast’s purchase of NBC Universal was a great deal for the cable company, Malone said. “If I had been given the opportunity to do the NBC deal, I would have done it. Sure.” He added, “Those opportunities only come along once in a lifetime.” Comcast is getting a good package of assets for little if any premium, Malone said. “It’s a very clever financial structure and it caught GE when GE really needed to do something,” he said. And the deal gives Comcast hedges against the rise of online video and against increasing programming costs, Malone said. “I always thought it was great to have investments in content when you had distribution, so I tend to think” Comcast Chairman Brian Roberts “is going to be right."
Initially, the combination won’t affect the rest of the pay-TV industry much, Malone said. “At least for a while, they've got a 50 percent partner in GE, so they're going to be somewhat constrained in what they can do,” he said. “It’s going to be somewhat arm’s-length,” he said. Comcast is still planning to complete the transaction this year, Angelakis said. “We are very optimistic about it.”
Malone was a bidder in the final rounds for the Bresnan cable assets that Cablevision agreed to acquire, Malone said. He was partly attracted to the assets out of sentimentality, because they were part of his original TCI holdings, he said. But without the scale of a larger cable operator to win cheaper programming contracts, the economics wouldn’t work, he said. “The scale advantages of a large cable operator are just overwhelming in terms of the impact on cash flow.”