On the surface of it John Malone seems to be flying a kite when this week he said told the Lions’ Gate Entertainment investor event that he saw no reason during a Donald Trump administration, why Comcast, Charter and Cox could not jointly acquire T-Mobile. In fact, he could even see that letting Comcast merge with Charter is a better way to even up the playing field with AT&T, if it is eventually allowed to buy Time Warner.
Interestingly his personal coffers will currently be overflowing, given that he was a major direct shareholder in the Liberty business which sold DirecTV to AT&T.
Malone is perhaps the only man that can even dare Think these thoughts, never mind say them out loud, but he means this as a test to the President elect – either Donald Trump is FOR interfering with the markets – and will prevent the Time Warner deal, or he is against it, which may mean he will not lift a finger to prevent Comcast merging with Charter.
Malone has form here. He bided his time when his acolyte Mike Fries, running Liberty Global in Europe for him, yearned to acquire Netherlands rival cable operator Ziggo. He changed the man who spoke to the European Union on behalf of European Cable from Manuel Kohnstamm, a loyal Liberty Global VP, to Matthias Kurth, who had been employed up until 2012 as the President of the German Federal Network Agency, Bundesnetzagentur. Kurth also served at one point as the Chair of the European Regulators Group at a time of crucial regulatory reforms in European telecoms. Politically he is in a different league from Kohnstamm.
Within a few years Kurth made it clear that the conditions that were required to allow Fries to buy Ziggo, were met – and he has since made it possible to go on and merge the resulting company with Vodafone – the result is a fierce across the board rival to incumbent KPN, with less debt and more pizazz. While Cable Europe continues to be a mouthpiece for the cable industry in Europe, it is more accurately a mouthpiece for Liberty Global. So, Liberty Global picked up the tab for Kurth, in the sense that it funds Cable Europe.
What Malone now wants is a repeat of precisely that in the US. First for two large cable firms to become one with nationwide power to compete with AT&T, which itself can only claim to be nationwide in conjunction with Verizon. It then wants a national Mobile company onboard, hence T-Mobile.
Malone has two shots at this – he is unlikely ever to get a merger with Comcast past the regulators, since they have already turned down a Comcast Time Warner Cable merger on the Democrat’s watch. But he might easily get joint ownership and effective control of T-Mobile, between him and Comcast. And given that Malone has no desire to run things day to day, he sees his role as chairman and Comcast CEO Brian Roberts as the CEO, which is a deal that might spark Roberts’ appetite.
While we have made, in Faultline Online Reporter, a number of assertions about what Trump may or may not do, once in office, the truth is that these matters can go either way. No-one knows for sure what Donald Trump, will or will not allow until it is put to him. If Trump has no strong opinions, then the Republicans under his wing will point him in the direction of letting these things happen.
He may require some time to get the right people in place in the FCC, the Justice Department, the Supreme Court and the Federal Trade Commission, but once Trump is in power, and once he begins this process, the writing will be on the wall, even if it takes a while.
We’re not sure that Malone can lose here. Either Trump intervenes and slams the door on massive unbalancing media mergers, in which case Charter may next buy a content business, and Malone has one in Liberty Media, and his holdings in LionsGate, or the deal is ignored by policy makers, in which case he looks hard at the other two deals.
What is interesting is that he rarely speaks without a plan, and in some instances, without having already asked the powers that be if his ideas and theirs align. Malone is a long-term contributor to Republican funds, although he has put the odd dollar into individual Democrat campaigns for Congress, so his politics are not entirely clear. But he has contributed enough to at least “ask the question” of the right people, “what are my chances of pulling this off” and we know that he is a masterful player of the long game, as we pointed out above.
So, while on the surface of it Malone appears to be flying a kite, we suspect there is method in his approach, and that he is already midway through the “realpolitik” of getting the job done and this speech was designed to see how the idea plays in at least the media, if not further afield.