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 with Liberty Global CEO Mike Fries in a virtual session broadcast at 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 HBO Max subscribers but to instead focus on profitability, Malone said streaming programming on WBD will work if done “effectively” and in areas ” that the general public wants to consume. “He’s going to do well,” he said of Zaslav, “and how he ultimately monetizes that content, I think, will evolve over time.”
Beyond WBD’s operations, the general appetite for audiences to both pay a subscription fee and also watch commercials on a streaming service for general entertainment “has yet to be figured out,” Malone said. “I question in my own mind, in my own habits, when I look at 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 asked a related question he’s asked Malone for the past two years in their annual Paley chats: Is Netflix overrated? “I tend to think so,” replied Malone, “because competition will limit profitability in the future.” Although “audiences obviously love streaming”, they are also price sensitive and “there is only 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 “exclude competition,” as Netflix appears to have tried to do in their free days in the 2010s.
Asked about Twitter’s radical makeovers under Elon Musk, Malone said it would be “a miracle” if Musk makes his money back on the $44 billion purchase. As for the amount of early moves, including cutting half the staff, he said: “What we don’t know is how much insight into the inner workings of Twitter did he have?” Prompted by Fries to specify why he thinks Musk took the plunge and bought Twitter, Malone reasoned: “He was a heavy user of it. He is probably a fundamental believer in freedom of speech and the First Amendment. He was offended, like many of us, by the arbitrary intervention” of Twitter’s former ownership, which flagged posts and banned users such as former President Donald Trump.