Liberty Media Corp And Liberty Interactive Corp at Morgan Stanley Technology, Media & Telecom Conference
Mar 03, 2015 AM EST
FWONA - Liberty Media Corp
Liberty Media Corp And Liberty Interactive Corp at Morgan Stanley Technology, Media & Telecom Conference
Mar 03, 2015 / 07:45PM GMT
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Corporate Participants
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* Greg Maffei
Liberty Media Corp. - President and CEO
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Conference Call Participants
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* Ben Swinburne
Morgan Stanley - Media and Cable Analyst
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Presentation
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [1]
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All right, we're going to get started. Good afternoon. I think it's afternoon. Good afternoon, everybody, or late morning. It's afternoon somewhere.
Please note that important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, all appear as a handout available in the in the registration area and on the Morgan Stanley public website.
Once again, I'm Ben Swinburne, Morgan Stanley's media and cable analyst, and --
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Greg Maffei, Liberty Media Corp. - President and CEO [2]
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Ben, wait a minute, we can go to the website and see what you're long?
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [3]
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Yes.
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Greg Maffei, Liberty Media Corp. - President and CEO [4]
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Are you long Liberty?
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [5]
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I can't own anything in my coverage area.
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Greg Maffei, Liberty Media Corp. - President and CEO [6]
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Okay. So that kind of defeats the whole purpose.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [7]
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It's a really interesting ETF strategy that I've laid out for folks.
I'm really excited to welcome back Greg Maffei, to my left. And I'm going to try to make sure I hit every single company Greg is running or involved in, but I may get it wrong.
Greg is President and CEO of Liberty Media Corporation, Liberty Interactive Corporation, and Liberty Broadband. Greg also serves as Chairman of the Board of Liberty-related companies Live Nation, SiriusXM, Starz and TripAdvisor. He's also the Director of Charter and Zillow. And somehow I missed this, but you're also President and CEO of Liberty TripAdvisor.
Greg?
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Greg Maffei, Liberty Media Corp. - President and CEO [8]
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It's a fake job thing, because we keep spinning things. And it's dilution of existing job, I [think].
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [9]
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Yes. Exactly.
Thanks for being here. Thanks for coming back.
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Greg Maffei, Liberty Media Corp. - President and CEO [10]
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Happy to come. Got a well-attended conference. Look at all these people, man.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [11]
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Yes. Yes.
We have a lot to talk about. But one question I've kind of been dying to ask you -- and I hadn't realized that you've been running Liberty for nine years -- I'll tell you, time flies when you're having fun. But you recently re-signed for another five. There's been a ton of change at Liberty over the course of your tenure. Besides make people money and create value, can you just talk about what your expectations are and what you're trying to accomplish, looking out over what is now another five-year term?
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Greg Maffei, Liberty Media Corp. - President and CEO [12]
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Well, yes. To say we've been lucky enough to have a pretty good run -- and a lot of that was done on the basis of cleaning up either incomplete positions or minority positions that we had, moving the portfolio away from things that we saw that were challenged or slower-growing. An example would be selling the business On Command that was in hotel rooms. Because we saw the internet taking that down.
A lot of that work has been done. There are fewer things left to clean up. For most of my nine years, we sat there and said we have too much cash on the balance sheet. And it's a drag, and when are you going to do something with it? That may be true at Ventures, but pretty much everywhere else, that's not true anymore.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [13]
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Yes.
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Greg Maffei, Liberty Media Corp. - President and CEO [14]
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So it's a different game. We have to do some probably -- try add-ons to the things we already have, try and extend them further. I think we've also expressed our view at Liberty Ventures that the market is very frothy in terms of incremental investments. But there may be room at the top for larger deals that's more attractive.
Example would be what we did with Charter. There aren't too many people who would write a $2.6 billion check. There aren't that many people with that availability in the TMT space, who are doing minority investments. Obviously, Comcast can write whatever check it wants. But they're not usually in the minority investment game.
So we've got to think about how to remake our strategy. We've got to do different things. And I think part of that is, as I said, optimizing the existing businesses and trying to utilize their cash flow in smart ways; but in addition, particularly, looking for elephants where we think their competition is less.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [15]
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I think we have almost every company you're involved in at this conference. It's sort of like a little investor day. But I wanted to start with your most successful investment, which is SiriusXM. When you look at that business today, what is your outlook for their growth opportunity? And in particular, the net adds guidance for this year suggest a slowdown from last year, maybe law of large numbers. But there's a long runway for vehicles to grow from here. So are you as bullish on that business as you've been in the past when you look at the opportunity in front of that company?
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Greg Maffei, Liberty Media Corp. - President and CEO [16]
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Well, I think you pointed out the first challenge -- I mean, the law of large numbers. They went through a period where the SAR, when we got involved, I think, got down below $10 million. And now we're looking at a SAR of something like $17 million plus. I think the room to grow the SAR, and therefore new car adds, is by definition more difficult. And when we got involved in 2009, early 2009, we were looking at 18 million subs, and now it's over 27 million. So by definition, it's going to be slower growth just in terms of new adds among new cars.
There has also been some weakening of the conversion rate from trial, pretrial to pay, offset in large part by an improvement in churn. People like the service and are churning less. So I'm very bullish about the overall demand for the product. How much comes from net new adds from new cars, I think, is going to be reduced in percentage terms.
But the continuing opportunity in the used car market is good. And the Company's done a very good job. Full credit to Jim Meyer and his team adding that market, which really didn't exist three, three-and-a-half years ago.
If you think about the overall business, we're looking at something like 27 million subscribers today. There are probably an equal number of more of cars which are SiriusXM-enabled on the road that are a huge opportunity. And that opportunity is going to grow. Just do the math -- we're probably looking out, in two years, something like 100 million SiriusXM-enabled cars, not all of whom are signed up but who are an opportunity for us, both to market for subscription services and also to market other kinds of things to them.
Lastly, the Company is investing heavily and smartly, I believe, in the connected car opportunity. And there will be a certain set of services which are likely to be tethered all on your mobile phone, and there are a certain set of services which are likely to be embedded. Exactly which services break which way, what the opportunity to be the platform for those embedded services, which is really SiriusXM's opportunity -- what the business model looks like, I think, is unclear; devolving. But I do think Sirius will have a very strong and interesting position in that business.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [17]
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I wanted to ask you about the connected car. In particular, when you think about the OEM relationships and the dashboard real estate that XM has -- remember when SIRI and XM were beating each other up over those OEM deals -- when you think about today attempts by Pandora, who will speak tomorrow; but also Apple and Google trying to get into the dashboard -- how do you position SIRI to sort of maintain or at least defend that incredibly important relationship and real estate in the dash?
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Greg Maffei, Liberty Media Corp. - President and CEO [18]
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I think you're right. I mean, that first screen is going to be worth a lot, or some variations on the first screen, early screens. SiriusXM is likely, I believe, to be well positioned there and continue to be so because of several factors. One is our strong relationship with the OEMs and what we've done for them, and the history we have with them; secondly, the business model we have with them, where they have an incentive to play with us that is far better than it is with some of the other services, frankly because we make them money.
Most importantly, we have a service that consumers want. And that's largely not only because of ease of use by being installed and how we work, but above all by the differentiated content that we have.
With all due respect, Pandora is a great service; Spotify. But there's a fair amount of commoditization and commodity-like aspect to music. The difference between those services is not high. They don't have exclusive content, the way we do. And I think there are a lot of reasons, I think, why car companies are going to continue to want to promote SiriusXM, because their consumers want it.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [19]
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Greg, I want to ask you about music rights, partly as it relates to SIRI but also how you might be looking at that industry, which is an industry that's gone through tremendous disruption over the years. The Web 4 proceedings are happening this year. We'll know more about the right structure for streaming after this process plays out. How do you -- what would you like to see happen with streaming costs when you think about SIRI's position, and then their competitive set?
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Greg Maffei, Liberty Media Corp. - President and CEO [20]
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Well, if you look -- and as you know, we had a ruling with the CRB, which extended out our cost of the music. There's obviously other litigation around things like Pre-72 that are still to be resolved, and we're contesting heavily. I think the whole industry will be impacted by that, and I think there's going to be a lot of add-on lawsuits, tack-on lawsuits. You've already seen that beginning.
In general, we're a distributor. Our incentive is to have less lower payments; let's be clear. Your point about the competition all seeing lower payments as well, what does that enable -- I think we're probably better off with lower payments. That having been said, I think in general, the pressure will be to see increasing payments in streaming space.
I also think you'll see related problem, or related issue, which is the free portion being such a big percentage of some of these services, and the difference being not trial, the way we do, but true free, which people stay free. And the analysis on how many of those frees actually are converting to pay and staying in the model pay, I think, is not one that the record companies today are looking, increasingly saying is attractive for them.
And I think you'll see pressure on the free model, not only from the record companies, but you're also seeing it from artists. Obviously, Taylor Swift could've have been more vocal about her unhappiness with the perceived commoditization of her product. And so I think the pressure on free will have an impact on this whole model as well.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [21]
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Yes. You have an interesting perspective on music rights cost story, given Live Nation, SIRI. I know you get this question -- would investing in rights ever make sense, either at Liberty or SIRI themselves, or --
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Greg Maffei, Liberty Media Corp. - President and CEO [22]
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Well, perhaps. We've really been somewhat of an arms merchant, right? Live is the beneficiary of much of that, because of the large aspect of their business, which is related to management. It's obviously dwarfed by the ticketing and the promotion side. But the management business is a good business. And to the degree that rights are going up, we're receiving a larger portion of that.
I think it would be challenging, not impossible, for us to navigate through some of the conflicts that Live would have of being in the rights business. Whether SIRI goes into the rights business -- in a way, when you look at blocking up exclusive content for long periods of time, you're in the rights business.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [23]
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Yes.
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Greg Maffei, Liberty Media Corp. - President and CEO [24]
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So we're in the rights business vis-a-vis Howard Stern, for example. Whether we go into it deeper into the music space I think is less clear.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [25]
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Yes.
At the Liberty Media level, we've been certainly focused (inaudible) focus on the discount to net asset value there. And we've been suggesting it will close and narrow, and rooting for it. But when you look at it, what can you do? And do you agree that the discount today doesn't make any sense relative to how simplified you've made the structure?
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Greg Maffei, Liberty Media Corp. - President and CEO [26]
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It seems counterintuitive that it would widen over the last year. It got down to, I think, about 2% by some people's analysis. And by some people's analysis, I don't know, it's 14, 13, 15, 12, I don't know. It depends on your view of some of the private assets.
Maybe there's a perspective that we will utilize our currency in a way that is not attractive; perhaps reel Sirius back in, as we tried a year ago. I think you can take your bet about whether you think that's something we're likely to do. Historically, I would point out we're unlikely to issue stock at what we believe is below fair value, or a significant premium on top. So it's really a double premium, using a discounted currency to pay a premium. That's probably not our most likely path, just given our history.
We have taken actions over time to repurchase our stock and take advantage of that discount. We're doing some of that now. The discount may also be exacerbated by the fact that SIRI is a large and positive returner of capital to its shareholders via share repurchase, which is probably creating relatively more demand for SIRI stock from the company than we are creating demand for our stock using our share repurchase. So there's some mismatch caused by that.
There are probably ways to arbitrage that out or take advantage of it. And we'll see, if it persists, whether those are attractive. But that would be the kind of thing that we might be prone to do if we saw it persisting.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [27]
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On that leverage buyback point, I wanted to ask you a question. I asked you this on the earnings call, but just to revisit it, given you're in the market --
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Greg Maffei, Liberty Media Corp. - President and CEO [28]
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Did I duck it then, or how'd I --
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [29]
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I wouldn't use the word "duck," but -- they're in the market today raising some money. What's your perspective on the optimal leverage for Sirius? And it seems like they're now maybe being a little bit more -- maybe cautious is the wrong word, but building some dry powder on the balance sheet. Do you share that expectation and perspective? And would you like to see them move towards their four-turns target faster?
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Greg Maffei, Liberty Media Corp. - President and CEO [30]
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Look, I think they have been somewhat a victim of their own success, right? When they began 2014, I don't think anyone inside the company expected they would have a stronger year in cash flow as they did, or in EBITDA. And both of those have had the impact, when you combine it with a relatively -- $2.5 billion share repurchase. But net, they really didn't get much ground gain on the leverage target because of the growth of EBITDA and the amount of free cash flow.
So I think it's a high-quality problem. It's not a problem of design; it's a problem of success. And they are -- when you roll that forward and do the same thing, if you have growth again, they're sort of chasing their tail, in a positive way. I do think they'll move towards that four-leverage target, the speed with which may not be as fast to meet all investors demand. And frankly, Liberty probably on the margin is more of a leverage-oriented company than Sirius, partly because Sirius is history. But I think they're moving in the right direction, and they'll get there.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [31]
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Okay.
One last question on the Liberty Media -- the discount percentage -- I get into debates with investors over whether we're treating the Vivendi piece the right way. What's the latest for you on timing there? And what's your degree of certainty around realizing that actual proceeds?
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Greg Maffei, Liberty Media Corp. - President and CEO [32]
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Yes, and I think that's a fair question. Because most analyses -- or few, if any, I've seen -- count. When we're looking at that 12%, 14%, 15% discount, are including anything for Vivendi -- the timing of which, I think, our general counsel, Rich Baer, talked about the on call. We would hope to get some ruling by a year from now, maybe, from the Appeals Court. Could get -- some chance it goes to the Supreme Court. The odds of the Supreme Court taking this case up seem unlikely. So you maybe expect some resolution in 2016.
I think we're very optimistic about our prospects. And we are, as you may recall, appealing the judgment on the interest. Because whether it's -- the interest rate that the judge imposed, in our view, looked more like treasuries, we believe under New York contract law -- more than I know a lot about or you would care to know -- we ought to get a higher interest rate. We're appealing that portion. So we actually could see a larger judgment if we win on that point. We'll see how it all plays.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [33]
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Okay.
Let's turn to one of your newer children, Liberty Broadband. We had Tom Rutledge sitting there earlier this morning. Big transactions, hopefully will close in the relative near future.
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Greg Maffei, Liberty Media Corp. - President and CEO [34]
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And you had Mike Angelakis.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [35]
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We had Mike --
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Greg Maffei, Liberty Media Corp. - President and CEO [36]
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Right after Tom, right? So you've got the whole --
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [37]
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The whole story. Tom talked about some of his expectations and why he's excited about the transaction. As a big Charter shareholder, what are you looking for from this new company that's going to emerge out of this on the Charter front?
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Greg Maffei, Liberty Media Corp. - President and CEO [38]
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Well, I think several things are going to occur, if the transaction and when the transaction closes. First and foremost, I mean, they're going to have a massive challenge in front of them and job. It is going to be a truly transformational series of transactions between the swaps, the purchase of the Time Warner subs, and the management contract and investment in GreatLand, which puts their foot on another 2.5 million subs. That's going to be hugely transformational for Charter and a big management job.
That having been said, I'm very confident in Tom and his team. And you can see the results that they've put to work and really have come to beginning of fruit at Charter today. Their plan of upgraded all-digital network, simplified pricing, cleaner go-to-market strategy run from the top -- those are working. And I think the opportunity to bring that sort of talent with Tom and John Bickham and the rest of the team, to bear on the purchased assets of Time Warner and the Comcast managed assets is going to be very interesting.
We are creating a company there that is going to be much more streamlined in terms of its footprint. Going to have less FiOS exposure, less RSN exposure; opportunities to do much cleaner marketing, much cleaner networking costs -- many things that are very beneficial. So I'm highly bullish on the combination.
I also think if the transaction closes as contemplated, you're going to see a case where Comcast is likely to be out of the market as an acquirer of incremental US broadband or video subs; that we will be the company, Charter, with the highest amount of synergies to bring to bear, with arguably the best management team and likely the highest multiple. So a lot of reasons why incremental acquisitions, as they come along, will be highly accretive, and we will be in a position to execute on them. So I'm quite bullish on the combination.
Looks like the marketplace has been quite bullish as well.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [39]
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Yes.
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Greg Maffei, Liberty Media Corp. - President and CEO [40]
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Because stock has had a heck of a tear over the last few months.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [41]
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You wouldn't call it frothy, though?
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Greg Maffei, Liberty Media Corp. - President and CEO [42]
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I think that's the job of all you to decide when the froth is up.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [43]
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Right.
Back in November, at your Investor Day, you and John talked about the bundle and some of the changes that have taken place. Things have happened this year, as I would've never guessed -- things like network groups being dropped completely by some small cable companies. What is your perspective, when you look out over time, at what will happen to the bundle? Do you believe cord-cutting is a threat to the business? And does that impact at all how you think about a cable investment, or even some of your media investments?
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Greg Maffei, Liberty Media Corp. - President and CEO [44]
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I think you're going to see continued chipping away at the bundle on the edges. And that's caused by several factors. One is the increasing cost of content and the rising cost of the bundle. It's caused by technology changes which have enabled different kinds of over-the-top competitors. It's caused by the actions, in my judgment, of many of the cable nets to create their own competition online, which lessens the uniqueness of the bundle and the exclusivity that the bundle provides.
So all of those things are creating a situation in which cable operators are stressed on the cost side and have less attractive unique product because of the over-the-top aspects. So I think you're going to see continued efforts to reduce content costs by eliminating or cutting back on certain cable nets. Think that's going to go on for a while. And that's driven both by the cost side, as I said, and by consumer choice.
Whether that's cord-cutting or really cord-shaving, and a variation -- because the strength of the pipe remains higher than ever, continues. You're seeing the numbers about how much share cable is taking of broadband. Very positive. And then, the price opportunity that still exists, I think, is out there. So I'm quite optimistic on that side and quite happy to see the success and the consumer demand for that broadband product. And the OTT does not reduce that; it only increases it. So there is a counterbalance if you're a cable operator.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [45]
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Great. I want to -- just one more question on your investment on the Liberty Media-Liberty Broadband side, which is of Live Nation. How are you feeling about their outlook, the concert business and the investments they've made in Ticketmaster?
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Greg Maffei, Liberty Media Corp. - President and CEO [46]
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We pick managers, largely, and we pick opportunities. And you have to say that some of the guys we have -- whether it be Jim Meyer or Tom Rutledge or Mike Rapino -- are doing unbelievably well and capitalizing on the opportunities in front of them. And Michael certainly fits, as I said, in that category.
The share they've gained in concerts is impressive, the way they've added to the Festivals business. And I think there's more potentially to be done there. The upgrade cycle that they're doing with Project Jetson to improve their ticketing, both on the cost side and the consumer-facing opportunity, both with secondary market tickets, TM+; and just making mobile apps that are cleaner and easier for the consumer -- have all created enormous opportunity. And improvement in the cost side, as I said, would improve the growing the margin.
Think there's more opportunity internationally to grow that business, more opportunity to do incremental acquisitions, more opportunity to gain on the manager side. I think they're hitting on all cylinders.
It is not the easiest business in the world. That is a block-and-tackle tough business. But Michael and his team have done an excellent job, and I'm very bullish on where they're headed.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [47]
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Actually, I lied - one more on Liberty Broadband that I wanted to ask you. John has hinted towards this in the past, but in the event that these transactions do not close, does Liberty as a director in Charter, look for Charter to go back after Time Warner Cable?
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Greg Maffei, Liberty Media Corp. - President and CEO [48]
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You said hinted? I think that would be being generous. Some of you may've been at the Investor Day when I asked that question, and John Malone answered -- hell, yes.
(Laughter)
Look, I think when Charter -- and Liberty was somewhat involved -- was bidding on -- bidding would be too strong -- discussing alternatives with Time Warner Cable, Charter stock was in the $1.25, $1.30, $1.35 range. There were some doubters, I think, that the stock was likely to continue to prosper. And here we are nine months, six months -- depending on what timeframe you're talking -- later, a year to nine months later. And the stock is in the $1.80s, $1.86 or something today.
Charter's capability to go after Time Warner Cable, pursue that acquisition on an accretive basis, has only improved, given the strength of its currency. So I think there'd be a ton of reasons why not only that would be something Charter would likely pursue, but why that is now only more attractive in terms of the opportunity for charter.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [49]
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Makes sense.
Let's now jump over to the Liberty Interactive Ventures side of the equation. QVC had a good year last year. Seems like you've got some momentum on the consumer side, some of the investments you've made. Can you talk about what you're seeing in that business that you're starting in the US, and what's working?
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Greg Maffei, Liberty Media Corp. - President and CEO [50]
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Well, [Mike, George] and his team have continued to capitalize on many of their strengths, understanding the storytelling aspect, the power of the content that they bring, the power of the community they bring. And that's working in the US. Their investments in mobile are working. You look at the percentage now that is internet -- well over 45%; the percentage of the internet portion that is mobile, tablet and phone, over a third. Those prospects and how they've continued the move the business forward are paying off in the US.
More challenges overseas, partly foreign currency-related. Obviously, everyone's got the problem -- if you're bringing back euros today, you're bringing euros back at $0.20 less on average or something than you did a year ago. That's a challenge.
But measured in local currency, Germany is doing pretty well. Italy is finally profitable. UK has remained very strong. Japan has been a challenge both in currency-related headwinds and local currency, because of an increase in their VAT tax and just a general tough market in Japan for consumer-facing businesses. But overall, I think the business is pretty healthy.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [51]
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What's been driving the strong margin result in the US? And can that continue?
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Greg Maffei, Liberty Media Corp. - President and CEO [52]
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I think careful expense management, first and foremost; some degree, movement away from -- a little bit of a mix shift away from consumer electronics, which tend to be lower margin. But I think it's more careful management of the business and thoughtful pricing.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [53]
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How has the second channel impacted the business in the US? I think most people would be surprised to know there's more cable networks being launched. But sounds like it's been successful.
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Greg Maffei, Liberty Media Corp. - President and CEO [54]
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I think it has. When you look, the incremental cost of something like that to us is attractive, because you're not -- you don't build out a [full end]. That's part of, I think, a plus on the margin-enhancement side. To the degree we're only creating relatively low cost just on the front end, we're already leveraging back-end costs around IT and warehousing the like, that's an opportunity for margin enhancement.
And I think the team there has done a good job of differentiating the two channels -- some opportunity to play off against each other.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [55]
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Yes.
Let's shift over to TripAdvisor and Liberty TripAdvisor. And Dave spoke earlier this morning. I will say I wasn't here, so I didn't hear it. But --
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Greg Maffei, Liberty Media Corp. - President and CEO [56]
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I heard about two-thirds of it (multiple speakers) --
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [57]
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Okay.
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Greg Maffei, Liberty Media Corp. - President and CEO [58]
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-- call.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [59]
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So you spun off your piece last year. You've always been focused on tax efficiency. I'm sure everyone is curious -- and I know you get the question a lot -- but how does this sort of resolve itself over time? And what's your vision for the Company over the next several years?
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Greg Maffei, Liberty Media Corp. - President and CEO [60]
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Well, I think looking at why we did the spin, and I think we've talked about this in the past -- our basis in TripAdvsior is very low. Our gain in the value of the TripAdvsior shares that Liberty Ventures held, and now Liberty Trip holds, is quite high. And somewhere down the road, the opportunity to either sell Liberty Trip as a company or merge Liberty Trip into TripAdvisor would likely obviate a capital gain, corporate capital gain or a large number. So that was why that made sense to have it set up.
That having been said, I don't think there's any need to collapse that in the near term. And in fact, there's probably some tension around collapsing it -- how much are the B shares worth, what kind of premium we get. Often, those kind of discussions are a lot easier in the context of some transaction down the road, if it ever were the case, where Trip was monetized, rather than just a disagreement about how much Liberty Trip gets versus what the other Trip shareholders get.
First and foremost, I think we're bullish on Trip. I mean, some of the things that some of you who might've been in the room for Billy Bradley's presentation -- continued top-line growth of shoppers or visitors. And as they move more from being just a vertical search site to more of a transaction site, opportunities for us to monetize a higher percentage of the transaction, opportunities for us to monetize the traffic we get already in restaurants and attractions -- the [lawful shed] acquisition, other acquisitions in the restaurant space; the Viator acquisition, other acquisitions potentially in the attraction space -- all of those are giving us both a broader funnel of revenue and a deeper funnel of revenue, which are attractive.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [61]
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You mentioned the B shares. So I would like to ask -- you and John swapped your shares in Trip. Does that have an impact on the strategy of the Company? Are you more involved? Do investors take this as anything that's going to impact how the business operates or what they're focused on?
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Greg Maffei, Liberty Media Corp. - President and CEO [62]
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To some degree, it's no change. I mean, John and I, I think, are likeminded about most of these things. We'd already somewhat had a division of labor in the sense that John has been on the Expedia board for several years, and I've been Chairman at Trip for several years. So our focuses have been on each side, and that doesn't change.
I'd like to think investors would take it as a relatively bullish sign that I went out and bought a lot of stock to complete the transaction, because John owned more shares than I did. So I needed to balance out. So I think that's hopefully some vote of confidence, at least by me, in the business.
But as overall direction of where we're going, I don't think it changes much about how Trip is going to operate or how Liberty's involvement will change.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [63]
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Over at Ventures, you got a lot of cash. It's one of the few areas where you are sitting on a lot of capacity. You also started our conversation talking about the markets being a bit frothy. So do we all have to be patient? Or are there things that might be interesting out there in the next year that we could be watching you take advantage of?
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Greg Maffei, Liberty Media Corp. - President and CEO [64]
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Whenever we do goal-setting internally, it's always very hard to say -- are you going to spend the cash this year? What are you -- how are you going to measure people on that? Because it's very easy to do transactions; it's a lot harder to do ones that pay off in a market like this. And you got to wait until the back end to figure out whether that works.
I think our strategy, as I mentioned, is already to look at the extra large. We think there's better opportunities in the elephant-hunting realm. That also is a little scary, because it's a lot of concentration. Our strategy usually is to try and do things that are either complex, because other people don't like complex; or messy, because other people don't like messy; and try and find some point of differentiation, particularly in the spaces that we know, in TMT. Maybe particularly around subscription businesses.
But very hard to say you're going to find that in some timeframe, that you're going to find that situation which is attractive. And would we rather spend a little more time and let the cash sit on the balance sheet, and not pursue the opportunity? Absolutely. We have the blessing of being a, if not controlled, heavily influenced corporation with [the] large shareholders who's likeminded. So we get the opportunity to be thoughtful and not rush to make judgments about investments that we don't want to make.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [65]
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I want to turn now to the last company on my list here, with is Starz. You're the Chairman of Starz. I realize that the transaction announced recently between John and Lionsgate is distinct from Starz.
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Greg Maffei, Liberty Media Corp. - President and CEO [66]
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Yes.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [67]
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But nevertheless, here you are. And I'd like to get your thoughts on what that means. We heard from Chris. I actually thought he made a lot of really interesting points about it. But what's your perspective on what happened there? And what are the implications for Starz from this transaction?
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Greg Maffei, Liberty Media Corp. - President and CEO [68]
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Well, I think John has been articulate in his belief that content creation is becoming a more attractive part of the value chain. The increasing number of distributors -- we've talked earlier about over-the-top and the like. International is the same. To the degree that you can make content that has broad appeal, there are more outlets distribute that, and there are more companies and entities within those different kinds of outlets competing than ever.
Starz has that capability. Starz is probably subscale for the long term on that capability. Lionsgate has some of those capabilities as well, and probably a better global footprint. But obviously, they don't have some of the distribution strength that Starz has in the US, nor do they have as much scale as I think they would like to seek in that content-creation opportunity.
So while nothing was announced in that stock swap that will necessarily lead to a broader strategy around content creation, we do have some existing partnerships with Lionsgate that I expect will be extended and grow. And as I thought Chris well described, we're becoming cousins, and maybe even kissing cousins, based on this transaction.
The nature of that transaction was such that holding John -- they're both below the 15 -- having John go on their board meant that it didn't require approvals of the Starz board. But we certainly were aware of what was going on and endorsed the idea that these companies could work together more closely.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [69]
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Great. Let me ask one more. And then, if you have a question, please raise your hand and wait for a microphone.
Also on Starz, Greg, we're expecting to see HBO go over-the-top this year. They've certainly not been shy about that. Les was here yesterday. No timeline, but Showtime apparently moving in the same direction.
What is the impact of that on Starz, if anything? It would seem like they could be a fast follower. But at the same time, I know their relationships with the distributors are critical.
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Greg Maffei, Liberty Media Corp. - President and CEO [70]
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Look, I think -- it's unclear to me that there's a massive amount of over-the-top demand for HBO that's going to pay $15 a month plus for a non-bundled product. I think those people who can afford to buy HBO -- most are probably buying the bundle, and doing that. And when they look at the alternatives around Amazon Prime or Netflix -- Netflix is going to have -- is targeting going from something like 150 to 320 hours of programming next year, with 18 series. That'll be 50%-plus more than HBO is providing -- something like 200 hours of original programming. It's not clear to me that that's going to create enormous amount of incremental demand for HBO.
What is clear to me is that there are people who don't want to get behind the bundle, that cost, for something like Starz, where we are much less expensive on a differentiated basis. You look at how much HBO is already taking of that $15 -- what they're already getting from the cable operator or the telco or the satellite -- there's not much room in there for incremental profit for them. There is a lot of room in there for incremental profit for Starz if we invert the bundle. And we're not behind all of that bundled content.
So I think it's actually an interesting opportunity, particularly in us not going over-the-top but doing something in conjunction with our cable partners, with our telco and satellite partners, to offer it on a -- if not a la carte basis, where it's not behind the whole bundle. And given that we don't have many of the restrictions and ties that others do, because you've got to offer something else as well, because you've got a whole package of content -- we are offering that one -- I think it gives us a lot of flexibility. And to the degree that cable operators do change their model or are experimenting, we're a perfect partner with whom to do it.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [71]
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Great. That makes sense.
==============================
Questions and Answers
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [1]
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If we have any questions from the audience, please raise your hand. Yes, we'll take two right back there. Go ahead.
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Unidentified Audience Member [2]
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So you've talked in the past about the possibility of an RMT of Liberty Broadband. Can you just remind us of the timing considerations there? Any comments on kind of strategic financial inspirations as well?
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Greg Maffei, Liberty Media Corp. - President and CEO [3]
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Well, first, when you talk about RMT, usually in my mind, that's taking somebody who owns a 51%-plus share and spinning it out to their shareholders of a continuing interest, it might mean merging it in. But your shareholders still have to have 51% of [boten] value post the transaction.
What we've done with Liberty Broadband, creating it as a separate company, where it owns 27% or 28%, depending on the dilution of Charter -- that's now a different kind of a transaction. You're headed the same way, I think. But just to understand, it's not an RMT; it's really a merger potentially of Charter and Liberty Broadband.
That would be unlikely to occur. If it were to occur, probably at least a year after the spin, which was in -- November, I think, we completed the transaction. So you're at least looking at November of this year.
The rush to do that, the timeframe to do that -- I don't know. I don't think there's any rush or time parameters to it. We are trading at a discount to the Charter price at Liberty Broadband. Maybe that's something, just as we talked earlier about Liberty Media, we try and take advantage of. We have cash at Liberty Broadband, an opportunity probably to increase our NAV, net asset value, per share faster than Charter at Liberty Broadband.
Somewhere down the road, is that likely to happen, in one way or another? Probably more likely than not. But I don't think there's a set timeframe or known timeframe for it.
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Unidentified Audience Member [4]
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Do you feel like, terms of everything that Charter will have on its plate with the transactions, that that may make the timing difficult for a near-term merger with Liberty Broadband? Or is that not a consideration?
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Greg Maffei, Liberty Media Corp. - President and CEO [5]
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Yes, I think that's -- most of the things they have on their plate are challenges that are operational challenges. And I think they've got a full handle on, but they're a full plate. The corporate finance challenge Chris Winfrey and the like could deal with more easily, and I'm not so worried about that.
That having been said, I don't think there's some rush to judgment here or need to do that in a hurry. We don't feel the need. And we'll see how it goes.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [6]
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Go ahead.
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Unidentified Audience Member [7]
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A question on Liberty Ventures.
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Greg Maffei, Liberty Media Corp. - President and CEO [8]
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Yes?
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Unidentified Audience Member [9]
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Can you talk a little bit about the Provide Commerce transaction, why you sold it to FTD, why you [cut the stay] again, how you see the business going forward? Thanks.
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Greg Maffei, Liberty Media Corp. - President and CEO [10]
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Yes.
I think our learnings in the ecommerce space, if we have any, are that scale matters a lot, and that when you're up against Amazon and other players like that, who are leveraging scale, you need to find differentiation or as much scale as you can. And putting FTD and Provide together provided scale in the flower business in an interesting way.
We liked that opportunity. We merged our business in Provide -- took a 35% stake [in] cash off the table, have flexibilities down the road. We see that opportunity improving to buy incremental shares in FTD. But first and foremost, [begin] to build scale and differentiation in the flower space in an attractive manner. So I think that's a very interesting transaction and one that you might see us attempt to do in other parts of our businesses.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [11]
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Okay, we got probably time for one more. Yes, go ahead.
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Unidentified Audience Member [12]
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Going back to Starz -- it's been over two years since the spin. So if a buyer were to emerge, are there any tax-related frictions that you're aware of that would inhibit a deal?
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Greg Maffei, Liberty Media Corp. - President and CEO [13]
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Mostly not. There are -- there's always a nuance or two in these, it's not so crisp. There were one or two issues that might take a little longer, like three years, to cure. But mostly not. Most buyers would not have a problem.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [14]
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That begs even more questions. But --
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Greg Maffei, Liberty Media Corp. - President and CEO [15]
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You know it's oblique. I try not to be, but tax is always that way.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [16]
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Yes. Well, that's basically all the time we have. Thank you, everybody, guys.
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Greg Maffei, Liberty Media Corp. - President and CEO [17]
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Thank you --
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [18]
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Please come back.
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Greg Maffei, Liberty Media Corp. - President and CEO [19]
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-- for your interest in Liberty.
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Ben Swinburne, Morgan Stanley - Media and Cable Analyst [20]
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Thank you.
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