Liberty Interactive Corp and Liberty Media Corp at MoffettNathanson Media & Communications Summit
May 18, 2017 AM EDT
FWONA - Liberty Media Corp
Liberty Interactive Corp and Liberty Media Corp at MoffettNathanson Media & Communications Summit
May 18, 2017 / 03:00PM GMT
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Corporate Participants
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* Mark David Carleton
QVC Group - CFO
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Presentation
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Unidentified Analyst, [1]
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Excuse me, if everyone could please take their seats, we'll get started. And if we can close the doors in the back. So thank you all for joining us for our conversation with Mark Carleton and Liberty Media, and thank you for those of you who are joining us via the web.
I'm really delighted to be joined here by Mark, who's going to be representing both Liberty Media -- or actually, all of Liberty Media, Liberty Interactive and Liberty Broadband.
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Questions and Answers
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Unidentified Analyst, [1]
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And I have to ask the opening question, Mark, just because it's so topical this morning. There have been news reports of a bid for Pandora from Sirius XM. So I guess let me start with that. What can you tell us about that?
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Mark David Carleton, QVC Group - CFO [2]
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Well, we've been consistent in our discussions about Pandora and the streaming business, that it's -- streaming business is a tough business and, certainly, profitability in that business is a challenge and the competitors are tough. And so we've paid attention to that and considered that asset for a long time, but there's no new news. That's the same message, I think, we've delivered before on that.
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Unidentified Analyst, [3]
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Okay. We'll come back to talking about Sirius and music. But I want to start with cable and with GCI. You've always liked the cable business, but GCI is not a typical cable operator. It's unique in a lot of ways. Why don't we start with the structure of that transaction? Tell us why you like the structure of that transaction and then talk about why -- what it was about GCI that made it so attractive.
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Mark David Carleton, QVC Group - CFO [4]
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Well, I think, first, we like the business. It's a -- the cable TV business that our Chairman, John Malone, has effectively created in this country, and it's a company that actually TCI Cable used to own back in the '80s, in the day. So it was a business that we liked, and we liked the cable and telephony business that they were in up there. We liked the growth opportunities that we had in it. And in typical Liberty fashion, we were able to find a structure that allowed us to get that deal done, but also to help solve some of our other issues, give us a point to get -- rationalize our businesses over there into 2 stocks, the GCI stock and the QVC stock, to have them both be asset-backed stocks so we could perhaps eliminate some of the tracking stock discount or the inherent discount that those had traded at. And in typical fashion, we could do something pretty easy and solve 90% of the issues or we could do something really, really complicated and solve a few more percent. So we were able to kind of get both of those done with that. But first and foremost, we like the business and what Ron Duncan and his team are doing with it up there.
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Unidentified Analyst, [5]
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And tell me what it is that you -- sorry, what is it that you envision can be done better with that asset so -- that makes the current valuation attractive?
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Mark David Carleton, QVC Group - CFO [6]
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Well, I think that the management team is on a good track, and the projections they have and the growth that they can achieve up there, I think, were compelling on its own right. Obviously, we think there's some financing and some other kind of Liberty magic that we can deliver to it, but the track that they're on for the next 3 to 5 years is pretty good.
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Unidentified Analyst, [7]
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So I was going to flip to Formula One, but as long as we're on the topic of cable, let's actually stay with cable for a second and talk about Charter then. I would describe and I think most people would describe their most recent quarter as a bit mixed, but the long-term trajectory of that business has been really remarkable. What are you seeing in the integration of Time Warner and Bright House from where you sit? And what gives you the confidence that what we're seeing is just a sunsetting of some promotions from TWC and not anything more systemic in Charter?
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Mark David Carleton, QVC Group - CFO [8]
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Well -- and I know you talked to Tom yesterday, and the numbers in the quarter certainly weren't a surprise to us. We're seeing really positive results as we get the spectrum brand and the spectrum pricing out there. We saw a lot of change in some low-end and some discounted and some promotional kind of customers, but there were really no surprises to us. What we were expecting and what happened was pretty consistent. And I think Tom and the guys are doing a really good job at integrating these businesses and driving through what they've said they're going to do, and I think we're extremely bullish on the equity. And Tom is focused, his compensation is focused on driving growth in that, and we're very bullish on it.
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Unidentified Analyst, [9]
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One of the themes that we've been talking about with almost everybody through this conference is the cord-cutting set of issues and the acceleration in the declines in pay TV unit subscribership at the industry level. Does that change the way you think about the business? Does it -- I suspect you've always viewed it as primarily an infrastructure broadband business anyway, but does it change the way you think about pricing and the attractiveness of cable assets?
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Mark David Carleton, QVC Group - CFO [10]
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Well, I think, obviously, we're thoughtful and we pay attention and Tom's team does in that as well. And I think you'll see more from them in terms of different types of bundles and different type of options to provide to their customers, but we love the broadband position they're in and the growth that they've got. It's a different issue for some of the satellite carriers and for some of the cable operators that have more fully penetrated broadband and don't have the growth opportunities that we see at Charter. So fortunately, we're a little bit sheltered from that. But that is the new reality. As costs continue to rise, there's more and more pressure on that packages and those bundles. And that's going to drive different thinking, and it's going to drive different impacts on programmers. But we think we're at least as good, if not better, positioned than anyone to really deal with that over the next several years.
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Unidentified Analyst, [11]
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Let's talk about the wireless business as it relates to Charter for a second. Charter recently entered into an agreement with Comcast for wireless services. Can you talk about what you're looking for from Charter as they start that and what role you think wireless -- you obviously had a lot of experience looking at the European market, and you've seen a very different evolution of -- or arguably an earlier evolution of quad play there than here.
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Mark David Carleton, QVC Group - CFO [12]
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Well -- and John Malone has been in support of cable operators working together for 30 years, and this, I think, is right up John's alley in that regard. Basically, with Comcast, from a Charter standpoint, we're at the beginning on wireless. We have the MVNO relationship, and this is really an agreement to agree. And if there are things we can work together with Comcast -- and certainly, they, even as large as they are, only operate in their areas today, and we operate in our regions and our systems today. There are things we can do together that are just sensical and logical and efficient to do. And I think we'll look to do those. I don't think we look at that agreement as much longer term than that or more binding than that today. It's an agreement to agree and I think there are things we can do together. In terms of the wireless opportunity, we look at it as a wireless opportunity not a wireless necessity. And I think we're in a good position with the MVNO we have now and the opportunities with Comcast to see how it develops. And that doesn't mean that at some point in the future, we may not want to or think we need to be facilities based, but right now we really like the position we're in. We've got flexibility. We've got optionality. And we think we can learn a lot and do some other things with our customers.
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Unidentified Analyst, [13]
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One of the things that caught everyone's eye about that agreement with Comcast was the reciprocal provision on M&A. Particularly, just given the backdrop that Verizon had reportedly been interested in Charter as an asset, there has been no confirmation of how serious that was, but the agreement with Comcast effectively took that off the table. Can you talk about that a little bit as to was that a -- how did you think about entering into that provision or agreeing to that provision?
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Mark David Carleton, QVC Group - CFO [14]
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Yes. The -- that provision in the agreement really didn't have -- had very -- had nothing to do with the -- with anything with Verizon. Really, what it had to with is: listen we're going to do some things together and we want to make sure that whatever we agree to do together doesn't just blow up because one or the other of us announces some big deal that may be contrary to the other. So the agreement is relatively short term. That being said, we're extremely bullish on Charter and its prospects. And so to the extent that something eventually happens with Verizon, that may happen, but I don't look at this agreement being a particular impediment to that, if something were to ultimately happen.
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Unidentified Analyst, [15]
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And one of the other things that John has talked about is not just integration with wireless but vertical integration. He's talked about the strategic benefits of vertical integration with content. What's appealing about that? Is it -- Comcast bought NBC really cheaply, but it's not entirely clear that they've strategically integrated those businesses. And it's not entirely clear that AT&T yet has done much with -- certainly, with DIRECTV and what they're going to do with Time Warner. What's the strategic appeal?
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Mark David Carleton, QVC Group - CFO [16]
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Well, there's certainly a benefit to being able to expose content across your distribution platform for content that may not be able to get (inaudible) kind of distribution on its own. The -- so in terms of launching and exposing it, it is a big positive, but in terms of leveraging it, it's tougher. The Charter systems only represent a small component of viewership across the country, and restricting that content or limiting it to a Charter set of systems presents a growth problem. And I think that the NBC deal for Comcast has benefited them far more because they made a great deal than the leverage they got from the distribution. But you can certainly enhance content through distribution, and it is very difficult to get your content value without having sufficient distribution. And we look at the Charter distribution platform, the Live Nation concert distribution platform, the Formula One racing platform, the Sirius XM 80 million radios and cars platform very similarly. How do we leverage that platform and generate as much monetization and profit as we can from those individual platforms? In some cases, logic dictates and returns dictate that, that can be exclusive; in other cases it can't.
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Unidentified Analyst, [17]
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Would your ever then look at content from inside of broadband? Or would you consider content as more of a Liberty Media separate opportunity?
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Mark David Carleton, QVC Group - CFO [18]
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I think it could be either. Certainly, we are in the content business at Liberty Media and have been, but certainly Charter looking at content, that -- I don't think there's a conflict in that.
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Unidentified Analyst, [19]
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And last couple of things on this before we move to Formula One. There's an argument that says the pendulum between content and distribution is starting to swing back towards distribution a little bit as the distribution business gets more concentrated and as cord-cutting and the pressures on affiliate fees start to weaken some of the media companies. What's your and John's view of -- and Greg's view of sort of where we are in the cycle of the value between content and distribution?
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Mark David Carleton, QVC Group - CFO [20]
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Well, I think we're seeing more of that distribution value come not so much from the cable distributors but from Amazon and Google and Facebook, huge distribution platforms that have such global scale and might that they shifted the curve in terms of value and dollars. And I think that, that's impacting cable distribution as well, and very hard to get your content viewed and valued and monetized if you're not in one of those really large distribution platforms. And so I think a cable distribution platform is similar to that. I think that value has shifted. Good quality content will find its way into that bigger distribution, but it's tougher. It is tougher as the power in these distribution platforms increases. And we're pleased that we're in a good position in some of those platforms.
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Unidentified Analyst, [21]
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And on the media side, for a second, where's the value in the value chain? Is it -- historically, there was a lot of value in the aggregation function of content into cable nets. Is it fair to say that the value is shifting from the aggregation function of cable networks to the upstream, to the content generation function instead? Or do you -- is there still a really attractive play in cable net?
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Mark David Carleton, QVC Group - CFO [22]
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Yes. I think it's attractive for the right nets. So I don't think it's shrinking, but I don't think it's growing. Individual content being streamed to customers for a fee is a tough business. And there are not a huge number of individual content providers -- maybe WWE has done a really good job of this, but pretty difficult and unlikely that an individual customer is going to have 15 or 20 different subscriptions to different sorts of content. They tend to default to some of these bigger platforms where they can access it. So there's still significant power in the bundle. And even as you look at ESPN, so their business is down but they still have 90 million or 87 million customers. That's a big number.
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Unidentified Analyst, [23]
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So last one on the broadband business. Further consolidation in cable, whether it's -- are there more GCIs out there that -- and are there synergies that you can create that would say, yes, I want to start to roll up the small players that are left in the U.S.? Or where do you take that collection of assets to next?
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Mark David Carleton, QVC Group - CFO [24]
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Yes. I think there are certainly still opportunities for combination out in the marketplace, and that will -- that's dictated by price and return. To the extent that we can find assets that drive the right kind of returns, I think those will be appealing. And they'll be appealing to Comcast or Charter or Altice or whoever is out there to find -- if you can find the right deals at the right price. But obviously, scale has advantages, and leverage and synergies are there to drive that. So I would expect that as -- if we have reasonable, willing sellers and willing buyers to do accretive deals, then we'll get deals done.
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Unidentified Analyst, [25]
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Are you seeing willing sellers? There's always been this argument -- over the last couple of years, there's been this argument that the programming negotiation scale and the technology development scale have gotten to the point in the industry where the small guys just aren't going to be able to keep doing that on their own and you're going to see some of these longtime, smaller family sellers finally come to market. But we've been saying that for a long time. I know Wave has -- is running a process. But are you finally starting to see more deals come across your desk?
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Mark David Carleton, QVC Group - CFO [26]
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No. I wouldn't say a meaningful increase, but I think it is inevitable. When you look at Charter's operating systems and Comcast and the amount of sophistication, voice activation that these networks are having, very difficult for a smaller player to continue to operate that way. And scale on content, to be able to really effectively manage your content costs and be able to deliver the value to your customers, you need a value. Scale matters. And John believed that 30 years ago, and I'm completely certain he believes it today.
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Unidentified Analyst, [27]
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So let's change hats for a second and now go back to Formula One. Talk about how about Formula One fits. And what was it that made Formula One jump out as an attractive asset?
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Mark David Carleton, QVC Group - CFO [28]
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Well, it's an iconic brand. It's a global brand. And those are very difficult to get. We own a few unique iconic assets. Live Nation is unique in terms of the concerts it promotes and the ticketing it does. Sirius XM is unique, satellite radio broadcaster embedded in cars. These distribution platforms are large, they're leverageable. We think they're pretty defendable, and they have we think, great growth opportunities. And that's really what attracted us to it to begin with. You can't own FIFA, you can't own the Olympics, but certainly, Formula One was one we could look at. And we thought there was significant opportunity in there in terms of monetization. And I think our views changed from when we started talking about this a couple of years ago, thinking that the U.S. was an immediate opportunity to realizing that baseline promotion, broadcasting, sponsorship kind of areas where we can make a huge amount of difference in growing this business. You've got to give...
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Unidentified Analyst, [29]
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Outside of the U.S.?
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Mark David Carleton, QVC Group - CFO [30]
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Outside of the U.S. You've got to give Bernie Ecclestone a lot of credit. He created a massive multibillion-dollar business, taking an asset that wasn't even his asset and just licensing it and driving it. But that being said, that business from a sponsorship standpoint, from a broadcasting standpoint, we think has been under monetized. And we are very fortunate to get Chase Carey to come on board and build a team with Ross and Sean that are really, really strong. And I think broadcasting and sponsorship and the promotion side is where we'll be at the beginning and ultimately into digital and gaming, and ultimately at some point into the U.S. But we think there's a huge upside in that business, and we've got a great, great management team operating it. So we were able to do a uniquely Liberty structured deal, with a combination of equity and cash, to satisfy the sellers who had different wishes, some wanted to hold, some wanted to be out, and we got the right management team put together. So generally, when we can do that, we do pretty well.
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Unidentified Analyst, [31]
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And can you put any numbers around the monetization opportunity and what kind of numbers you can expect that business to put up?
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Mark David Carleton, QVC Group - CFO [32]
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Well -- and I would defer you to Chase and the group with that, and there's certainly some decks that have been going around recently on that. But we think it's significant.
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Unidentified Analyst, [33]
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Okay. Let's talk about Sirius XM for a second. That's been just a home-run investment for you. But it faces some unique issues going forward, partly associated with the challenges that a business like that faces, from largely free content from the Pandoras and Spotifys of the world. So leaving aside this morning's reported news, how does that business compete against Pandora and Spotify and free services? How comfortable are you that the growth trajectory for a business that is a monthly subscription fee in that price range still has real legs to it?
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Mark David Carleton, QVC Group - CFO [34]
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Well, we like the Sirius XM business now. We've got 31 million or 32 million customers paying us $10, $12, $13 a month. It's a beautiful business. And we've got 2 things that we really like about it. One, we've got a significant distribution platform, 70 million, 80 million cars with our radios in them. And we've got unique and, in some cases, exclusive, compelling, curated content. And I think that we have a view that there is a place and there is a value for curated content versus just "select your song and play it on demand" kind of music and with the listenership that we see at our Hits 1 channel and The Highway, are significant across the country. So we've got a strong, growing platform. We're uniquely positioned inside the car, and I think our technological developments inside the car will help us preserve the value of that real estate for many more years. We've got a next generation of interactive services that will start being rolled out very shortly, voice activation services coming. So we've got a lot of continued differentiation there. At some point, ultimately, is another form of ad-supported or another form of on-demand service fit with Sirius? Maybe, but I don't think we feel pressured or compelled. Many years ago, when the iPod first came out, people thought, "Oh, this is going to kill Sirius XM." It really hasn't done that, and to date we've not seen much, if any impact from the streamers. Now granted the service is a premium service. It shows up in 70% of the cars which are sold in America today but it doesn't show up in the ultimate low-end cars. It's in the higher-end cars, and it is a premium service. It is not a service for every 14-year-old in America. And if we can keep growing that business, is there room for a 35 million or 40 million customer premium service? We think there is.
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Unidentified Analyst, [35]
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And have you seen any impact from the transition to wireless unlimited plans? That -- one of the impediments to substituting an Internet radio has just been it's expensive or at least it's perceived to be expensive. As that perception disappears because usage is -- becomes costless to the end user, does that pose a threat to the business? Or is there just -- is it just all speculation at this point in time?
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Mark David Carleton, QVC Group - CFO [36]
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Yes. We've not seen that, and streaming audio is not a giant bandwidth pig as it is. It's obviously video that is the problem. But we've not seen a big issue with that. And integration is a huge benefit. Seamless, safe operation of the service in there has been a huge benefit to us. So we've not seen it. But I think, Jim and his team there realize -- Jim Cady and the top technical folks, that they need to continue to innovate and they need to bring interactivity and they need to bring a lot more of these features in there to continue that advantage. And I think they're doing that.
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Unidentified Analyst, [37]
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So that's another business where you've had a discount to NAV that you described at your Analyst Day. You talked about continuing to explore alternatives to close that discount. Can you say more about that?
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Mark David Carleton, QVC Group - CFO [38]
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Well, there -- we have an ongoing debate and a lot of discussion about the nature of that discount. Some of it is inherently that we're tracking stock, and some -- oftentimes those trade at a discount. There's active buybacks going on at Sirius XM level and not at the Liberty Sirius XM level and some speculation of a takeout by Liberty that would involve some premium that would account for that. So we think that discount is higher than we think it should be, higher than we'd like it to be. I think there may come a time that we'll have to take action to do something about that discount. Hopefully, the market will close that. And obviously, part of the GCI transaction, one of the benefits, the lucky strike extras, was our ability to work towards shrinking that inherent discount in trading and monetizing.
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Unidentified Analyst, [39]
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Not putting some assets underneath?
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Mark David Carleton, QVC Group - CFO [40]
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Indeed.
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Unidentified Analyst, [41]
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So -- but I guess, this may just be a roundabout way of asking the same question I just asked. But because there is this -- or is there any interest in buying in the whole thing? And it creates a sort of a circular reasoning, right? If the NAV gap got small enough, would you then say now it's interesting to buy it all in?
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Mark David Carleton, QVC Group - CFO [42]
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Well, we like the business, and if there was an effective way for us to buy it all in faster, we'd certainly look at that. The company has an aggressive buyback program, which we think is highly accretive and a good use of their free cash flow because we're bullish on the equity. And so I think, right now, we're fine on the path that they're on. And Sirius' board and management -- with the buyback, I think we continue to be supportive of it and they're supportive of it.
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Unidentified Analyst, [43]
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Let's talk about Live Nation, a business that had outstanding quarter. Revenue is up 19%; operating income, 20%; adjusted operating income, I think up 25%. How long is the growth runway for that business? And is it just -- do you just ride it because it's a great business? Or is there something that you say, okay here's the next way to -- place you take that business?
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Mark David Carleton, QVC Group - CFO [44]
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Well, Michael Rapino and his team there just really have done a good job with that business, and they've created a platform and a flywheel that delivers millions and millions of customers and puts us in a position to sell tickets and to sell merchandise and to sell food and beverage and to sell significant sponsorships. It is really a great machine and a great platform. And I think we're just beginning to see it. Obviously, we've got opportunities on the ticketing side, in secondary and in ticketing technologies and different opportunities there. We've got growth domestically in shows, music festivals and, certainly, growth internationally, Mexico, South America and places in Europe where we're not as big as we are. And we've got opportunities in video and certainly live concert information and footage, the availability of shoulder programming. So I think ultimately, there is an angle to that. So the path is great and what Michael has created and those guys have created is -- there's just no better place for an artist to monetize their skills than to come through Live Nation. We're in a position where we can pay them more than anyone else and make more and that's why people like Jay-Z have chosen to sign a 10-year agreement with us recently, because it's just way more lucrative for them to do it that way. So it's a great model and we think there's still -- stocks performed well. We think there's still a lot of room to run on that.
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Unidentified Analyst, [45]
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Will we see a Live Nation video service, whether it's -- probably not a traditional cable net anymore but a much more intensive focus on the video side?
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Mark David Carleton, QVC Group - CFO [46]
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Well, I think at some point in the future, there's value in that content and I think we'll see more of that happen at some point in the future.
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Unidentified Analyst, [47]
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Now let's talk about the Braves. You've got a new SunTrust Park stadium opening the '17 season. I know it's early days, but is that -- how is that doing relative to your expectations?
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Mark David Carleton, QVC Group - CFO [48]
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The stadium is and the mixed use, the battery area around there is really doing well. We went down to opening day 15th of April and records were set, retail, food and beverage and the like around there. And it's just getting going. Our Omni hotel opens up near the end of the year. The Comcast office building will get occupied in November or December, around there. Bars and restaurants have been busy. We've had half a dozen shows in our Live Nation Roxy Theatre down there that have been very successful. So, so far it's very positive. We've sold, leased 150-or-so apartments down there. And the team is now in second place in the National League East. For any of you suffering Mets fans here, Braves have just passed you. We're all way back from the nationals, but the team is starting to perform well. So we like the opportunity on that and where we're positioned. And obviously, we'll see what happens with the Marlins, but even at the prices we've seen discussed for the Marlins, at the low end of those, bodes extremely well in terms of a Braves valuation relative to where our club sits today versus the Marlins today.
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Unidentified Analyst, [49]
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But I assume that's a certain notional valuation in that your -- is there an interest in selling? I mean, having just gotten...
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Mark David Carleton, QVC Group - CFO [50]
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No. I think -- but obviously that stock has performed well, but we think there's more value there in the Braves than we've seen.
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Unidentified Analyst, [51]
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And how long before you earn a return on the investments that you've made there? Some of that is very long-dated stuff.
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Mark David Carleton, QVC Group - CFO [52]
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Well, we're certainly generating cash flow, and we're on our plans and projections from the battery. And we're seeing the benefits from the new stadium. Generally, what we've seen historically is teams will, inside the ballpark, get a 15% or 20% increase just because of the new park. And I haven't seen any of the numbers in that regard yet, but it certainly wouldn't surprise me, given the volume of activity we've had there.
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Unidentified Analyst, [53]
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And what about the television side? I mean, there's been a lot of pressure on RSNs and regional sports. How do you think about the value of the Braves television rights over the long term?
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Mark David Carleton, QVC Group - CFO [54]
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Well, our agreement comes up in 2027. And I think you've got some teams that are at different ends of the spectrum, right? You've got the Dodgers, Houston Astros, Portland networks that have really struggled getting carriage, where those prices, at least as the distributor saw them, were too high, and they were unable to pass them through. I think the Braves are more in the opposite end of that. We have a large main viewing area and the largest second-tier market area in America with Mississippi and Alabama, Northern Florida and the Carolinas, parts of Tennessee that are part of that. So we think we've got significant improvement opportunities in our contract. But again, each of those contracts will work with the distributor or won't, and the ones that push too far will go over. But we think we're underrepresented in terms of that.
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Unidentified Analyst, [55]
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Let's talk about QVC now. That's another business that -- retail in general, online or physical, has a lot of issues around it and competing against Amazon and what have you. Domestic revenue growth in the first quarter, while still negative, is getting better. What drove that improvement? And what's sustainable in that business in your mind?
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Mark David Carleton, QVC Group - CFO [56]
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Well, I think the good news and the bad news is the issues we had late last year. I think Mike George himself would admit, we're more self-inflicted than Amazon-inflicted. And we've done a lot of work on merchandising and on retailing and on making sure we understand who our customer is and what she wants and how she wants to watch. We really don't see that it's been that kind of Amazon impact. We've got -- 70% of our products are unique and differentiated, and that shopping experience is very different than Amazon. We generally are not the low-priced provider of any product. If you want to just shop on price, you likely won't end up at QVC. But the shopping experience is an entertainment experience, it's an engagement experience. We're continuing to find out what she wants and how to get it to her, more digital, more mobile, more snippets of video, more specialty kind of concepts.
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Unidentified Analyst, [57]
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And how are you evolving who your customer is? I tend to think about it in customer age cohorts. As you try to make your -- as you try to ensure the relevance of the brands by making your brand relevant to younger and younger consumers, how is that going?
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Mark David Carleton, QVC Group - CFO [58]
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Well, it's going well, but it's work. You have some people who have been valued listeners and buyers for 15 or 20 years, and you have a number of 20- and 30- or 40-year-olds coming into the system. So you need to thoughtfully program for each of those. And some of the new technologies and some of the mobile and some of the digital and some of the snippets are serving our younger customers far better, and our older customers are used to some of the more traditional programming. But Mike and the team are really focused on measuring who those customers are and delivering the right kind of experience, the right kind of engagement and the right kind of product to each of those groups. And that is a balance, and it's a perpetual kind of a learning experience. But I think, so far, the results have been pretty good.
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Unidentified Analyst, [59]
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Is that business meaningfully impacted by cord-cutting and changes in the affiliate universe?
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Mark David Carleton, QVC Group - CFO [60]
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No, the interesting thing is, is our viewership has stayed the same, which with cord-cutting means it's actually gone up relative to the other end. And there's a different kind of...
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Unidentified Analyst, [61]
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And your viewers aren't cutting the cord?
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Mark David Carleton, QVC Group - CFO [62]
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Right. And we are a payer of commissions to the cable operators, not a seeker of payments from them, so our renewals with them always go a lot easier than ESPN's or Viacom's do.
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Unidentified Analyst, [63]
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We've mostly been -- or at least as I've been asking these questions about QVC have been thinking domestically. But talk to me about the international side of QVC and -- both the opportunity and just where you are in that.
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Mark David Carleton, QVC Group - CFO [64]
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Well, the international business has been good. Japan and Germany have been good. The U.K. was a little bit soft, and we're continuing to learn in France and Italy and push on that. But I think those businesses, we think, have good opportunities, and we're learning areas where they're different and we're learning areas where they're the same. So I think those have been bright spots for us and certainly, 3 or 4 of the countries have been big bright spots.
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Unidentified Analyst, [65]
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And can you just comment on zulily, as to what you're seeing there? And again, what should we expect as investors?
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Mark David Carleton, QVC Group - CFO [66]
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Yes. Tough first quarter for zulily more because there's some really tough comps and some -- and the leap year, the leap day that was out. I think Darrell and his group there are doing well and understand their business. And it's very dynamic, and it's very young and it's been hugely valuable for us in terms of learning how people in that demographic shop, what they're looking for, how they buy it. I think that other than the tough comps, business is doing pretty well, and we would expect it to continue to do well. And we're seeing more and more opportunity for integration and synergies between the QVC and zu. And it is a very different group. When you go to QVC, it's staid and more conservative. And you go to zulily and there are people with blue hair and green hair, wearing weird costumes and definitely a different demographic that they're marketing towards, but very vibrant and really fun. And I think the mix of those 2 makes them both better.
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Unidentified Analyst, [67]
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Can you make zulily grow again?
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Mark David Carleton, QVC Group - CFO [68]
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I think so, yes. I believe we can.
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Unidentified Analyst, [69]
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And what role does it play in the portfolio? You talked about the kind of -- you talked about it, how it might make QVC better and vice versa.
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Mark David Carleton, QVC Group - CFO [70]
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Well, it is a platform, and it is specialty shopping. And it's aimed at younger customers. And I think it fits right in with the QVC platform and how QVC's platform needs to continue to develop away from just the live broadcast.
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Unidentified Analyst, [71]
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So now let's step back a little bit. So we've talked about a lot of different pieces of a lot of businesses, and one of the things that's always sort of dogged you a little bit has been the -- are you a business or are you a mutual fund? What ties all of this stuff together strategically?
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Mark David Carleton, QVC Group - CFO [72]
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Well, I think the type of businesses that we acquire generally are similar, and I told some folks earlier we're unlikely to buy a bunch of oil and gas wells or a string of coffee shops or something like that. We like platforms. We like unique distinguishable iconic assets that have strong moats. We like leverageable cash flow, tax efficiency. We -- but we're not operators. And we -- say, one of our best skills is we know what we don't know. We try to find good businesses and hire really good management teams to drive them and compensate them well if they can achieve those results. And so I think, that's the best way to look at us. We can -- we like the combination. Formula One became a much easier transaction to do when we had Chase Carey onboard, knowing we had the right folks to run it. Putting Ticketmaster and Live Nation together, knowing we had Irving and Michael Rapino there to run it helped drive that. So we are -- we're not operators, we're investors. We're good at structure. We're good at taxes, and we think we're pretty good at hiring management teams. But we like those kind of platform-driven, defendable, leverageable growth assets. And I think, generally we're pretty good sticking to our knitting.
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Unidentified Analyst, [73]
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One of the things that Greg has said on the stage in the past in his typically colorful way is he said, "You guys don't buy businesses, you rent them." Is there an argument that some of the businesses you have might be ready for sale and that, as you think about where they are in the life cycle, some of them have peaked in their life cycles and the best valuations you might get are now?
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Mark David Carleton, QVC Group - CFO [74]
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Well -- and I think history shows, with some of these companies that we have spun off to shareholders, that there gets to be a time that we make a decision that the highest return for our shareholders is a transaction like that. And I think we continue to evaluate that with all of our businesses. We value every business we own every week or every couple of weeks, and we invest based on those valuations. And if we think things are cheap, whether it's stock in one of these companies or whether it's our own equity or our own debt securities, we're happy to buy those. And if we think things are more fully priced, we're happy to consider selling those or using that value to leverage into additional assets.
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Unidentified Analyst, [75]
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So there are -- because there are so many people that follow what John is thinking specifically, can you channel John a little bit and say, "Here's my sense of where John would say the best investment opportunities are ... "? First, in terms of the value chain, where in the businesses you look at would John say these are the sectors or points of the value chain that he's most interested in and then, where he thinks the real values are geographically? Are there parts of the world that, to you guys look really attractive?
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Mark David Carleton, QVC Group - CFO [76]
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Now you've known John Malone for about as long as I have. I've worked directly or indirectly for him for 30 years. I'm not going to begin to speculate what's in John's head because half of the time that you're in talking to him about something, you end up hiding under your desk sucking your thumb, right, in the fetal position. But I know John. John continues to love the cable business, loves the cable business domestically, likes the scale of it, likes the broadband advantage that it brings, likes the wireless opportunity to come with that, that he's seen first hand in South America and in Europe. And he continues to like capital-intensive, leverageable, tax-efficient businesses. And I think, as long as John's there, that -- those are going to be the places where we're going to revert and where we feel most comfortable and where we've had the most success. And leveraged -- prudently leveraged, consistent, systematic stock buyback models have worked really well for 35 or 40 years that John's been in this business and I think, will continue to.
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Unidentified Analyst, [77]
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And would he rather invest a dollar in the U.S. right now? Or would he rather invest a dollar in Lat Am or somewhere else?
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Mark David Carleton, QVC Group - CFO [78]
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Well, it's interesting that he's investing some of his personal dollars here in his ranches and everything and in Ireland and some places in the Caribbean. So I think it depends on the opportunity.
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Unidentified Analyst, [79]
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Okay. We've got a lot of either current or potential investors of your various entities here in the room. Give us a close, for a second, as to why they should own the Liberty family of stocks.
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Mark David Carleton, QVC Group - CFO [80]
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Well the best benefit, I think, is that we're partners. We have the benefit of having our single largest shareholder sit in the office every day and -- in John and a significant shareholder in Greg Maffei sitting in the office every day. And the majority of all of our compensation comes from increases in the stock price not from base comp. So we are run by shareholders. We have a shareholders' outlook from top to bottom, and I think we've been pretty good partners over time with our shareholders. And that -- I think that is what -- that's what our pedigree is. That's what we've been from the get-go. And it is -- when you got 2 big shareholders sitting there every day on every decision, you end up making decisions for the shareholders, and I think that has served us well and has served our partners well.
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Unidentified Analyst, [81]
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Mark, it's a great place to wrap it up. Thank you very much for being with us.
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Mark David Carleton, QVC Group - CFO [82]
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Thank you for having me.
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Unidentified Analyst, [83]
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And we look forward to having you back next year.
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