Liberty Broadband Corp, Liberty Media Corp, GCI Liberty Inc and Qurate Retail Inc at MoffettNathanson Media & Communications Summit

May 14, 2018 PM UTC 查看原文
FWONA - Liberty Media Corp
Liberty Broadband Corp, Liberty Media Corp, GCI Liberty Inc and Qurate Retail Inc at MoffettNathanson Media & Communications Summit
May 14, 2018 / 08:00PM GMT 

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Corporate Participants
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   *  Gregory B. Maffei
      Liberty Broadband Corporation - CEO, President & Director

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Conference Call Participants
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   *  Craig Eder Moffett
      MoffettNathanson LLC - Founding Partner

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Presentation
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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [1]
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 So thank you, all, for joining us and for those of you on the webcast, thank you for joining us for our session with Liberty Media and all other sub-companies of Liberty with Greg Maffei. I'm really delighted to have Greg here. I could list all of the President and CEO of Liberty Media and Broadband and GCI Liberty, and Chairman of Q8 and all that sort of stuff, but I just think of you as Greg Maffei.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [2]
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 I guess that's good.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [3]
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 It's good because in addition to wanting to hear your thoughts about your individual businesses, I love to just get your perspective on these industries. And that's where I want to start.

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Questions and Answers
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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [1]
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 And that's where I want to start with the U.S. cable market. You started your big developments since the last time you were in this chair with the GCI acquisition. You closed that in March and the associated split-off of GCI Liberty, together with the reattribution and re-branding of Q8 and all that sort of stuff. First, just take us through the transactions and the rationale for the new structure.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [2]
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 Well, the goal was to free up, largely, our Charter shares, in which even at today's somewhat depressed price, we have a nice [game] and we were trading at a very large discount to NAV at Liberty Ventures, both -- for a bunch of reasons: one, perception of the tax, perception how would get out of tax free, tracking stock perhaps, whatever. So the idea was to find a compatible company, which would serve as an active trader business, which would allow us to spin out our Charter and Liberty Broadband shares, and for this purpose, I think of them as one and the same. And we called GCI the Goldilocks deal because you had that one of a sufficient size that would qualify as an active trader business, but given that Liberty Ventures' stock was trading at a pretty significant discount, you didn't have a big incentive to issue more than it was necessary. So a company that was too large was also less attractive. And we needed one that if ultimately, the likelihood is that Liberty Broadband could end up and GCI Liberty with it, as part of Charter, you needed a company that would fit with Charter, that Charter would likely find attractive. So GCI fit a lot of those specification. We issued Venture's stock painfully at a discount, but the transaction, because it allowed us, therefore, to separate out those Charter shares, Liberty Broadband shares traded up nicely and we'll see where we go from here. Now we have a freestanding company, GCI Liberty, which is really just largely Liberty Broadband and Charter stock and some GCI. We also have one of the decent sized asset, which is lending, Lending Tree. We've got a billion dollar position in Lending Tree.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [3]
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 It wasn't just that this was the right size, and that GCI was a vehicle for the spin. It was also a business that you have found attractive enough that you wanted to invest in.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [4]
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 We did. We had to obviously believe there will be a good store value. They are on a -- they have had to overcome a bunch of issues around the economy of Alaska, which we think is largely improving, around the fiscal situation in Alaska, where the state government is kind of in a standoff. They have a huge fund that they've accumulated over the years, they won't release even though they've got big budget deficits and issues about what to do, or things like that maybe being resolved, the economy is a little better with $70-plus oil. And they have a plan at GCI to increase margins largely through improvements in efficiencies around billings, other kinds of cost cutting, some upgrades to the network that they've done that are going to open up, I think, improved margins for GCI. So you're right, we certainly found out that also GCI was an attractive asset.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [5]
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 And they're not your run-of-the-mill cable company in the sense that they're -- it's not a -- the competitive pressure is a little different than it is in the rest of the United States. It's not a simple cable versus telecom market.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [6]
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 Yes, it's a totally quad-player. They are a -- they have the largest mobile coverage of Alaska. They are a big business provider, the biggest in the state. There were only 3 public companies in Alaska, now there are only 2 because we took this one out, I guess, if you call -- if you said GCI Liberty is no longer Alaskan, and it was, far and away, the largest, big impact in the business economy, so big consumer mobile, big business opportunity that were different than many cable companies relatively.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [7]
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 But it's funny. If you went back a few years ago, the view was urban cable is much more attractive than rural cable. And in some ways, that's been turned on its head now. I think there are a lot of investors who would say, I'm actually more interested in some of the more rural properties that have less chance of overbuilding and less chance of fixed wireless broadband. For example, is that -- did you apply that same lens, and was that the way you were thinking about it?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [8]
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 It was -- I think your point is a very fair one, and it was pretty safe to say that Nome is unlikely to get overbuilt, it's a low-risk proposition. It actually is the -- the biggest sort of risk was not actually -- not risk, but we had a company, Quintillion Networks, which built a fiber ring hub in the north, trying to service the -- some of the rigs and stuff up in the north. It was really attacking a small part of the business. And we were wondering how the hell they could justify this ring. And who -- why would anyone build this? There's not enough business up there for that. And of course, it turns out that it was a fraud, that they booked fake orders to get the financing.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [9]
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 That never happens in telecom.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [10]
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 Hard to imagine. I lived through that, and I can't -- you think that those sort of days are over, but Arthur Andersen was a competitive asset for a while as an auditor.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [11]
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 I remember those days too well. So pro forma EBITDA margins at GCI were about 33% in 2017. Where can you get that to? And how do you get it? How do you get it there?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [12]
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 So the biggest challenge is probably -- other than the Alaskan economy and low net job formation and the like, so that's tough, hopefully that will improve. But the other part that's a big challenge is, as a smaller video operator, they have all the problems of lack of leverage against programming costs. And the video business is not the driver here, as is in a lot of other cable situations. The driver is really not only the business side, but consumer broadband, where they have, far and away, the best offering. There is a competitor, but we're substantially -- if you want unlimited, if you want -- and on cold Alaskan nights, when there's 3 hours of sunlight, you probably want to make sure you have good broadband. We are the real player and that is -- that's a big competitive edge. So I think it's around continuing to drive strength in the broadband business, continuing to drive its mobile offering. But also, as I mentioned, these series of efforts around things like streamlining our billing. Currently, we had a bunch of disparate billing systems, you couldn't have flexibility. We didn't have number portability if you didn't have an Alaskan 907, I think, it's the right area code, 907 area code, we could port your phone. They always seem that we're cleaning up. They're going to be substantially more customer-friendly that will, I think, are going to help not only of us capture more business, but also going to incur fewer costs.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [13]
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 And with those programming costs at GCI, does GCI make money in the video business, do you think?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [14]
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 I think so. But it's -- you've got to look through the right eye, turn your head.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [15]
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 Well, we'll come back to that -- in Charter. So let's transition to Charter. Obviously, the stock has sold off, another cable stock has sold off with it. And investors are worried about every part of the cable story right now. Is that good news or bad news? I mean you -- there's a pretty big contrarian streak in you.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [16]
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 Look, I think a series of things are unfortunate. The stock was fairly frothy around acquisition rumors and had a pretty hefty multiple, and expectations got quite high. And then the market has turned on expectations for cable, in general. I think the effort that Comcast did and where Comcast went, what's happened with my friend Dexter out there, he just walked away. The stage was set for a lot of people who have doubts to begin with. I think Charter, perhaps, to understate the case, drew a donnybrook of a line around video subs that was probably less than an important thing than they should have. The reality is, they made some also self-inflicted wounds around their billing systems and all those to say that..

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [17]
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 And they bought back stock at a really high price.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [18]
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 And they bought back -- well, I was going to get to that, because you blew your wad of cash up at a high number, blend the leverage up a little and now they're saying pull it back. So I'm not sure what the right answer is. So look, it's an opportunity if you take for the long term. It's, of course, disappointing, but I don't think, if you look at the fundamental health of the business, that it's a substantially different story than it was 6 to 12 months ago.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [19]
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 So then, in your seat, what can you do about that? Are there ways that you can capitalize on that? Or you just sit patiently?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [20]
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 Well, I think we have -- I think there are things that the board is trying to enable folks, like [Derek Zimmerhoff] we're helping [Tom] and [Chris] make sure the story is well told, making sure that communications are good, that's one. Two, I think there's an element where we can push to do -- continue the buybacks perhaps at a higher pace. Three, we, at Liberty Broadband, are fairly under levered and have an opportunity to utilize capital to take advantage of that, both at GCI Liberty, which is -- we have a discounted broadband for I think roughly 10%, and then another 10% from GCI Liberty, depending on how you value GCI. But at a relatively low multiple for GCI, you're looking at maybe 18% to 20% discount off books in Charter. So we can take advantage of that. There's probably, as we think margins improve at GCI, there'll be more capability to do that. But today, even at broadband, there is plenty of borrowing capacity to take advantage of that discounting. From our perspective, better to take advantage of it at GCI Liberty and a broadband where discount can't even meet with Charter price. Yes, I think we're -- if you look through Charter, I think, come on, it's around $200, the 200 -- low 200s to buy at GCI Liberty.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [21]
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 Yes, it's interesting. So the comment that I just -- I was just repeating in the last (inaudible) John had said last time, I saw you guys was -- the whole reason you want to be a public company is because your stock will overshoot in both directions. And when it overshoots to the downside, you can buy it back and when it overshoots to the upside, you can use it to buy stock. And that's the whole story.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [22]
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 There may be 1 or 2 other positive developments as you get to see, all you nice folks, but that is clearly one of the best things, is that you have markets which do run hot and cold. And when you're hot, you'd like to be issuing; when they're cold, you like to be buying so yes. So there's no doubt.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [23]
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 The general anxiety about cable seems to stem from a handoff. So from unit-led growth to price-led growth. I think most people still believe you can make the numbers work. When you look at Cable One, they've lost 50% of their video subs and they're still growing EBITDA while they've done that. And their broadband has fairly grown over that period. They've had to just take a lot of price to get there. So the sense is you can do it if you want to, but the market is less willing to put a multiple on price-led growth, than on unit-led growth. Tom seems to be very resolute in there's a lot of unit-led growth left. Do you agree with that?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [24]
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 I think that Charter -- I agree with -- in the main with Tom, that Charter has plenty of potential PSU growth around broadband. Look, we passed 50 million homes. Put aside the 2 million businesses. We passed 50 million homes, where 16-ish in video and 24-ish, 25-ish in consumer broadband, and 50% penetration roughly. Is it realistic even in the face of the perception of 3G -- or 5G, rather, and the perception of overbuilds and fiber that we could run our share up to 60% or plus of the market over the next 5 years. I don't think that's crazy at all in the broadband side. And your view of what are the net adds? Even in a bad quarter, we've taken 100%, and cable has taken 105%, 110%, 115% of all the growth in the market -- yes, the problem is the total growth in the market has come down. But I think you're going to continue to take share. And our care territory, it looks, people like CenturyLink, people like Frontier, we've been there. There's still people you can take share from.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [25]
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 So we ask the same question about Charter that I asked about GCI, which is do you make money in video?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [26]
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 I think Charter makes money in video, yes.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [27]
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 So clearly, more than a GCI would because their programming costs are...

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [28]
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 Programming costs are a fraction, yes. So significantly better programming costs, and other scale efficiencies as well. And that's not true on a direct base. I think, obviously, if you also look at the ancillary benefits around churn and broadband and planning more products around name recognition, all those things are a little harder to calculate, but clearly part of the equation.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [29]
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 As an observer of the ecosystem, do you feel like the tide is turning on programming costs? There was a time when nobody could have imagined that Comcast would put up a 3% programming cost growth year-over-year, and they went from double digits to 3% in one quarter. So that's a one-time stuff, but what...

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [30]
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 I think the tide is turning, but slow. And this is a little bit -- -- the old [lemon], if you give the capitalist a rope, he'll hang himself. I mean yes, the programming costs have been pushed out of line. Rather than thinking about tiering and other ways to get the growth, you've seen it continue as well, geez, I'm at risk, subject to decline, I better get more price. Back to your point about volume versus price. The programmers are people who are looking for that probably more, because they're obviously not getting us the benefit of the broadband subs at all.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [31]
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 Do you think that the Sprint-T-Mobile merger, in the context of Charter's entry into wireless, is that a net positive or a net negative? And what's your own outsider view of whether you think that deal is going to get approved or not?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [32]
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 It doesn't make sense if approved. But we live in today's Washington, so who the heck knows, right? I mean, if you look at any traditional measure, just objectively, the measures by which people do these things, Herfindahl index and the like it's a very hard part. But predicting anything it's very difficult.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [33]
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 And so it's a positive?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [34]
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 I think it remains to be seen. I think it's probably a net positive for us, in that you run from 2 aggressive competitors, down to 1, maybe it's 1 better funded one, but I think it's probably a net positive.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [35]
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 I want to ask some bigger picture questions here. You and John have always had sympathy for the idea of wireless convergence a la Liberty Global.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [36]
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 I think the experience in Europe, certainly, has colored John's thinking.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [37]
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 And John, I think, perhaps more than what I've heard from you, has a soft spot for vertical integration with content.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [38]
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 Well. I think it was a great move and a great, at the time, for TCI. It probably was a great move and well time for Comcast. I'm not sure today, it's as easy a move just looking at what the alternatives are.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [39]
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 So in your position of thinking about what do you do with the asset that is Charter?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [40]
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 So talking about content, Charter, for a moment. I think you can take more broadly. Charter has an incredibly strong regional position in a pipe into the home, either business pipe, or more frequently, a consumer pipe. But we are not a global player. We're not even a national player. And to build scale and content, I think you need to be that kind of a player, and we are not that player. Now there may be content offerings around regional ideas, particularly local news, local sports, sports in general that are quite powerful and help bond us to our customers and can be good content plays. But I think the idea that we're going to go and create a ton of original content and extend it somewhere, I think that's a harder story. And the scale is less relevant than it used to be in kind of driving new channels or something along those lines. I just don't think that has the same oomph at one time.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [41]
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 So what about wireless? Do you imagine a day when Charter is part of an enterprise that includes wireless? And what are the paths to get there if so.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [42]
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 I think there is this natural convergence. How those paths work, whether there's ultimately some kind of a merger between the wireless players and cable guys of scale, we'll see. If some of these things happen, you can imagine different kinds of other cable majors more horizontal to get a national play, so who the heck knows.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [43]
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 So you talked about horizontals. Is there more room for rolling up some of the smaller cable operators?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [44]
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 Well, there's probably not enough oomph. I mean, there's 1 or 2 that would scale, but they'll not really appeared to be sellers. I mean, the real play is if you can put these things together, why can't you put Charter and Comcast together at some point, right? If you're saying hey, these things are allowed to happen.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [45]
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 Is that something you'd like to see happen?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [46]
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 I think the synergies would be large. I just don't believe it can -- I don't believe it can happen, but if you want to talk about what has enormous synergies, right, that's the play.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [47]
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 So as long as we're on the M&A stories here, what do you think should happen on June 12, conversely on -- announce this Time Warner-AT&T deal?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [48]
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 I think that's a vertical merger that should be allowed, should be allowed. And that's not to say they're not no restrictions unfettered. But in general, I don't think that's the most dangerous merger in America.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [49]
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 And so then if that happens, then Comcast has already said they would have a bid for Fox. Does that sort of start the dominoes falling to verticalize the entire industry?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [50]
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 Hard to know. There aren't that many plays. Both of them are doing it for different reasons, I think, than just -- than that verticalization. They're looking who was clearly a big element both for their decisions. Those deals are not about, for example, I don't think it's about the regional sports network for either of them, right, as an example, which is the largest piece of value almost in the whole thing. I think it's about who wins not how they play.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [51]
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 Last question on Charter, and then we'll turn to SiriusXM for a second. But what's your counsel to Charter about taking their video product out of footprint?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [52]
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 I think that's potentially interesting if they -- as we figure out our whole video strategy around being an aggregate of all their content, that would be the more interesting. But I don't think another me-too product in -- out of footprint is necessarily going to be compelling. There are also a lot of people offering video solutions that are…

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [53]
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 And not a lot of them making money out there.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [54]
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 Yes, exactly. Even if they start with scale. I'm not sure they're making money. I can do the math around DirecTV Now product and things like that.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [55]
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 And it has -- I think you have to look at people like Google and Amazon and wonder, is there room to make money in a business where those players are looking at this as a [lost feed] or for something else?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [56]
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 Well, I think that's a great question. And obviously, Amazon and Apple get paid in other places. If you just look at what's happened, right, we went from 200 original scripted shows, to -- headed towards 500, and the cost per hour went up 2 or 3x. So you added 5 to 7x the amount of money being spent on original scripted content. Where is the return going to come on that if you spend 5x, 7x as much capital and find a return for all that? Well, some of them may come because you get paid because they're prime customers and the like. But that's just discounting against the traditional players many of whom, like Netflix have scale, and if you're a non-scaled player and that -- on those cost of [multiples written] The bar is just that much harder I just think it's a very hard play for some of these things.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [57]
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 So when you look at this ecosystem then, the sort of broad cable, video and broadband ecosystem, where are the places where you really think you can make money? Is it still a broadband business?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [58]
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 I think, you have a pipe that is -- has -- not unique, nearly unique capabilities -- and the idea is [to offer the] services[removed]. Start out, you're offering free TV and you start offering broadband and you offered VoIP, now the TV is somewhat receding as a value proposition and you're going to find other places. I think you'll find ways to make money and to value that pipe.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [59]
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 And I guess this is the place to wrap it up then on, this is just -- your strategy has always been a pretty simple strategy, right? That pipe generates a lot of cash. I'm going to take that cash and I'm going to use it to shrink the equity float, and equity is going to get more and more valuable.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [60]
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 It worked for a while here. I think we can make it work again too.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [61]
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 Yes, is your confidence shaken in any way? Or is it just what you always had these kind of dips and cycles along the way, it's never a straight line and you push that back.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [62]
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 Yes, I think, you hope not to have somewhat of a perfect storm of the negative circumstances that we have, some of those come together. Most if not, which don't appear to be irreparable.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [63]
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 Okay. Let's turn to an investment where in the rearview mirror and just right out through the windshield. This has been one of the best investments anybody has ever made. And yet it's hard not to look at SiriusXM and worry a lot, right?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [64]
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 You like to worry.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [65]
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 I do like to worry, that's my job. But I covered it a decade ago, and it's been about a decade since I covered it. But in the days that I covered it, everybody thought SiriusXM will be destroyed by the iPhone dock. And then it was digital radio.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [66]
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 Digital radio. When do you ever hear those words, right.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [67]
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 It was going to be HD radio that's going to kill it.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [68]
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 HD radio.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [69]
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 But now I think it's fair to say the threat from Spotify and streaming services is a more material threat than what that business has faced in the past. You're shaking your head like you don't agree.

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [70]
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 No, I'm waiting for the question. I'm absorbing and processing to the degree I can.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [71]
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 So let's start by looking at the rearview mirror. How have they done as well as they've done against the streaming services so far?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [72]
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 I think they have a bunch of advantages around the ease-of-use in the car -- cars roughly half, at least in the United States, particularly when we're targeting older audiences. We're not targeting by teenagers. We're targeting those older audiences, which pay, which appreciates the ease-of-use and appreciates the diversity of content, which is not just music content, not just, actually, commodity music content because they're all basically the same, but has differentiated kinds of audio content -- different kinds of radio content and has a much advantaged business model, not only around the premium solution in the car, but around the deals we've cut, and a lot of these things are fixed rate deals where we get leverage on our P&L, unlike the video deals or the music deals that Spotify has, which are straight, nonlinear, and maybe various breaks, but basically they pay, and more than they make. You will have -- that's not the case -- it's the case in our music portion, but not the case on our non-music stuff.

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 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [73]
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 So how confident are you that they can continue to own the car and that Spotify and services like that aren't going to ultimately start to really take share in the car, particularly, in a world where unlimited wireless plans are now pretty much the norm everywhere?

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 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [74]
------------------------------
 Yes. I think our -- certainly, our uniqueness of ease-of-use in the car will decline. Will it be eliminated? Probably not eliminated, but decline. And there's plenty of words about what's the first screen, Android Auto, CarPlay, by the way, Spotify is not a friend of either of those guys, right? Pandora actually comes -- springs -- is the first that pops up on your CarPlay. There's been a lot of that for a while. There's car manufacturers, OEMs who are [unlocking] test fleets. You can't run CarPlay in your test fleet. There's plenty of fights still to come about how the ease-of-use works out, and we've a friend to those guys. And there are a lot of things we're doing around 360L, which is our new product, which is going to be very compelling and quite differentiated with what anybody can offer. The challenge for that will be rolling it out because the rate of new cars and the penetration will be slow. The positive for Sirius, that the rate of new cars and the penetration will be slow and we're in an awful lot of cars, and that's not going away anytime soon.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [75]
------------------------------
 So last September, you did a $480 million purchase of the Pandora convertible. That's 16% of Pandora's common or as converted basis, 19%, including accrued unpaid dividend. Why did you do that when you did it? What made the timing finally right? And it's been an odd dance to watch this dance between Pandora and you guys.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [76]
------------------------------
 Yes. They had basically put themselves up for sale, couldn't find a bid they like. We couldn't agree on a price. They needed capital and we wanted to stay involved because we thought there were things we would learn about the business, and I think that's been true. We had a belief that there's a potential in that business.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [77]
------------------------------
 The free model?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [78]
------------------------------
 The free model, yes. That was not consistent where they really had been targeting before. That's not to say they shouldn't have a subscription offering, but making that the focus and underinvesting in a free model, I think, was a mistake, where they had advantages.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [79]
------------------------------
 And so is that -- you said there was stuff to learn. Is that what you learned?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [80]
------------------------------
 Yes, I think that we're -- we still have -- nothing's shaken that view that that's the right strategy, and they're pursuing some of that strategy more.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [81]
------------------------------
 And so what's the right long-term relationship between SiriusXM and Pandora?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [82]
------------------------------
 Well, I think ultimately, we talked earlier, scale is a benefit in all these businesses, and Pandora probably should be part of something, ultimately, something larger. We'll see, if we're the person.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [83]
------------------------------
 Okay. And what about iHeartRadio? You've made an offer to buy 20% or more of the restructured iHeart.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [84]
------------------------------
 Between Sirius and ourselves, we offered to buy 40 -- at minimum, 40.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [85]
------------------------------
 40. So what are the advantages of owning minority stakes in both Pandora and iHeart?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [86]
------------------------------
 Well, we were willing to go higher in both. We just weren't willing to go higher at the price Pandora was willing to sell at, so the bridge was that preferred. And in the case of iHeart, we actually offered to buy up to 90 something, but the creditors, at least some creditors, expressed interest in owning the equity with us. So that was the view there. It's a little harder at iHeart to combine it in because, in general, Sirius, despite your fears, and Pandora are faster growth vehicles than iHeart. So generally, it's not perfect to combine slower growth...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [87]
------------------------------
 And the stock goes up every day.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [88]
------------------------------
 Combine -- it's not perfectly perfect to combine slower growth -- consolidate slower-growth entities. And there are a lot of synergies and things we could benefit from each other.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [89]
------------------------------
 A couple of just sort of more, less strategic but still important items. The [CR-V] rate decision, the royalty rate increases from 11 to 15.5, or increased to 15.5 in January. Are we hearing -- could see that maybe reduced 14.7 at the lowest? But still, this is a lot higher than what you were seeing before.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [90]
------------------------------
 It was a surprise.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [91]
------------------------------
 Do you have to wait another 5 years?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [92]
------------------------------
 Well, we have appealed some of the elements of it. As you readily know, most of them had been rejected, but there was a question how some calculations were done that, I think, we're getting some traction around. But in the main, yes, I don't think we're going to see a big re-rate for 5 years.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [93]
------------------------------
 And how do you think customers are going to respond to an increase in the MRF [growth rate], going from 14 to 19?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [94]
------------------------------
 We didn't see -- we did not see that as a churn going up, for example, in Q1, as we've rolled that out. We'll see what happens, but that has not been so far. Now that's obviously maybe price we could have taken. Who knows, right? But you're right, that is -- somewhere, that's got to get absorbed.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [95]
------------------------------
 Okay. We'll come back to this at the end when we talk about the whole portfolio, but now let's move over to another business that's evolved a lot, Q8. That's -- and it's another business that's faced some pretty significant competitive threats and reinvented itself. In December '17, you acquired 62% of HSN that you didn't own, and you doubled your synergy target. Did the larger-than-expected synergies change how you evaluate other M&A opportunities? Is that something you could...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [96]
------------------------------
 It's really, really hard to...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [97]
------------------------------
 It's a one-timer?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [98]
------------------------------
 Yes. It's hard to project forward on something that -- yes, because there's just such a high degree of overlap in what HSN-QVC do, HSN and QVC do. There's not a great many other examples like that.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [99]
------------------------------
 Okay. At the Investor Day, you said that Amazon isn't a convincing component of the bear case because it's mostly -- Amazon is search-driven and QVC is...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [100]
------------------------------
 It's on The Everything Store, right, and we're a curated example. That's not to say Amazon isn't a very scary competitor, and we've made that clear. I just don't think it's the same focal point that for us, it's just not where our customers are looking for what they're shopping Amazon, but they're also shopping us for different things.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [101]
------------------------------
 But at the same time, they've got a video platform and they're expanding their programming budget. Do you get concerned that they -- that, that becomes -- that they're -- that part of what they want to do in video is just sell more stuff?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [102]
------------------------------
 Well, I'm sure that's true. They -- so look, they announced the TV product. They pulled it back. The rumors were -- actually, in the last 2 weeks, there was sort of rumor that they were going to buy one of the other lesser channels. All things are possible to Amazon. Clearly, they can do whatever they want. It just doesn't seem like it's their focus or the highest and best use of their time, but not to say it won't be. They have, as I said, made these forays and then either pulled back or hasn't happened, so we'll see.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [103]
------------------------------
 And now here's another one, Trip. Trip, it had a -- I think you said on your quarterly call it was a great quarter.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [104]
------------------------------
 Great quarter. You missed 14 in a row.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [105]
------------------------------
 I was going to say it was a better quarter.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [106]
------------------------------
 You make one and you feel good.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [107]
------------------------------
 So you can quibble all over the word great, but it was a better quarter. But that's really a competitive segment, right?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [108]
------------------------------
 Yes, I think it's a very competitive segment for a bunch of reasons. Competition from Google, who has pushed everybody down the page and moved from a free search site to a paid inclusion site and tried to eliminate the free riders, and we were square in the sights of being a free rider in their mind. The lower trend, the transition from desktop to mobile only exacerbated that problem. The competition in the hotel space between OTAs who are feeling squeezed by Google and metasearch companies like trivago, competing for terms, all those have made the hotel -- the margins in the hotel space have just continued to decline. It's just unabashed.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [109]
------------------------------
 And then the cherry on top is they're still struggling to monetize mobile.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [110]
------------------------------
 Yes, I don't think I agree with that quite as much. Now the conversion rates are lower in mobile. They're getting better, and they're absorbing through that and working through that over time. The reality is it's a changed focus for Trip and changed emphasis. First, they did a bunch of things to neutralize some of the advantages that other metasearch players had: simply the product, made the message around advertising much clearer about, hey, low-priced hotels. We have the lowest price. We have the lowest price. They had lost that message and that was not helpful. They also, I think, have done a good job thinking about more broadly. We have 400 million unique visitors a month. We can monetize them other ways than just hotels, which is, as I've said, increasingly competitive. We have a relationship with those customers, which is the longest in the travel cycle. We're the beginning. They start and they plan with us. And at the end, they still want to be using us as they travel to the actual location, not just book and be done. And taking advantage of that by either -- we've done some native advertising, but also now investment in the space around experiences we used to call other kinds of activities that you would do and the investments in restaurants, both of which are growing well. And finally, saying, okay, we don't need to be -- if we're not going to be in the hotel space, we don't need to chase all these marginal keywords. And we gave up on a lot of unproductive revenue and put a lot of our emphasis on those experiences and restaurants as the attractions business and that turned out to be a good growth property.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [111]
------------------------------
 So one quarter doesn't make a trend. But is that a business that can actually grow again?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [112]
------------------------------
 Yes, it is.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [113]
------------------------------
 And so you're confident that, that -- it's a...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [114]
------------------------------
 Well, they've already said they'll grow EBITDA in 2018 over '17, and I believe they're...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [115]
------------------------------
 Confident?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [116]
------------------------------
 Yes.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [117]
------------------------------
 Okay. Live Nation is a business that hasn't had as many challenges. It's actually just been a good business.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [118]
------------------------------
 Great deal.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [119]
------------------------------
 How long is the growth run rate for that business? Or is it just -- are troubled businesses more interesting than good businesses because...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [120]
------------------------------
 Look, I don't think we're into the troubled businesses, which you'd like to find as some reason why you think the market has misperceived and why it can do better. And great franchises that have something wrong at the moment or perceived, for whatever reason, are not -- misunderstood. That's a pretty interesting beginning of an opportunity. I think that to some degree, Live Nation, the stock got down to $9 or something, $8, $9, and we bought a bunch of it down there and very happy.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [121]
------------------------------
 Yes, is it -- can you bridge that business into -- there's all kinds of creative things you can think about what you could do with the position that they've got in the ticket market.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [122]
------------------------------
 Yes, I think actually over time, the really interesting growth probably is more around the promotion side where they have scale. They're starting to flow from that around sponsorship and advertising that are going to grow. There's unique content that they have, I think they can do some things around. So I do think Live is...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [123]
------------------------------
 Do you think of them as a content business?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [124]
------------------------------
 The potential for them to become more and more of a content business. They're clearly a live experience business, but the unique content that they can utilize, I think that's something we should be trying to find ways to utilize better.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [125]
------------------------------
 And are you helping them? Are you set up to be able to help them do that?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [126]
------------------------------
 I think they're well set up, if you think about it. Rapino is a very -- Mike Rapino is a very able guy.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [127]
------------------------------
 Okay. You -- now let's move to Chase Carey. You outlined a lot of changes you want to make to Formula One: limiting what teams can spend on the race to make them more competitive, simplifying rules, growing sponsor relationships, building OTT product, engaging with the host cities, on and on. It's such a long list. What are the priorities there? What do you do first?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [128]
------------------------------
 Well, I think we actually have to do work on all of them. When they get segmented. I mean, there are guys like Ross Brawn, who is the winningest team guy in history, who can work on things like on track, making it more exciting. And there are a host of really simple things there, from when tracks get resurfaced or tracks are rebuilt or renewed that you have the right kind of surface. So there's tire degradation, so like there's enough tire changes to make it an interesting story, that you have the right changes and turns and (inaudible) where they're likely to be overtaking. So there are things around that. There are things around the design of the car and the simplicity engine that relate to the cost side that are, again, trying to level the playing field, trying to be neutral engine suppliers where the current OEMs have such dominance on the engine because of its complicating factors. You try to do things where you are limiting the cost, so that's not an enormous advantage. If you think about sports leagues, in some ways, the best one, the most socialistic one, is the NFL: hard salary cap, strength of schedule, drafts that are low to high in terms of what order you draft.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [129]
------------------------------
 That's protected by Congress.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [130]
------------------------------
 Protected by Congress. That's all very positive to have those kind of factors. At the other end, something like La Liga in Spain where 90% of the TV money is going to the top 2 teams is unlikely to create diversity. So we're trying to tilt the playing field to look a little bit more like football where there's -- a cost cap on what can be spent on the car; there's rules, as I said, around simplifying the engine; being able to create neutral suppliers. There's work to have where there's some historical bonuses and artifacts where certain teams got extra money, so that's tilted so that the winners get more money, but not so much more than the losers that the losers are never able to catch up and be competitive. So you're trying to build a bunch of those factors in.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [131]
------------------------------
 Is the ground sufficiently well plowed for Formula One to make a real dent in the United States?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [132]
------------------------------
 Yes. I think those Miami races are going to be great, really good. Exciting -- in-city races are fun and city races are exciting. Miami is absolutely the right kind of venue and the right kind of city you'd like...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [133]
------------------------------
 Because it's so international and...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [134]
------------------------------
 International, great story around sea and sand. There will be a lot of good stuff, hell of a party. To be clear, Formula 1 is about selling glamor and parties, and Miami is probably better than places -- other places you can pick.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [135]
------------------------------
 And you got to unseat NASCAR in those places, those other places.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [136]
------------------------------
 I don't think NASCAR and we are in a collision course, to be honest. They're a slightly different path.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [137]
------------------------------
 The Braves -- talking about the Braves...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [138]
------------------------------
 Braves are hot, best record in the NL.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [139]
------------------------------
 And a really young team.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [140]
------------------------------
 Super young team. Field -- so the youngest 3 guys on the NL were playing for the Braves today, two 21 year olds and a 20-year-old. [I think that's] amazing.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [141]
------------------------------
 Can you -- how do you think about the television rights? You mentioned the value of the RSNs. How do you think of the television rights value in an OTT world of the Braves? Because that's really where the value is, right?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [142]
------------------------------
 Yes, though. We're -- we have the thing called the Battery and we have a new stadium, SunTrust. We're making some pretty good money out of them. And I -- back to the idea of live experiences, that anchors a lot of interesting stuff that comes around it, and we have built a great residential community there. We've got office buildings. We're -- we have a whole ecosystem around the park, around SunTrust Park at the Battery that's created a lot of value. That even said, TV will clearly be a big player or I would say the right -- these rights, how they all play out, will be a big player. Ours don't expire until 2027. Exactly what the form of that will look like, whether we create our own RSN or whether there's some other digital play, we'll see. I think the world will evolve quite a lot...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [143]
------------------------------
 So let's talk about that. I mean, what do you see happening to RSNs, now just putting on your industry observer hat for a second.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [144]
------------------------------
 Look, the logical owners of RSNs are either the content owners themselves or perhaps something like the local cable company, which gets some advantage of bringing this together. It's more unusual, I think, in the long term that these [2] stand alone.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [145]
------------------------------
 But you can make the argument that the ones owned by the teams themselves, the Yankees were, for a while, a special case because their television contract is just so ginormous. But it really struggled in that the logical place for them is to be consolidated with each other like someone -- like they are in Fox.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [146]
------------------------------
 Yes, I think there's probably more -- as much logic, I wouldn't say more, but there's much logic that they're part of a local video provider as well as anybody else.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [147]
------------------------------
 Or the local video provider. And do you think that's -- that will be a focus of antitrust in the M&A deal part?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [148]
------------------------------
 Yes, and it's interesting, in that deal, one of the reasons why Fox can look inside before Disney is Disney has agreed to take that problem on.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [149]
------------------------------
 From an antitrust perspective?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [150]
------------------------------
 And they'll dump and Comcast have said they'll take them back at that same price, which may not be what Fox wants.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [151]
------------------------------
 And is it fair to say that the antitrust issues are probably bigger by putting RSNs with a distributor than they are putting RSNs with ESPN?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [152]
------------------------------
 I think it's about how much scale you have already in sports. So I don't think -- I don't...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [153]
------------------------------
 So you're saying -- so ESPN may be just as big a problem...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [154]
------------------------------
 [ESPN], I don't know why ESPN shouldn't be a problem, too. We'll see.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [155]
------------------------------
 Okay. So what do you think happens to -- you said you think that the AT&T-Time Warner deal gets approved...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [156]
------------------------------
 I'm going to be back here and getting abused by Craig. What do you think?

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [157]
------------------------------
 I said 50-50.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [158]
------------------------------
 Well, that's a good hedge, Craig, come on.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [159]
------------------------------
 I think -- no, I really think it's a digression. It's not about Liberty, but I really think that the DOJ's case is a little easier for Judge Leon to accept than people seem to say. That's not to say I think it'll likely get rejected. I just don't think it's quite the slam dunk that a lot of people think. Opine on Disney, Fox and Comcast, Fox and all that sort of stuff for a second.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [160]
------------------------------
 We'll see. Honestly, I think we'll see. Disney has some advantages. Clearly, the Murdochs seem to favor the deal, tax-free deal. There are -- they theoretically can go higher with the cash and stocks than Brian who doesn't want to issue that stock. So we'll see.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [161]
------------------------------
 So as you -- as I think about this portfolio we've talked about with Trip and Live Nation and Sirius and Cable, the Atlanta Braves and Formula One, I guess, the question you always ask is just, first of all, does it -- is there -- what's the underlying logic that ties it all together? Or it's just -- these are the businesses that crossed our ROI hurdle.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [162]
------------------------------
 That's probably the more likely. I mean, they're businesses that we felt comfortable with, we felt would be good to own and we still hold them because we think there are some positive reasons to hold them that we can add value. We certainly have not been reluctant. We thought our cycle had ended. DIRECTV, Starz, other ones, CommerceHub, all businesses will be either have spun and have no -- arranged to be sold or merged into other entities.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [163]
------------------------------
 I know you can't sort of say among these, here's the one that I want to sell. But you have to be thinking about some of these...

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [164]
------------------------------
 LGI. No, just kidding.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [165]
------------------------------
 But some of these have to be things that you would sell, right?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [166]
------------------------------
 Well, at the right price, surely. One of the problems is our structure doesn't lend itself very well to that sale in a taxable -- non-tax-free manner. So...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [167]
------------------------------
 So you don't like taxes?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [168]
------------------------------
 Even at 21% federal, that's an amount we...

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [169]
------------------------------
 Still haven't gotten to where you want to be?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [170]
------------------------------
 Yes, look, it just raises -- it lowers the hurdle. It doesn't make it an absolute bar. It just says that you're more willing to absorb a taxable deal, but it's still a hurdle.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [171]
------------------------------
 So I guess the flip side of that then is what looks interesting out there, whether it's subsectors -- because these are all sort of broadly media telecom -- or media communications related, hence, why you're here. What -- look, what sectors do you look really appealing and to John, look really appealing?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [172]
------------------------------
 Well, I -- one, is -- I was in the Electronic Arts board for 10 years. I mean, you got to look at video games and say that's -- it's a great sector. It's a great sector. But look, the -- it's not necessarily easy to come in de novo and buy things like that. The stuff that's generally make the most sense are things where you can add on. Why are we playing so much in music? Well, we have a platform that we can add to and be synergistic around, right? And we can be tactical. Wait for Pandora to be at the right price or wait -- we'll wait for iHeart to be -- and do a restructuring phase, get something that you can be both strategic and tactical.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [173]
------------------------------
 And is there a preference to say I want to be a controlling shareholder in most of these businesses? Or is that not critical?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [174]
------------------------------
 We like to have influence. Controlling is perfect, but we generally haven't found it attractive enough to pay, clearly, the last year at 30% premium. But to have influence and partly because to have influence not only in things around capital allocation, strategy, but to the day you want to exit. If you want to exit in a tax stream and are having enough influence to make sure that you can get that done as well.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [175]
------------------------------
 And then the last question is sort of you talked about -- you named video games as a sector that's interesting. Is there a geography in the world that you'd say if you or John had your druthers, where in the world would you be investing?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [176]
------------------------------
 Yes, I don't think we're quite as geography driven. I mean, a lot of these businesses benefit from you love to play in the ones that can play across global scale

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [177]
------------------------------
 So global.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [178]
------------------------------
 Yes, global. But in a lot of cases, there are reasons why the music industry in the U.S. just because of DMCA and the rules -- the laws around thresholds are very different than the music business in other parts of the world. So there you have to look and say, hey, global is nice, but there could be very good reasons why you want to be in one country or another.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [179]
------------------------------
 So what does Liberty look like in 5 years? Can you even put a guess on that or you have no idea?

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [180]
------------------------------
 Who knows? I mean, look how much -- in the 12 years I've been here, look how much we've changed dramatically. We'll change again, I suspect.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [181]
------------------------------
 All right. Well, with that, we look forward to.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [182]
------------------------------
 Thank you.

------------------------------
 Craig Eder Moffett,  MoffettNathanson LLC - Founding Partner   [183]
------------------------------
 I thank you for being here, and I look forward to having you back next year.

------------------------------
 Gregory B. Maffei,  Liberty Broadband Corporation - CEO, President & Director   [184]
------------------------------
 Thank you, Craig.




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