Liberty Media Chairman John Malone says that while Comcast’s takeover of NBCU “absolutely” makes strategic sense, the biggest political issue of the deal is what it will take to get the NBC-TV affiliates on board.
To win government approval of its takeover of NBC Universal, Comcast may first have to win the approval of the NBC affiliates, Liberty Media Chairman John Malone said in an interview with John Faber on CNBC.
“That is going to be the biggest political issue in this whole thing: What will the broadcast affiliates of NBC say they want to not fight this transaction?” he said.
“The big issue is localism,” he said. “It’s about broadcast affiliates locally, whether or not that model is viable.”
According to Malone, the model is not viable: “Don’t work,” he said.
The networks will have to either subsidize their affiliates or dump them and become cable networks, he said.
As a cable network, the network would retain 100 percent of the ad inventory and get to program 24/7, he said. Whatever network made the move would become “the most powerful” cable network, eclipsing USA.
“Maybe two of these guys [broadcast networks] just become cable networks and two of them end up with retrans and support localism,” he said.
“There are just too many advertising-driven businesses in the local marketplace to be viable, given the siphoning off of revenue” by the Internet, he said.
Malone also endorsed Comcast’s takeover of NBCU, saying it “absolutely” makes strategy sense. “It’s a way to get into content and get some market power in content without betting the farm.”