Kate Bulkley, Media Analyst.

Lightning strikes at Liberty Global

By Kate Bulkley

Broadcast News

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For Broadcast May 11, 2017

Broadband project is important but original content is what matters most, says Kate Bulkley

When Virgin Media owner Liberty Global issued its first-quarter financial results this week, it acknowledged a “bump in the road” for its £3bn broadband project, Project Lightning.

It will deliver 4 million more super-fast connected homes – albeit a bit later than the expected deadline of the end of 2019.

But while there was plenty of focus on pipes, very little was said about the future of ITV (in which Liberty Global holds a near 10% stake) or plans for future investments in content overall.

That’s strange, given the current climate.

Netflix and Amazon’s push into original content is being mimicked by other digital giants, including Facebook’s reported move into original video commissioning, expected as early as next month.

Snapchat has been busy commissioning short-form ‘vertical content’ (mobile-friendly) from a bevy of providers including Discovery, BBC Worldwide and, most recently, MGM Television, which produces TV shows including ABC’s Shark Tank and Hulu’s The Handmaid’s Tale.

More is coming: only this week, Amazon announced its latest content push will be into live music – it will run live concerts, starting with Blondie later this month, that will also be made available to its Prime Video customers.

Yet Liberty Global chief executive Mike Fries said that upgrading broadband is “the best use of capital we have in front of us”. His caveat that “content is not unimportant to us” is a far cry from the feared attack of the internet giants spending billions trying to take traditional TV’s lunch.

It’s an odd situation, because Liberty Global chairman John Malone is a great believer in the power of content.

His fingerprints are all over deals done by both Liberty Global and Discovery (he is a large shareholder in both companies) over the past couple of years, led by the two companies clubbing together to buy All3Media.

Discovery and Liberty also bought stakes in The Hunger Games producer Lionsgate Entertainment in 2015, and in June 2016, Lionsgate bought US premium cable channel Starz.

The talk then was that this could signal the beginning of a much bigger “roll up” of content assets, including potential targets like AMC Networks, Scripps Networks Interactive, and possibly even Channel 5 owner Viacom.

So far, the “domino effect” of deals predicted by Starz boss Chris Albrecht has not really emerged. A few weeks ago, Discovery sold its Raw TV and Betty production assets to All3Media, but that was more in the vein of tidying up than a big strategic move.

And then there is ITV, to which Liberty Global has been linked for a long time. But no bid has materialised and Fries said that ITV’s multiple was too high to be of interest to “smart managers of capital”.

He added: “Adam Crozier was a good chief executive and his departure doesn’t change our view one way or the other. It’s not a transaction we are working on.”

What Liberty has done in content is marketspecifi c deals, such as buying exclusive rights to ice hockey for its Swiss cable system. It also has sport on its Dutch Ziggo cable system, now part owned with Vodafone.

But this strategy could soon change – perhaps spurred on by Malone. My sense around the company is that Liberty will begin to invest in content in a bigger way.

Its continued push to be the best broadband option for customers is a good thing, but in the end, a pipe is a commodity and one way to make it stand out is through differentiation. Certainly having content unique to your platform has worked for Netflix and the rest of the digerati.

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