"Interactive television and popcorn anyone"?
On The Plus Side
TCI Music's strong relationship with Liberty Media should serve as a valuable asset for the Internet venture firm. Liberty Media maintains stakes in more than 100 cable channels such as BET, Discovery Channel, E!, CNN, TNT, CourtTV and USA Networks (USAI). Liberty also maintains sizeable stakes in Rupert Murdoch's News Corp. (NWS), QVC and Time Warner. Such pre-existing relationships should serve as a powerful factor in attracting significant Internet deal flow for TCI Music. In addition, Liberty Media's ties to traditional media should prove valuable when introducing various TCI Music companies to Liberty Media investments and vice versa.
TCI Music's direct connection with TCI, which currently maintains majority voting control of high-speed Internet provider At Home (ATHM) should enhance the venture firm's bargaining position with private and public Internet companies. Liberty Media is also a large investor in leading set top box maker General Instrument (GIC). Together, Liberty Media's At Home and General Instrument stakes provide a compelling "broadband entry strategy" for private Internet companies looking to jump on the high bandwidth bandwagon. Although, I'm sure in Malone's perfect world that means these private Internet companies must first give up a sizeable equity stake for the magical doors to be opened.
In addition, TCI Music has already announced they plan to develop 12 interactive cable channels. An agreement reached between Liberty Media and AT&T as part of the AT&T/TCI merger gives Liberty Media valuable interactive video rights to AT&T cable systems. And guess who Liberty Media is turning the rights over to? Yep - Liberty Digital, as part of the proposed TCI Music-Liberty Media deal.
So far, interactive television has been tried often and has failed often. Will this soon change? Will the proposed Liberty Digital find a way to ride interactive television's coattails? Possibly.
I'm not a true believer yet in interactive television or in Malone's recent moves with Liberty Media and TCI Music, but one thing I do know is to never underestimate John Malone. After all, he was able to peddle off TCI to AT&T for $55 billion. What can he do for an encore with TCI Music? I'm still not sure, but it's definitely going to be fun to watch. Interactive television and popcorn anyone?
Disclosure: Please note that CMGI is an investor in Raging Bull.
Quote of the Week
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"AT&T is now Ma Cable. It wants to get as a large a cable footprint (as it can). I'm a little surprised by this, but it signals that they want to have a much larger footprint in the United States of cable companies."
-- Comments made this week by Scott Cleland, a telecom analyst at Legg Mason, to CNBC regarding AT&
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