WHEN: Today, Thursday, November 9, 2023
WHERE: CNBC’s “Squawk on the Street” – from Liberty Media Day in NYC
Following is the unofficial transcript of a CNBC exclusive interview with Liberty Media CEO Greg Maffei on CNBC’s “Squawk on the Street” (M-F, 9AM-12PM ET) today, Thursday, November 9 live from Liberty Media Day in NYC. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
DAVID FABER: Welcome back to Squawk on the Street. You’re choking me up, Greg, you see that. We’re live from Liberty Media Investors Day. And Liberty Media’s CEO Greg Maffei does join me now. Good to have you here. Thanks again.
GREG MAFFEI: Thank you. Nice to be here.
FABER: An annual – I wouldn’t miss it.
MAFFEI: How many years?
FABER: I don’t know. It’s got to be at least ten. Maybe more, right?
MAFFEI: Yes. This is my 17th.
FABER: Wow. For me, at least ten. And I’m always happy to talk to you. Let’s talk Formula One first, because you’ve got a big race in Vegas coming up next week.
MAFFEI: We do.
FABER: You know, on the earnings call very recently you said, “it’s going to be a bigger spectacle, more impactful than we’d anticipated.” You also talked about initial start-up costs. And I did get a couple of questions, Greg, from investors sort of saying, ok now you’re spending, but the free cash flow could be quite high going forward from Vegas. Is that true?
MAFFEI: Yes, I think there are a couple things to think about. On the initial costs, we’ve got an opening ceremony that’s grand. Won’t have that in future years. We had a bunch of initial start-up costs around security, around temporary bridges, around optimizing the fan experience in a hurry that over time we’re going to be optimized both for the quality of the fan experience, but also for probably improved profitability. But the impact, not just of the race, but what it will do to our interest among sponsors, what it will do to our interest among fans, we think that is going to be enduring from this year forward.
FABER: And therefore, perhaps the possibility of generating a good amount of free cash in the future, which you do what with?
MAFFEI: Well, I think we look for ways to invest both in ourselves. We had a lot of capex related to this. We may see other opportunities. We bought Quint, which is a business which we think will help us reach our fans, providing premium hospitality experience and the like around Formula One but also we could look forward to repurchase stock or do the like… we continue to also look at other IP opportunities. What I talked about in here was, we are investors in premium IP. The Atlanta Braves, Formula One are all great examples.
FABER: Right.
MAFFEI: But we could find others. We’d continue to look.
FABER: Would the PGA be something that was included in that?
MAFFEI: I think the PGA is definitely premium IP.
FABER: You do? Does that imply that you guys are at least looking at it as a possibility, along with what I know are a number of other groups that are at least knocking on the door there given the potential transaction with LIV.
MAFFEI: Can’t comment on that, but I think the PGA is premium IP.
FABER: Maffei says premium IP. Got it. Back to Formula One, before we move on. TV contracts, you got a lot of questions about that on the call. You know, keeping them somewhat short term. Why do you think that’s beneficial to not sign the longer deal in terms of the distribution of Formula One here domestically?
MAFFEI: Where we’ve seen a stable market and an attractive partner, for example in the U.K. we’ve done a longer deal and in certain markets, but where we see the growth we’ve experienced in the U.S. and the opportunity, we think we’ll be able to capitalize on that relatively quickly and the next TV contract, the next broadcast contract, whichever form it takes, will be better because of the growth we’ve had.
FABER: Ok. Move on quickly to Sirius. I know you probably won’t have much to say here but just, timing wise, in terms of the collapse of the structure and where we stand right now. There were some who thought maybe we’d get an announcement today. Obviously didn’t happen. Can you give us any updates?
MAFFEI: We made an offer. We’ve had dialogue. And I’m afraid that’s all I can say.
FABER: That’s it. Any expectation in terms of when you’d like to at least have an answer?
MAFFEI: Can’t say that.
FABER: You can’t?
MAFFEI: We only comment only that we’ve made an offer.
FABER: You have gotten so disciplined through the years, you know?
MAFFEI: Yes. You know, you learn, slowly.
FABER: What’s happened? Alright, let’s talk Braves. You mentioned them. Sorry that the playoffs didn’t go well after 104-win season.
MAFFEI: Yes, 104 wins.
FABER: We know what it’s like as Mets fans, 101 wins a year ago. Of course, we were horrible this year. What an incredible team you do have there.
MAFFEI: It’s an offensive powerhouse.
FABER: It is. Why did you guys sell the 1.8 million shares recently?
MAFFEI: We originally had an exchangeable debt that was done at the Liberty level when we split into different tracking stocks. And that debt ended up over at Liberty Siri. There were underlying elements where to remain hedged effectively, Liberty Siri went out and bought some Braves stock. They had an inner group interest in the Braves stock. And when we spun the company, that no longer became relevant. They no longer had to worry about exposure to the Braves. So, we only sold off the shares that were underlying that exchangeable and were no longer relevant.
FABER: Last time I had you on I asked a similar question. There does seem to be a lot of expectation at some point that the Braves and the, obviously, the property and everything else may be sold. Is that a fair expectation?
MAFFEI: We have no plan or intent to do that. We created optionality by creating a separate asset-backed security, but we have nothing to announce about that.
FABER: At all?
MAFFEI: We’ve been owners for 16 years. We love it.
FABER: I know you do, but there may be a lot of embedded value there. Not sure how you do a tax-free transaction for it given all these guys seem to like to pay cash for these assets when they buy them but –
MAFFEI: But by having done the spin, we would be tax-free, certainly at the corporate level, for any transaction that occurs in the future. So, that optionality is positive.
FABER: You talked about a pivot to live a number of years ago. Obviously, Live Nation is an example of that. Are you happy you did it? You got out a lot of linear cable networks and we’ve been seeing continued pain there.
MAFFEI: Look, we have tried in these things, our investor days, to outline some of our views of the world. We talked about what we thought was excess competition in video streaming, we talked about why we thought the ear had more upside than the eye. We talked about the power of live. And we’ve tended to move on that. We got out of DirecTV. We got out of Starz. We’ve invested in Siri. We’ve invested in a lot of live events, whether it be the Braves, Formula One, Live Nation, all of which have been capitalizing on people’s interest in live. We had some challenges, like many, during Covid, but we come out the other side very strong with that interest.
FABER: How – you know, you do have insight, Greg, into a lot of different sort of parts of the economy to some extent. How would you characterize things right now on a broad basis?
MAFFEI: I think there’s surely nervousness. I mean we’ve seen strong demand for – at the higher end consumer, whether it be for ticketing and concerts or whether it be going to Braves games or whether it be going to Formula 1 but I do think you see nervousness. And as you go down the income levels, you see far more challenges. And some of other businesses, which cater less to that optional dollar, that higher-end consumer, clearly feel a little challenged.
FABER: You expect that to continue?
MAFFEI: Yes, I think, you know, we are in probably a higher interest rate for a longer period. I think that’s probably right –
FABER: Yes.
MAFFEI: Particularly given the amount of government debt we continue to produce. $2 trillion deficit, it’s not a positive. So, yes, I do worry about that.
FABER: Yes. And, finally, back to this idea of live. You know, again, you sort of keep an eye on so many different things. Endeavor potentially is going to be taken private. Maybe or maybe not. They also own that 51 percent position in TKO, which is live. I’m just curious as to your thoughts about that asset, whether you think there’s value there.
MAFFEI: I think Endeavor owns a host of interesting properties. It did not trade particularly well, as you know. And I think Silver Lake is looking at that and saying they don’t like that trading and trying to take advantage of the discount.
FABER: Right.
MAFFEI: To their credit.
FABER: You think so, to their credit? Yeah. TKO attractive to you at all?
MAFFEI: I think TKO is an interesting property. I don’t see them releasing in TKO.
FABER: No. I would imagine that as well. Greg, we’re going to have an opportunity to talk to Chris Winfrey about Charter. Normally I’d ask you about that as well. Fixed wireless, you want to weigh in on that? Is that a real thing in terms of competing with broadband right now?
MAFFEI: Clearly for some consumers set fixed wireless is attractive. I think it has expanded the market to new areas, but it’s also been the case there’s probably some substitution at the bottom. I don’t think over the long term that is as much of a threat as some perceive, both because of capacity issues from some of the carriers, but also because of demands. I know you spoke to John, our chairman, John Malone, and he clearly points this out, if you look at how we’re going to increasingly distribute video content with streaming it, it’s going to put massive pressure on these fixed wireless assets. Our friends at Amazon, who run Thursday Night Football, are consuming something, with 40 million streams are consuming something like 25 percent of all the bandwidth in the United States during Thursday Night Football. As you see more of those kind of events be streamed, you’re going to put more and more pressure on these networks. And I don’t think FWA is going to be able to handle it.
FABER: Well, they don’t pay anything for that.
MAFFEI: Well, that’s net neutrality, which I would argue is a complete travesty.
FABER: Yes.
MAFFEI: Why shouldn’t Amazon not be paying for all that carriage?
FABER: That’s a good point. It’s something that Malone and I did talk about as well. But, Greg, always appreciate taking some time with you.
MAFFEI: Thank you, David.
FABER: Thank you for having us here yet again.
MAFFEI: Glad to have you here.
FABER: Greg Maffei, CEO of Liberty. Back to you guys.
