《生而有线》（2025年9月读书会）

You're about to listen to the yet another value podcast with your host, Andrew Walker. Today it is time for my monthly book club with my friend Byrne Hobart from The Diff. I've been really looking forward to this one. We read Born to Be Wired, the John Malone memoir that came out earlier this month, in September 2025. It was a fascinating read.

I've been a longtime follower of Liberty and Malone, and I had so many thoughts. I was excited to get on the podcast and talk to Byrne about it. We really enjoyed it. As always, nothing on this podcast is investing advice. See the full disclaimer at the end, but I think you're really going to enjoy it, too. It was a really interesting memoir style: in the first half, he tells his history, and in the second half, he lays out what Liberty owns right now and his thoughts on it.

I had a ton of fun talking to Byrne about it. I hope you read it. If you haven't, you're still going to enjoy this podcast, but you should probably go buy it if you're into media, cable, or investing. I think it's awesome. So, we're going to get there in one second, but first, a word from our sponsor. This podcast is sponsored by AlphaSense. Look, AlphaSense has been a longtime sponsor of the podcast. I am a super happy user of the AlphaSense products. Everything ranging from their AI platform for investing, but particularly the expert calls that I use on a daily basis to look at companies and kind of see what industry insiders who are doing more than I'm doing, which is just being a dummy and reading the publicly traded filings and reading trade industry insiders are telling me about how business is actually working on the inside and how they're viewing trends and everything inside it. So, super huge fan of the platform. If you're interested, AlphaSense was kind enough. They just sponsored a free webinar with me and a former at Mastercard where we talk about the future of finance. In particular, we're talking about stable coins and their effect on the overall economy, how they could impact remittances, how they could impact particularly payment networks because he's a former Mastercard. I think it's a really fascinating interview. I think you're going to, whether you're a journalist or a specialist who focuses on that, I think you're going to learn a lot listening to it. And if you listen to it, I think you're going to, you know, see why I think expert call networks are kind of the most revolutionary product for investing, for journalists, for specialists, for everything to come along in the past 10 to 15 years. So, if you're interested, I'll include a link in the show notes to go check out that webinar. But thank you to AlphaSense for sponsoring this podcast. And now, on to the podcast. All right. Hello and welcome to yet another value podcast. I'm your host, Andrew Walker. With me today, it's our monthly book club. So, I'm excited to have my co-host, Byrne Hobart. Byrne, how's it going?

It's going great.

Going great over here as well. Before we hop into book club disclaimer, remind everyone nothing on this podcast, investing advice. See the full disclaimer at the end. We're going to be talking about John Malone, one of the people I've studied the most in history. He wrote the memoir Born to Be Wired, and we both read it. I could go 1,000 different ways, but I'll just start with this: Byrne, how did you feel about the book? What were you thinking about when you were reading it?

What was I thinking about? One of the things I was thinking was that Malone was a man built for a particular time period in U.S. capital markets, and that from the 1980s through the 3 decades starting in 1980, he did amazingly well. He was perfectly suited for that moment, in part because he was able to think in so many different dimensions, optimize across taxes, optimize for strategic value sometimes, and assemble these eclectic mixes of assets. But because he was under the U.S. tax code, he had to do weird, unnatural things to realize the value of some of those investments.

He was also very perceptive on media, and there are pieces of the book where it's just not quite his time. Some of them are the more recent things, and if you look at a chart of pretty much any of the Liberty-associated companies over probably the last 10 years, you see some good things, some bad things, and some difficult times.

That was a real shot to the kidneys you just hit me with.

I know. I've been burned on some of these names myself. I truly believed in the Liberty Latin America thesis for a while, and then I realized that everything I was betting on wasn't happening and all the risk factors I was thinking about were, in fact, happening.

But earlier in his life, before all of this was really a possibility, before we had the kind of financial markets that really supported his approach, he was the same guy. To me, one of the most impressive parts of the book is actually a part where nothing happens, because he is asked to do a study of AT&T's financials and their capitalization. This was in the 1950s, right?

I think it's the 1960s, but it's around there. He says, “Okay, we should be cutting the dividend, levering up, and buying back lots of stock.” This was totally shocking to the AT&T people, but he was just looking at the numbers and realized that the cheapest telecom equipment you could buy was the stuff already on AT&T's balance sheet, and that AT&T was a really good business and wasn't going anywhere. The only threat would be the U.S. government.

That's the way to do things: buy back a ton of stock. It's very tax-efficient, and if the stock is cheap, that's even better. I think that was just the wrong thing to say at AT&T. During the Depression, they were kind of famous for having a $9-per-share dividend that they just never cut. They were one of the rare companies that was able to keep paying a steady dividend.

There were companies that stayed profitable but had to cut their dividend. AT&T was able to keep that dividend going, and it was of totemic importance to their shareholder base. They had lots of retirees who had all their money in bonds and then owned a few shares of AT&T. They had some kind of moral obligations, maybe to their stockholders, and those obligations did entail them doing some capital-inefficient things.

I think Buffett, maybe a decade earlier than that, had actually written about AT&T and its dividend being really inefficient. Apparently, a lot of AT&T investors would sign up for a dividend reinvestment plan, and Buffett was pointing out that you get your $9 per share, the government gets a piece of it, and then you buy some more shares of AT&T. AT&T could just buy those for you, and you wouldn't be paying the extra taxes on it.

A lot of really smart people had noticed this. It was a great predictor of future success as both an investor and a member of the value-investing pantheon: if you felt that AT&T's dividend was too high and that it should find a different way to return capital to shareholders in the 1950s, you were destined for greatness.

You hit on a lot of the points I wanted to hit on, and I think one of the funny themes of this book is that every decade Malone has a run-in with AT&T, or AT&T does something, and every decade AT&T makes the absolutely wrong call with acquisitions.

It starts with this, when Malone is literally fresh out of college and says, “Hey, we should do this.” I remember the chairman pulls him aside and says, “Son, that was a great presentation. There's no chance in heck we're going to do it. If in your life you can get one thing done at AT&T—one thing changed—your career will have been a smashing success.”

You can just feel an ambitious, smart young person thinking, “In my whole life, if I get one thing changed at AT&T...” But throughout his entire career, it's AT&T making the wrong moves and getting its pants pulled down.

Let me start with the thing you said at the end. We can come back to AT&T. You and I, I believe, talked previously about how John Malone was optimized for the environment he grew up in. He comes to power in the early 1970s. Interest rates are high, taxes are high, and people are obsessed with GAAP numbers.

He is the one—I thought it was Mario Gabelli who came up with it, but maybe it was Malone—who comes up with EBITDA and says, “Hey, judge us on our cash flow, not our GAAP numbers.” He famously says at a shareholder meeting, when somebody asks about GAAP income, “If you're here for GAAP income, you're in the wrong meeting.”

He optimizes for cash flow, taxes, and leverage. All of those benefit him because taxes are high, interest rates are high, and the cable industry starts out as wires and television. Then the industry makes a big technology shift and ends up being the dominant way to provide broadband.

I was wondering: if he had come along today, when taxes are generally low and interest rates are generally low, would his skill set be optimized? Cable is completely built out. Maybe he goes and does something with AI and optimizes CoreWeave's capital structure or something, but how much do you think he's a product of his generation versus the past 2 decades saying, “If it weren't for these tailwinds he was riding, he doesn't do anything well”?

I think media becomes—media is a really interesting business. Years ago, I articulated my general theory of success in media companies because I was writing about BuzzFeed and trying to figure out, okay, why do they do well, and then why did they start doing badly.

Why they did well is really easy to answer: there were a lot of newspapers and magazines producing content. They were basically translating the print model to the internet. This is a new way: the ink is cheaper, but the ads make you less money. Maybe you can get people to pay to subscribe to things, and you can still show them ads.

BuzzFeed realized there were new distribution channels, attention spans were shifting, and the article was not the ideal unit of content. It was not the only unit of content anymore. Essentially, every piece of high-quality content needed its own little marketing campaign in order to get attention, as opposed to, “We’re going to send this bundle. It’ll be a magazine. It’ll have articles by 20 different people, and at least one article will be something you just skim because it’s not that interesting to you, and then there will be one that is potentially really great.”

BuzzFeed could do that when it understood the distribution model really well, and there was a lot of content out there to rehash, rewrite, redistribute, et cetera. The New York Times actually had this big internal meeting and produced a nice paper on this, where they pointed out that there was an article they had written where BuzzFeed actually got more traffic than the New York Times because BuzzFeed found a way to make the article famous. BuzzFeed actually beat the Times.

The Times was like, “It’s actually a lot harder to write a really deeply reported article on something nobody realizes is news and tell this amazing story that actually shifts people’s perceptions. That’s the hard part. Tweeting a link to it is not the hard part. Making sure there’s an SEO-friendly headline so that people who are looking for that article find the Times version ahead of the BuzzFeed version is also not super challenging.” Especially because all this stuff is happening in public: BuzzFeed is basically showing you its social media and search strategy every time it posts something, so you can copy that really easily.

Whereas the New York Times still does these amazing articles. It had one a couple of weeks back where it talked about the business of smuggling drugs into the U.S. They were able to interview guys who get a truck loaded with heroin and drive it across the border. They have photos of this guy, although his face is not shown, showing you where they put it in the vehicle.

They did a little ride-along and talked about how there’s a guard every so often. Sometimes the guard will say, “No, the cops are here this time. Just turn around.” All that stuff is going to be really hard for BuzzFeed to get to the point where it can do that. The Times has this content advantage, and then it can catch up on distribution.

There are times when the distribution piece is what matters, and there are times when the content piece is what matters. A lot of media companies are a bundle of both. If you’re buying a newspaper, you’re buying the newsroom and the culture, the journalist superstars, and the ones who are maybe not superstars but know their topic well and have good sources. Then you’re also buying trucks, newsprint, and all of this physical stuff.

If things are usually bundled, you actually have the opportunity to periodically and strategically unbundle them. That’s the signature deal in Malone’s career: TCI had been cobbling together this portfolio of varying amounts of ownership in varying content platforms. It had a nice set of these things, and they were also being valued more on a multiple appropriate to just a company that owns these pipes and has regulated-monopoly economics in monetizing them.

He realized these were actually 2 different things, and the content was the valuable, underpriced part. So, let’s separate that out, put a price tag on it, and then merge it back in. You could look at this deal and, if you didn’t know who Malone was and didn’t have a ton of respect for him as a capital allocator, say, “This is actually a really shady transaction. This guy splits this company up, takes warrants in one piece of it, ends up owning a huge chunk of that, and then they merge it back together.”

For those who don’t know, and who haven’t read the book, Byrne is referring to the 1991 split. TCI had built 20% ownership in basically every cable channel it owned. He splits that into Liberty Media through a famously complicated transaction. Even in the book, he paints himself in a very positive light around this deal. He’s like, “Oh, we got a lot of people who were like, ‘This is the most complicated transaction I’ve ever done.’”

But he does it through this really complicated rights offering with warrants. He way oversubscribes, and he’s bragging about how the stock price does great through this. If Byrne and I own 10% of a company, did this super-complicated transaction, and took our ownership from 10% to 40% of the spin-off, and then the spin-off worked really well, we could say, “Great spin-off.” But we could also say, “Maybe we cost the other shareholders 30%.” A spin-off should be kind of distributing the pie in different ways. This is what you’re referring to: he does this crazy, complicated transaction that is kind of how he makes his fortune overall.

Let me go back to a point you’re making. Let me talk about the unbundling to rebundling. Obviously, when we’re talking about the 1991 Liberty Media spin, that’s a kind of unbundling transaction. There are a few themes of the book. One of them is hatred of taxes and hatred of regulation. AT&T is getting its pants down.

You can sense his hatred of big tech, right? Multiple times he talks about how regulations toward big tech, or the lack thereof, are unfair, which I think is quite funny.

Oh, that was the funniest chapter, where he takes off his libertarian hat for just one chapter to say, “By the way, obviously we should be regulating these big tech companies, and obviously we need them to be paying for the bandwidth that they consume, and they’re just unfairly exploiting us.”

The tech billionaires are just ruthlessly exploiting the helpless deca-billionaire class. If you read this, Malone—famously a libertarian—it’s actually a laugh, because he decries all these barriers and all this sort of stuff, blah, blah, blah, blah, blah, and then he says, “But John McCain, when John McCain sponsored the a la carte cable channel, that would have been a great piece of regulation.”

You’re like, “He’s against all regulation except when it’s in his favor,” right? The McCain proposal—this is unbundling cable channels in the mid-2000s—he’s super for that regulation. Okay, I’m sure you’re a real libertarian on that one.

The other place where he hits on regulation is with the tech companies. I think it’s really interesting for a free-markets guy. He decries, “Oh, these cable companies—we have spent billions and billions of dollars building out this cable infrastructure that connects the world, that connects America to the internet. All these Netflix, Facebook, and Google platforms go over the pipes for free and have built these fortunes on it.”

It’s akin to the electricity company decrying, “Hey, we provide you regulated electricity, and Facebook over there is going off and building an AI data center that’s going to make tens of billions of dollars off of our electricity.” I thought it was really interesting that he was speaking in his own book, but he really decried it throughout the book.

Yeah. I find that kind of stuff endearing. It is a very natural human instinct that, when you look at regulations, you don’t think about the ones that have no impact on your life. The ones that are mostly positive for you just feel like the natural order of things: “What government wouldn’t want to support this?”

The ones that actively inconvenience you make you think, “What? These people in D.C. have no idea what they’re doing. There must be some high-powered lobbyists getting them to write these stupid laws at my expense.” That’s totally natural. My view is that it morally obligates you to structure your life such that the policies you support will actually be good for the world. It’s actually harder to do that than to think honestly about the difference between your own personal interests and how the economy ought to be structured.

I think you read more memoirs than I do. You just said, “Structure your life in a way that the policies you argue for are good for the world.” Have you ever read a memoir where someone admits, “The policies I’m lobbying for would be great for me but bad for the world”? Everyone kind of thinks the policies they’re arguing for would make the world a better place.

Yeah. I guess nobody comes to mind there. I guess there are a handful of cases where someone declines to use some kind of opportunity that they could use.

There’s this brief mention in The Snowball of how Berkshire had a grandfathering-in period where you could turn a publicly traded C corporation into a pass-through entity.

This was in the 1980s, when Buffett had to decide if he wanted to stay a C corporation or become a hedge fund manager, I think is what you’re saying.

Yeah. And if it were a pass-through entity, he would have made a lot more money. He probably would have sold more Coca-Cola if Berkshire Hathaway LP had most of its capital from pension funds, endowments, foreign nationals, and other people who wouldn’t be facing a tax hit.

I don’t think he was super excited to own Coca-Cola at 70 times earnings. But I also think that he felt like you were selling Coca-Cola at something like 45 times earnings after taxes because your cost basis was close to zero. I think it had gone up more than 10 times by that point. So even if you wouldn’t be buying it at 70 times earnings, maybe you would be reluctant to sell it at 45.

It does work into some of the decisions that Buffett and Malone made. They were doing this in the structure of a C corporation, and they didn’t have some of the tax advantages that a hedge fund might have.

That’s the closest you get to someone saying, “Hey, I lobbied in my own interests, and I did it because I could.” It’s a very distasteful thing to admit, even if it is somewhat true.

But maybe this is part of the job of a lobbyist: not just to tell Congress how to write rules that are favorable to cable companies, but actually to tell cable CEOs, “Here’s why this rule is favorable for the country. You’re in the right here. We’re doing something good for the country, and we’re informing Congress because we’re industry experts. We’re informing them of how things work.”

In the end, I think the equilibrium you get to is that Charter has lobbyists, and so does Netflix. Those lobbyists are going to hash things out. If the Charter lobbyist is actively lying about something, the Netflix lobbyist is going to call him on it, and that’s going to hurt his credibility. So both sides do at least have an incentive to be honest in the information they present.

The incentive to be less honest is in how they frame the discussion: what they emphasize and what they don’t emphasize. To your point on electricity, you could hypothetically imagine a world where the power utilities were getting some piece of the upside from the things they were powering and using.

What you actually see is that sometimes the incentive structure works another way. There’s this minor detail that gets mentioned early on, in the 1960s and 1970s, where he’s talking about some of the early cable networks. He mentions that one of them was actually subsidized by TV retailers in the nearest big city.

Um—

Oh, I don’t remember that one. It just sounds weird.

It was a really minor thing. He didn’t make a big deal about it, but I thought it was interesting because the incentives are aligned. More TVs will be sold if more households can get TV. So, of course, the cost of capital to a TV company for investing in cable is lower than the cost of capital for a random cable company.

Speaking of subsidizing, one of the interesting things is that he notes—I did not realize this—that the cable companies pay for C-SPAN. They pay for the whole thing, and this is huge for them. Obviously, it scores them lots of political points and gives them lots of power.

One of the interesting things later in the book is that he says YouTube and a lot of the tech companies don’t carry C-SPAN, and he really hits them for it. I thought that was really interesting. I do wonder whether YouTube is making a tactical mistake by not carrying C-SPAN. How much would it really cost them to subsidize C-SPAN, versus what happens if cable goes away and Senator X comes to them and says, “Why am I not able to watch my speech anymore?” Then again, maybe everybody just watches those speeches on streaming. But I thought the C-SPAN piece was interesting.

Yeah, it was. You can kind of see from that that the cable industry was big enough and consolidated enough by that point that there were probably some holdouts and people who didn’t really want to put in their pro rata share. You probably had the less profitable networks saying, “We should all invest the same portion of our EBITDA,” while the really profitable ones were saying, “No, let’s do it on the basis of revenue or customer count,” or something like that.

Saying, “We’re all going to back this and we’re going to do this collectively,” is different from figuring out exactly what “collective” means to everybody.

C-SPAN was a form of lobbying for them, too, because they always got to say to a congressman, “The reason your constituents were able to watch that speech is because we made this possible.”

And I’m sure every one of your constituents watched and loved it, sir. I’m sure.

Of course.

You mentioned collaboration, and let me go off track a little bit here. I think it’s really interesting throughout the book. Malone talks all the time about how he collaborates with these guys. Rupert Murdoch would be the number one example. Sometimes they’re enemies, sometimes they’re friends, and sometimes they collaborate, come together, and then split apart.

He talks all the time about how he really decries the state of the world now, where business leaders aren’t collaborating. The two examples I would throw out there—C-SPAN would be one, but the other two I’d throw out there are CableLabs, where the government passes a rule that says competitors can form R&D labs together. CableLabs has been famously very successful.

Cable is not in the place where it is today without facing challenges from fiber-to-the-home and fixed wireless, but it could have ended in the 1990s if they hadn’t leaped from cable TV to the internet. CableLabs would be one example.

The other is that every time a deal goes hostile, he says, “I don’t get why AT&T bought this at a huge premium instead of going to Comcast and saying, ‘Hey, we’ll take the networks that make sense for you, you take the networks that make sense for you, and let’s not pay a huge premium and get into a big fight about it.’”

Those were the two things I thought were interesting. He really decries this. He says the partnerships work for him, and he decries how the world doesn’t seem to work that way anymore.

Yeah. There was a really interesting bit where he talks about a cable system that he knew about. I think they had borrowed a bunch of money from life insurance companies and other lenders, and it wasn’t making any money. He says, “Okay, we’ll run it for you. We’ll do that for free, and you’ll owe us a favor.”

I would love to know what the actual discussion was like internally at TCI when they decided to do that, because that sounds pretty crazy to me. My eyes got very wide, and I was wondering if it was something like this: Let’s say you had 100,000 subscribers and I had 100,000 subscribers. I could imagine saying, “Byrne, I’ll run your 100,000 subscribers for free if I can get programming pricing power.” You go to ESPN, and you say, “Instead of $200, we’ll pay $100.” I wonder if the real thesis there was, “We’ll run it for free, but we get their programming pricing power.” We can buy more modems at that cost. I wonder if they were seeing scale across the business.

I don’t know, because I remember that story very well, and I thought, “They did it for no management contract, no nothing.” That’s really relying on the kindness of strangers in the long run.

Yeah. You just don’t hear stories of the local Burger King being short-staffed one morning and the nearest McDonald’s sending some people over to flip burgers for them. Even though that would be a nice gesture, it’s totally out of the ordinary.

It did seem like there was probably some quid pro quo. There was probably no explicit contract, but there was an understanding that, hey, if this works out, we’re going to be buying it from you at 4 times EBITDA instead of 6 times EBITDA or something.

In the meantime, it’s not going to default, and you’d get in a lot of trouble with your regulators if you were making these crazy loans to overbuilt cable companies and they were all going bad. You can definitely see a case where value could be exchanged there.

I do think the scale piece probably makes sense. It could have been something as prosaic as them thinking they were going to close another acquisition and having already hired a good manager for it. That acquisition falls through, they’ve got this brilliant guy who’s itching to do something, and they realize that maybe this is actually an opportunity for free training.

The best way to learn to run a cable system is to run one. This one isn’t ours, so it’s not the end of the world if it doesn’t go well. In that sense, it’s a really asymmetric bet, because if the system is already failing—if it’s already losing money and they’re just wondering when they’ll write down the loans—if they end up writing down the loans, everyone can say, “That’s a really tough situation.”

It’s a hard business, and it’s too bad things went the way they did.

And it’s Malone, so he says, “We did it for free.” I mean, they could have gotten warrants on top of it, and he said, “For free, with an upside kicker.”

One thing I wanted to come back to: You mentioned BuzzFeed earlier. I hate to keep saying “the main thing,” but honestly, the main thing I took away from this book was how frequently you see bidding wars—flat-out bidding wars. This happens a lot during the bubble, but it happens throughout the book. You see flat-out bidding wars for properties that, not even decades later—years later, sometimes months later—are just write-offs.

I know this happens in business, obviously, but it’s shocking to go back and look. You’re talking about the titans of industry: Sumner Redstone, Rupert Murdoch, Ted Turner—all of them. You’re talking about these multibillion-dollar players competing with each other in huge bidding wars.

I think that was the really interesting thing to me as I’m thinking with my investor hat on. I want to put that thought out there and ask you: Do you think it’s endemic to media? It could be endemic to media because it’s shifting, and it’s shifting at a much more accelerated clip as the years go on. Is it unique to that? Maybe I’m underestimating how many of these huge acquisitions are write-offs. What did you think about that tendency for write-offs?

It’s this weirdly scaled-up version of the fact that media is often distributed in a bundle. I think there are 2 big drivers of the bidding wars on the infrastructure and distribution side.

You will sometimes have companies that are really paranoid they’re going to lose access to their customers, and they absolutely need to have some position. It wasn’t a bidding war for assets, but it was a bidding war for talent and equipment when every channel and every network apparently decided they needed to have their own standalone streaming service after Disney+ launched. They all felt like, “We’ll just be subscale, and our core business is dying.”

The cords that are getting cut are not the cords that bring in most of the video content for most households. They’re the cords that bring in our video content. So we have to do Paramount+, and we have to do Discovery+, or whatever it was.

Some of those will work. It seems like HBO Max makes sense as a business. Obviously, Disney+ makes sense as a business. But as you move more subscale, I think the realization a lot of these companies have had—and they’re still getting there—is, “No, you’re actually just a content company. You did miss the boat in distribution.”

On the other hand, the content is good. Content-based bidding wars are a simpler thing, where someone likes the idea of owning a particular show or some particular IP. They’ve always dreamed of it.

As the lifespan of IP gets longer, you have a lot more people who grew up reading Marvel comics, watching Spider-Man cartoons, and knowing that they can actually buy Spider-Man and be the owner of Spider-Man. That’s pretty cool. It allows them to be the person their 6-year-old self always hoped they would be.

You probably get some of that, too. You see that sometimes when very rich people take over well-established magazines, and they tend to know what they’re getting into. You don’t buy The New Republic thinking that this is how you make your money. You buy The New Republic thinking that it’s sure nice to have money, and this is something good you can spend it on.

That tends to inflate some of those prices. People will just believe that the content they personally love is universally beloved and could do better. I think that encourages them to overpay at times.

I agree with all that, especially with movie studios. The most famous overpurchase is somebody gets really rich and buys a movie studio because they want to hobnob with celebrities, right? Absolutely. The most famous overpay happens all the time.

If you’re a billionaire, that’s what you do. If you’re worth $100 million, you finance a movie and get robbed that way. This is classic.

There’s 1 example I know of where this was actually a good strategic move. Sometimes the strategic move is that you buy it from someone else who made a bad strategic move.

There’s this book, Metal Men, which is a biography of Marc Rich. It really emphasizes the partying, and the metals traders in the ’70s were pretty energetic partyers. But it does mention that he was part owner of 20th Century Fox in the ’70s. What he would do is, if he were negotiating some oil deal with the head of state of a Middle Eastern country, he could tell them, “Hey, do you want to go to the Fox studio? Bring your kids. Your son can meet C-3PO, and you can see Yoda.”

The other oil-trading companies could offer really lavish dinners and lots of fun entertainment, but that was something they could not actually offer. It’s something I’ve argued about with sports teams for a while.

Historically, it won’t work forever, but sports teams have been an incredible investment because they are trophy assets. There are 30 of them, and as media rights have exploded, they’ve become more valuable.

Even if you ignored the investment side, if you were a billionaire like Steve Cohen, you would be having the most fun of your life owning the Mets, right? Probably not today, because the Mets got eliminated from the playoffs yesterday.

But all these billionaires buy them, and before, you were a no-name billionaire. Yes, you could do anything you wanted, but now everyone in that city knows your name. You’re politically important. You can do anything. All these doors that weren’t open to you before open up.

It’s very similar to owning a movie studio. Owning a movie studio in the ’80s, owning the local newspaper today—there are very few businesses you can own that make you a mini-celebrity on their own.

Having 1% ownership of the Clippers probably doesn’t do you a lot. But if you can close deals and say, “Hey, I’m a VC. Let me invest in you. And by the way, I’m going to take you courtside to a Clippers game,” you probably close a few more deals.

We can start to feel his distaste for 2 things: paying taxes and having succession issues, right? His mentor and partner at TCI, Bob Magness, dies without a settled will, and you can feel it ripping Malone apart as, because of that estate, he almost loses control of TCI.

Sumner Redstone has huge drama over his legacy with Viacom and CBS, and you can feel it ripping him apart. I want to ask you about that, but I also want to ask you—we talked about how the last 10 years have not been kind to Malone. It’s really interesting to look at the last 10 years as Malone has largely stepped aside and become more of a chairman. He’s taken on the role of chairman emeritus, and Liberty has dramatically underperformed over the last 10 years.

I want to think about those 2 things together, right? He hates succession issues. He obviously hates paying taxes, but then he’s handing all these things over, and the stock price, bro—all these things are dramatically underperforming. I have 1 more thing to say about that, but I just want to toss that over to you because it was one of the things I was really thinking about as I read.

Yeah. Part of why I felt nostalgic reading this was that there were a bunch of characters I remember being active, live players, cutting deals. He gets Bill Gates to partly bail out the cable industry, and he’s dealing with all these larger-than-life figures. A lot of them are retired or dead now.

It’s the titans of our youth, right? The titans of our youth—the guys who were in their 50s and 60s when you and I were just starting to open up The Wall Street Journal and maybe only read the front page.

So it does feel like maybe there was just a pretty special generation of media titans. Maybe part of the reason for that was that there were enough structural changes in media that there were lots of ways you could make your fortune.

There used to be lots of 2-paper towns. This was part of Buffett’s thesis for buying The Buffalo News: Those 2-paper towns are all going away, and lots of things tied into that.

If you go back and look at some data set on where newspapers got their revenue, it turns out that classifieds really started being a big deal in the ’80s. When people described the newspaper business in the early 2000s and why it was struggling, it was always that they were heavily dependent on classifieds because they were a regional monopoly. If you needed to sell your used car, that was the only place to do it.

Then Craigslist shows up, charges less, gets a larger audience, and that revenue goes away.

So I had assumed that classifieds were always a core part of the newspaper business. But it turns out it was a newish thing and a growth business for them. If you were someone like Murdoch or Buffett and started identifying newspapers, you understood these secular trends, and you could just buy what you thought would be the surviving paper—or buy a paper that you could make the surviving paper in a town that had room for 1.5 newspapers.

You were a company supplying a market that needed 150% of what a single company could provide. You could mint money. Being 1 of 2 companies, where you were each trying to achieve viability but there was actually not enough business for both of you, and where the classified ads could go to this paper or the other paper, with both having similar circulation, meant that the market-clearing price was just whatever the lowest amount was that the most desperate paper would accept.

That gave them a lot of opportunities to make a ton of money while owning some core business that, at the time—in the '80s and '90s—had pretty predictable cash flows. Then you could do some fancier stuff later on. A lot of these guys did that, and they were able to take a media ecosystem where there was already such a thing as a TV show, and people already knew how to do news and script sitcoms and cop shows.

If all of those were known quantities, you could take that and scale it up by being the person who figured out that there were a lot of ways to scale it. If you kept adding cable channels, maybe there would be a cable channel that was just all cop shows, all the time. Maybe someone would be crazy enough to do literally 24-hour news. Maybe there was room for cooking channels that were all cooking, all the time. If you knew that and saw it coming, you could position yourself really well for that.

You were always betting that there was more demand for more shows, and once there was a concept, that concept would be synonymous with the genre if it worked. If the network worked, that network's name was synonymous with the genre that it owned. There were lots of ways to own really good businesses and back them when they were young, a little bit risky, and cheap.

To your point on titans, I think one of the things is that the '80s was a unique time, where you went from basically 3 cable channels to 500. He talks about going from 5 cable channels to 500. Now, 500 is still limited, and there are economies of scale to owning cable channels, just like owning cable companies. A lot of the media titans we think of are people who owned 20 of the 500 channels.

Today, because we're living in a world of infinite channels, it doesn't matter who owns the channel. Maybe people can say who the CEO of Netflix is, and people know the CEO of Disney, but these things don't matter as much. It's Joe Rogan who matters, and the media landscape has fragmented so much. I think the age of the media titan of yesteryear is dead.

Yeah. I guess everyone's idea of who is in the Malone cohort depends on when they first heard about Malone and what he owned at that time. You could choose a different time frame, and Diller and Malone would be part of the same group of people, or at least they collaborated more in the early days.

But I mean, Maffei is the CEO of Liberty. Malone is the chairman. Maffei was the CEO for 20 years, and he's a bit character in this book who kind of gets pooped on.

Yeah, he does. That is kind of weird. You would think that if Maffei were actually bad at the job and Malone were good at the job of being chairman, he would have fired him at some point, very early. He's probably had a lot of stock options vest over that 20-year period.

That was a little bit tacky. I would also think that if you have a model where you are totally mentally flexible in terms of how you set up your financial relationship with someone—you can own equity, you can lend to them, you can buy their business and then spin it out—that's the kind of thing you would design if you were worried about succession problems and wanted a lot of CEOs you had spent a lot of time with, none of whom you had bet the business on.

At the end, you could say, "You've done such a good job with the Sirius piece, or you've done so well with Formula 1, I think it makes sense for you to run the entire organization after I fully step down." You would think that would work, but maybe what that actually means is that his incentive is to have quasi-successors who are more media operators, while he's the dealmaker.

Even today, if I were somewhere in the Liberty complex and had a clever idea for a merger, and I pitched it to Dr. Malone and he said, "No, that's not going to work. Here's why," I would generally assume that he knew what he was talking about. If he didn't like some merger, restructuring, or spinoff, he was probably right, and I should figure out why he was right.

He is probably still the guy who signs off on that kind of thing. I think that means it's hard for him to have a successor for the thing he does. This is not an uncommon problem with companies and succession. Apple probably could not have handled being run by a Steve Jobs-like character after Steve Jobs left.

They needed someone who was really good with supply chains, diligent, knew how to keep a lot of balls in the air, and was perhaps less perfectionist about the product. As the company gets bigger, it's better for the product to be pretty appealing to a large number of people than to be mind-blowing for a small set of customers.

It's similar with Microsoft. At the beginning, they were more technically constrained, and having someone who could mentally envision all the registers of the chip and say, "No, this spell-check product is not going to work in this version of Word. We've got to wait at least 2 years for Intel to ship a better chip, but at that point it'll be great"—that's the person you need early, in the '70s and '80s.

By the 2000s, you might actually need someone who was more of a dealmaker, someone who could hang out with lots of CIOs and make them feel really good about how much money they were spending on Microsoft. Then it toggles back. Actually, Ballmer, I think he's underrated in many ways. He is an incredibly smart guy. He's now made more money than Gates, so we know he's good at business, too.

Ballmer—I don't doubt that he's an incredibly smart guy. This is way off track, but I don't doubt that he's an incredibly smart guy. I would just point out that everything he does, he does with a lot of enthusiasm.

I don't love the whitewashing of Microsoft under him because it was a disaster. The Nokia deal—every deal they did was a disaster. The company was not in great shape. They missed multiple things.

Then you look at his post-career work with the Los Angeles Clippers. I think he did a great job building it into its own thing. I haven't been, but I hear rave reviews. But when you look at the Clippers, I haven't seen the championship. The team that just won the championship, the Oklahoma City Thunder, was built largely on the basis of robbing the Clippers in a trade.

I think he's very enthusiastic. One good thing he did was get onto Microsoft and just never sell or give away the stock. I'm not saying he's not crazy smart. I just don't know if he's a genius at business.

I think one of the first things that Satya was able to accomplish—he's also a really sharp guy—was just getting people to take a second look at Microsoft. A lot of the stuff that has played out really well under his tenure was stuff that was started under the Ballmer tenure.

They definitely did some really bad deals. But it's like some of the media deals we've talked about: when you're worried about getting disrupted—if you're worried that everyone's going to spend all their time looking at a device that's this big instead of a monitor that takes up a desktop—you get scared. It makes sense that you want to be really aggressive and own your piece of that future, and sometimes you'll get it wrong.

Both Google and Facebook, I believe, have said, "AI is existential to us. We will spend whatever it takes to make sure that it does not end us." We investors get really excited about AI and everything. I don't think they care about ROI.

They care about survival and making sure that they do not miss the shift. I think that's really interesting. Let me—

The end of the book, again: I really enjoyed this book. I did skip a little bit; I don't like reading the childhood years. There was a chapter that reminded me of Larry Ellison having multiple chapters on sailing. There was a chapter on horses. That was a fast skip for me, but I did not deeply read about the equestrian piece.

But I think this book has a really interesting structure, because in the first half you basically get the story of his career—the deals and stuff—with an obviously very rose-colored view. Then in the second half, he basically says, “Here’s Liberty and my major holdings. Here’s where they are at this point in time,” and he gives you their outlook.

So I just want to ask you: he does a little piece on Formula 1, a piece on Liberty Global, a piece on Charter, and a piece on SiriusXM. I might be forgetting 1 or 2 others. When you read these, what was the one you were most bullish on?

I mean, honestly, the lazy answer is that Formula 1 is this amazing franchise, and I think that's true. People like seeing cars go around a track really, really fast. There aren't that many brand names in that space, and the economics do get really interesting when it's also an advertisement for the car companies.

There are just a lot of things to like about that business. It has the feel of one of those Disney-esque platforms where you can make a lot of documentaries and really burnish the celebrity of some of these drivers. So I did like that. It felt like, okay, we have this section where we're actually going to have a little impromptu Liberty Investor Day and just run through all of his holdings.

Can I ask what you liked?

Well, I will come back to that, but I want to talk about Formula 1. I also think the way he talks about the Formula 1 deal is interesting. It was the only place in the book where Greg Maffei comes off positively, but he says, “Look, Formula 1 is up for sale. It’s a very complicated deal.”

If I remember correctly, CVC owns 60%. Formula 1’s old owner, about whom there were lots of rumors of tax dodging and who eventually got caught for it, owns 30%. He says Liberty Global, with Mike Fries, is working on a bid; Liberty Media, with Greg Maffei, is working on a bid; and I think 1 other piece of his empire is working on a bid. I can’t remember which one, but he has them all working in parallel.

Then he says Greg Maffei is the one who comes up and says, “You know, he really knows his audience.” He pitches, “Hey, John, let’s do a tracker with a rights offering to get these guys out of it tax-free,” and that’s the structure that ends up winning. I did think it was interesting just hearing him say he had different pieces of his empire competing with each other.

How did you think about that deal structure?

I think that’s just part of the nature of scale, and part of it is the nature of the bundle. If you own the distribution, it really helps to have some key piece of content that means people have to use your distribution channel. It gives you some leverage there, and also gives you some understanding of what your counterparties think about, what they care about, and how their business is evolving.

It also makes sense that if you have this media thing—this content-holding company that is also a financial engineering company—and it has lots of different pockets to shift things around in, you can lend money across these different subentities and take out margin loans on this tracking stock and not this other one. It’s just a more fun thing to play around with.

So it did feel to me like it made a lot of sense for Liberty Media to be there, but it wasn’t crazy for Liberty Global to at least be taking a look. I guess it’s not incredibly hard if you’re on the phone with both of these CEOs multiple times a day. It’s not super hard to tell them, “Please don’t lob in a really high all-cash bid with no conditions—no financing conditions—because that makes it harder for us to do this more complicated bid.”

To your question—to my question—I think the piece it’s hard not to walk away from it with is that the one you’re least bullish on, he’s clearly bearish on SiriusXM. He’s like, “Oh, man, we hit a home run, but the future does not look good over there.”

It has to be Formula 1, right? If you’re just talking—ignore valuation, just investing—it’s where all the pucks are going, right? He’s talking about the Drive to Survive success. Formula 1 would have to be the answer.

You and I are taping this September 29. EA announced the deal to get bought out for about $50 billion by the Saudis, Silver Lake, and all this sort of stuff. Formula 1 would be such a fit for any Saudi wealth fund. To what we said about media companies earlier, they want to own it, they want to take all their friends, and they want to say, “Hey, I own this. Let’s go sit in the owner’s box.” I think that’s the long-term formula, and it’s where all the pieces are going.

Now, if you said, “Hey, risk-adjusted for me, alpha,” the thing I, as a stock investor who’s followed Liberty for a long time, really thought was interesting was that he speaks very highly of David Zaslav. I think I would say, “Stock price, bro,” right? I pull up the Discovery stock price and say, “I don’t think any of that sounds very good.”

But the one I thought was really interesting was Mike Fries, who runs Liberty Global. Liberty Global, for those who don’t know, has been where value hedge fund guys have gone to die for the past 10 years. The stock price, if I remember correctly, is basically flat over the past 10 years. I know it’s flat over the past 5, but he says, “Look, Mike’s done a great job.”

He points to a recent spin-off and says, “Liberty Global trades really cheap. Mike’s going to buy my Class B shares when I die, and Mike is 100% driven to unlocking all this value.” Liberty Global is this huge corporate structure of lots of different cable assets in Europe. He’s like, “Mike is going to buy back a ton of shares. He’s going to split it all up. He’s going to create a ton of value.”

I was just interested. This was a man putting that in his memoir. I was kind of interested by that.

Yeah, and I wonder what the incentives are there, because on the one hand, this is your legacy. On the other hand, you’re not going to be around to see it. So who knows? Maybe he just wants a really good capital-gains basis step-up when he does finally depart.

Look, as I read this book, and then I went and read Mike Fries—he was at, I think it was a BofA conference 2 months ago—and he was spiking the football. He says, “Look, we said we’re spinning off some...” This is the transaction John talks about in the book. He said, “We traded at 5.5. We spun off Sunrise. Sunrise trades for 8×. Our stock’s up 25% over the past 12 months, and I will tell you this: I’m not satisfied. This is not the end. More spin-offs, more deals are coming.” He’s just pounding it.

I read the book and then read that. I was like—

It’s pretty interesting from an event angle. I do agree with that. I guess for me, one of the issues is that I have to do a refresh on how cable works in all these different markets. In some ways, the business is the same business; in other ways, every country is going to regulate media a little bit differently.

So maybe that’s a fun homework project for me: to figure out whether this is finally Liberty Media’s moment. They own 50% of some markets, consolidate and don’t consolidate, as you know from the LiLAC years.

That’s 1 other thing on that, and then I have 2 other follow-ups. I thought 1 interesting thing was that in the early ’90s, if you took the years away, a lot of the stuff he says in the early ’90s could apply in the mid-2000s or it could apply today, right? There’s lots of talk about convergence plays in the early ’90s. There’s lots of talk about the internet supplanting things.

I just thought it was interesting how a lot of these issues are kind of timeless. I’ll pause there.

Yeah, I think if you paint with really broad brush strokes, you can say that the amount of bits we produce and our ability to send those bits to the right eyeballs just keeps on rising. Sometimes the distribution is doing a little bit better, sometimes it’s the total volume of content, sometimes it’s the quality of content, and these all follow their own weird cycles.

Sometimes people—I think of some of the dramas of the early 2000s, like The Sopranos or The West Wing or something—showed people that TV can actually be good, and it can be an art form. Then you have some lag time, and people start thinking, “Okay, what is my version of The Sopranos?” Then you get something like Mad Men.

I guess it’s harder to bet on that other than just betting on whichever studio gives creators the most leeway when you feel like there is room to do a better job with some genre or subgenre or kind of content. But you do have these big swings in the business.

The broad theme is that there’s more media, we need higher bandwidth, and we need more ways to sort it. To the extent that the story is kind of fading and dying out, it is because John Malone did not really bet on feeds, and most people did not bet on feeds—like news feeds—as a default way to consume things.

He has this indirect bet on video—streaming video—just by owning some of the infrastructure, but clearly the economic arrangements are not to his satisfaction in terms of how you divvy up Netflix’s piece of the upside versus Charter’s. So, yeah, he missed a big transition, but it’s also a transition that you wouldn’t necessarily expect someone to make in the same way.

I’m sure a lot of the people who were running the smaller newspaper in a two-newspaper town knew they had challenges. They didn’t realize how things would go, how things would evolve, and that they would make a ton of money if they merged their business with the larger competitor and got a piece of the upside from the new monopoly. Similarly, the cable-channel operators—the networks—were giving Malone equity stakes. I think if they had known just how valuable it would be and how things would shake out, and that there would be some channels where everybody has to pay for a bundle that has that channel, so it’s just a tax on everyone because some people absolutely insist on—

I do think that is a chicken-and-the-egg problem, right? Because TCI had 20% of the market, and remember, if you weren’t on TCI, you could not get into the markets that they had, right? So I do think it was a chicken-and-egg problem: They took 20% of your equity, but he was saying, “Hey, you give us 20%, we launch on TCI instantly. You’ve got basically nationwide scale.”

So maybe they could have negotiated harder, but I think a lot of these channels—there was competition. CNN, right? There was another news network that was launching at the time. He went with CNN because he liked Ted, but if CNN hadn’t given him the equity, he would have gone with someone else.

Speaking of CNN, I want to end with one thought on AT&T, but I do want to talk about CNN. I think it’s really interesting. Multiple times—and I’ve seen Malone decry this over the years—he decries the state of CNN, right? He basically says, “Hey, this is a left-leaning media company that I want to go back to straight news: just down the pipes, just the facts, ma’am.” And he lays out a vision for it, right?

I thought that was really interesting. He says, “And I know America would love it.” He ends with that, and he says, “Walter Cronkite.” I thought that was really interesting, and the market, to me, has spoken, right? Like, yes, I’m sure everybody says, “I would like to watch nonbiased news,” but their preferences are revealed, right? Everybody watches nonbiased—everybody watches biased news. I was just really interested that Malone was decrying it. He really wants this nonbiased news.

I think that—I think it’s ignoring the realities of the market. USA Today is not really making it. The AP is struggling. People want to hear where the money is; where the eyeballs are is Twitter. It’s the engagement. It’s the rage bait. It’s an unfortunate fact, in my opinion. I’m sure in Malone’s opinion, but that’s just the fact. I was kind of surprised he had his head in the sand about that.

Yeah. I think what happens with unbiased news is that everyone’s idea of what that is is different. And if you try to do it, what you actually have is all of your Republican viewers being like, “I can’t believe you said these horrible things about Trump.” And then all of your Democratic viewers will be like, “I can’t believe you failed to say this horrible thing about Trump that I was thinking.”

I did. Everybody complains about football announcers, right? I remember when I was growing up, all my friends, because they’re all LSU fans, would be like, “Oh, CBS is famously biased against LSU.” So I just took it for granted that CBS was biased against LSU. Then I grew up and realized, no, every football team thinks that about whoever covers them, because they’re used to hearing the local guys who rave about them or only talk about them. When they hear a national guy who’s unbiased, they think he’s biased against them.

Yeah. So I think a more direct and honest way to say it would be for Malone to say, “I’m a libertarian, tend to be conservative on a lot of issues. I like this country a lot and don’t like people trash-talking it, even though there are things to improve,” et cetera, et cetera. And there are a lot of guys like me. We have a lot of spending power—maybe not as much as me, but a lot.

Maybe there’s more competition on left-leaning news than right-leaning news, and so, just as a pure business decision, center-right CNN could make sense. There’s definitely room, just in the sense that there are a lot of people who are to the right of center but to the left of Fox and Newsmax, or who just want things to be a little bit more straightforward and a little bit more honest.

If Trump does something genuinely stupid, they don’t want to hear about it for the first time from someone who watches a broader news source or someone who reads The New York Times. They want to actually know what’s going on. That audience does exist, but I think it’s just media people. Some of them have incredible taste in just what the average American’s taste will be, but that’s a really hard thing to have.

And the more that you are also a media theorist, think economically, and are aware of the details of really complex issues—and, incidentally, one thing we didn’t talk about that much but that I liked in the book is that sometimes he gets pretty technical. He actually cares about things like, “Here’s how the hardware works for a set-top box,” or “Here’s how much you can—”

Well, he’s an electrical engineer by training, right? So, like—

Yeah, and I wouldn’t think that you need that stuff to run a cable company, but what it does help with is that he would know—he would have a better sense of what’s physically possible. If he sees some trend, he would have a sense of whether there’s some technical limitation that means we only ever have 30 channels and therefore should act accordingly, or whether we have effectively infinite channels. He knew that a little bit before some of his peers did, and it helped.

But anyway, people who run these media companies just have a very distorted view of what the average person wants from the media. People watch enough TV—you can’t watch an average amount of TV and also run a media company. You can’t spend 4 to 6 hours watching network TV, cable news, and online clips and have enough time to actually run a company that does any of those things. So they will always be somewhat guessing about what the taste of the average consumer is.

But they are also human beings who will sometimes turn on the TV and just cannot believe how dumb these people are being. It’s just that he has been involved because he ran TCI and was involved with Charter for so long. He’s been involved in negotiations with these cable channels, right? And I’m just surprised. He knows, “Hey, Fox News, which has the largest cult following, commands way more than CNN because, A, there is no other right-wing channel, but B, because their audience is so passionate, because they’re delivering strong opinion.”

So for him to just say, “Hey, CNN needs to lose the left,” you’re basically saying, “Give up your business because this is what I want.” Byrne, I had so much more to talk to you about. I had AT&T margin calls, but we’re at the hour mark.

I really enjoyed this book. I can’t recommend it highly enough. I know that our listeners are going to be invested in stuff, but it’s a really fun read. Pretty quick, too. I really enjoyed it. Skip the part about horses, but I loved it.

What do you think we’re going to read next month? You got any ideas?

What are we going to read next month? Let’s see. We kind of ping-pong between profiles of people and broader, general-interest stuff, but we’ve done 2 profiles. So, yeah, maybe—I don’t know. We should find some semi-classic.

But Byrne, this has been awesome. I’ll hang on; we can finish our chat after this, but this has been so much fun, and I’m looking forward to Halloween book club next month.

All right. Yeah, let’s read something scary. Let’s read When Genius Failed or something like that.

That’s not a bad idea. We could—we should do something on the 1929 crash or on 1987. I don’t know if there’s a good book on 1987, but 1929 has some—

These are all great ideas. I really like something a little spooky. A few years ago, I did the great fraud books, like When Genius Failed, and then the—now I’m forgetting—the Bernie Madoff one, the one with the Singaporean fund, and it was really fun.

But I will tell you, I’d wake up in cold sweats at night and be like, “I’m not running a fraud right now, am I?” It’s really scary when you read these things and the pressure these people are under. I’m not trying to sympathize with the fraudsters, but I read them and I’d be waking up in a sweat just thinking about the pressure.

Yeah, there was that guy who kept—he got caught because he had these back-to-back meetings where one was with a law firm, and then he got the guy’s business card and went to the next meeting, introduced himself as that guy, and handed over the business card. I would not be able to do that. Just the boldness—it’s incredible.

All right, we’re way out. What time, buddy?

A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial adviser. Thanks.