John Malone: Old Media Needs New Distribution

John Malone, the chairman of Liberty Media and a pioneer of cable and various other types of media, was a featured guest at the "D: All Things Digital" conference — and sat down with me for an exclusive interview.

I asked Malone about some of his recent deals — he's been quite active so far this year with DirecTV (DTV), Sirius (SIRI) and HSN — as well as his overall philosophy on media.

Perhaps most interesting, Malone weighed in off-camera on the future of the oldest of media: newspapers. He is based in Denver, where the Rocky Mountain News recently went under and the Denver Post is now also at risk.

Malone says he considered investing in the Denver Post to help keep it afloat, but that he decided not to because he's just not sure that there's any way to make money on newspapers until they move beyond dependence on the print format.

Malone seems intrigued by the importance of newspapers as a source of local news, if not the best source of local news. But he says that they need to provide that local news in various formats — TV, Web and, for those who care for paper, print.

Of course, the problem is the fact that the FCC prevents single ownership of local TV stations and newspapers, but Malone says he thinks those regulations will loosen. And I think, why not? There's certainly enough other content out there that vertical ownership of local media shouldn't be anti-competitive.

Malone points to the Dolan family's ownership of Cablevision (CVC), which dominates media distribution on Long Island, between paper Newsday, cable distribution, and its ownership of Clearview Cinemas, one of the largest movie theater chains in the New York area. Malone says this is the type of company that should and will own newspapers moving forward.

Malone has certainly been busy. Earlier this month, satellite TV operator DirecTV Group and Liberty Media (LMDIA) announced plans to merge, which will simplify DirecTV's ownership and set the stage for future deals, like a potential sale or closer ties to a phone or satellite company.

Malone says this is very much consistent with Liberty's history of creating sizable investment positions in a company and then turning them into independent businesses. He wouldn't divulge any details of the next steps for the company once it's fully independent.

Earlier this year Liberty looked to another type of satellite business — satellite radio. Liberty Capital (LCAPA) invested $400 million in Sirius XM Radio, with the potential to invest another $200 million for a 40 percent stake in the company.

Is this part of some master plan to create a satellite content distribution empire?

Malone says it's much simpler than that: he saw Sirius as a company with a lot of problems with its balance sheet and debt structure, which had prevented it from taking advantage of the synergies of the Sirius-XM merger. Malone effectively bought Sirius XM a couple of years to service their remaining debt, giving them time to realize their synergies.

Of course, the company is suffering from the slowdown of the U.S. auto market. But Malone is a big fan of the satellite radio service and is confident that value will prevail.

Just last week, Liberty marginally increased its stake in Home Shopping Network, and of course, Liberty also owns 100 percent of QVC. There's been lots of speculation about Malone creating a massive home shopping empire.

For now, Malone says Liberty is just taking advantage of the cheap stock to increase its stake, and he acknowledged that down the road it might make sense to merge the two companies into one.