John Malone's international cable giant Liberty Global on Wednesday reported improved fourth-quarter financials and continued subscriber gains.
CEO Mike Fries said he felt good about the latest results and highlighted that the company had a stronger second half of the year as it had predicted.
Fries on late Wednesday told The Hollywood Reporter about the company's expectations for 21st Century Fox's planned acquisition of the rest of European pay TV giant Sky, which operates, among other markets, in Britain and Germany, where Liberty Global is also active. "The U.K. is a competitive market. It always has been and remains one," he said. "It's also a very vibrant digital and broadband market, and there is plenty of room for growth. I don't anticipate the new Sky to act any differently than the old Sky."
Overall, the exec said about the planned deal and what it means for Liberty Global: "They have always been a rational competitor and a great supplier of content to us and others. So we don't expect it to mean any wholesale change."
Asked about the recent carriage showdown between Sky and Discovery Communications, in which Malone also owns a big stake, that ended in a last-minute deal, Fries said "We did do our deal with Discovery last year and averted any public crisis. But it's always a challenge. Every year, we are trying to spend our programming dollars in the most efficient way. And often that means trying to get better rates for the content that we are distributing and reallocating some of that spend to more on-demand content. We are all looking to rebalance a little bit our content spend to match more closely our consumers' consumption habits. It's inevitable that there is going to be some tension there."
Asked about the company's interest in acquiring content companies, Fries highlighted that Liberty Global already co-owns with Discovery production company All3Media, has a stake in Lionsgate and owns a 9.9 percent stake in U.K. TV giant ITV, among other things. "We remain opportunistic there," said the exec about his approach to potential content acquisitions. "We don't have anything to discuss today and we do own some great businesses. We are just staying the course in terms of really smart, offensive, opportunistic investments."
He also mentioned the Time Warner-AT&T deal, which shareholders of the entertainment giant approved earlier on Wednesday. "There isn't a Disney in Europe. For us, there isn't the equivalent of AT&T-Time Warner," Fries said. "You have to be more tactical about how you put that money to work."
Liberty Global on Wednesday posted quarterly operating income of $824.2 million, up 33 percent compared with the $621.3 million recorded in the year-ago period. Operating cash flow, another profitability metric, rose 5.3 percent to $2.41 billion. Quarterly revenue increased 2.1 percent to $5.14 billion.
Liberty Global posted a fourth-quarter loss of $5 million for its Latin American business, compared with a $10 million loss in the year-ago period. Its European business posted a profit of $2.2 billion, compared with a loss of $200 million.
Liberty Global added 323,700 revenue generating units (RGUs) in Europe, while in Latin America it lost 200. The company's video subscriber losses in Europe in the quarter amounted to 24,400, an improvement over the year-ago loss of 59,100. It lost 6,200 video subs in Latin America, compared with 1,300 in the year-ago period.
"As expected, we finished 2016 on a high note," said Fries in a statement. "This performance was driven by solid results across our European operations, including Virgin Media, which delivered its best quarterly result in two years." He added: "As promised, the key 2016 drivers of our Liberty Go plan are kicking in - new build accelerated, B2B performed well and we kept indirect operating expenses relatively flat. We expect the collective impact of these drivers to continue ramping in 2017 and beyond, underpinning accelerating growth over the medium term."
Fries continued: "On the subscriber front, we increased our 2016 RGU additions in Europe by 24 percent year-over-year and finished the year with 946,000 new subscribers. This improved performance can be credited to the wide range of innovative new products that we've launched, including our superior and ever-increasing broadband speeds and our aggressive network expansion program."