Even after reversing its subscription declines and cutting down on costs, Netflix is still overvalued at around $260, Liberty Global Chairman John C. Malone said Tuesday.
Speaking at the annual Paley International Council Summit in New York, Malone stuck to his long-term view of the stock, even as its price has gone down, saying that competition will limit Netflix’s profitability in the future.
“The fact that Disney was able to launch and get to scale, pretty powerful and pretty quickly is a pretty good indication that that thesis is correct,” Malone said.
As far as gaining sustainable profitability in the space, Malone said he believes it “will take quite a while to sort out,” since consumers love high quality, but remain highly sensitive on pricing.
Netflix and other competitors are trying to combat that price sensitivity by launching lower priced advertising-supported tiers. Still, Malone said he does not know how big the advertising or consumer market is for that tier, given the sustainability and success of free content paid for with advertising as well as premium content with no advertising.
“It seems to me that subscription plus advertising for entertainment programming is a narrow choice,” he said.
Asked about David Zaslav’s recent moves with Warner Bros. Discovery — in which the CEO pledged to maximize the value of the content, either on the platform or off, and has pledged to curb spending — Malone said he thinks “he does win with that strategy,” but only if the quality of the content remains high.
“He’ll do fine and how he ultimately monetizes that content, I think will evolve over time,” Malone said.
On the other hand, asked why Elon Musk bought Twitter, Malone said he believes Musk is a power user on the platform and “was offended, as many of us were, by the arbitrary intervention into free speech.”
But as to whether he’ll be able to make money off of his $44 billion investment into Twitter, Malone said, “It would be a miracle.”