Malone: Fee squabbles will lead to consolidation

Cable programming distribution companies must merge to get the leverage they need to successfully negotiate fees and programming deals on the same level as the big broadcasters, according to Liberty Media Chairman John Malone, who, having built the largest cable company in the world when he ran TeleCommunications Inc. (TCI), knows a thing or two about mergers.

Big distributors like ABC parent Disney, which recently had a very public spat with Cablevision Systems and is lining up Time Warner Cable as its next target, have a distinct advantage over smaller companies when it comes to getting more money for their wares, Malone said.

Meanwhile, Liberty itself is considering some more consolidation through acquisition, according to reports out of Australia where the U.S. cable giant is said to be positioning itself to acquire a stake in Australian cable TV operator Foxtel. It could be a tough play. Telstra owns a 50 percent stake in Foxtel while News Corp. has another 25 percent and Consolidated Media holding the last quarter--none of them would appear friendly to a Liberty play.

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