Fifth Estater

Keeping the Globe Wired In

John Malone’s CEO at Liberty Global has been instrumental in building one of the world’s largest multichannel operators 1/23/2012 12:01:00 AM Eastern

Mike Fries

Title:

President and CEO, Liberty Global Inc.

Education:

B.A., Wesleyan University, 1985; M.B.A., Columbia University, 1988

Employment Highlights:

PaineWebber, investment banking division, specializing in cable, media and telecom, 1985-1990

United International Holdings (later United GlobalCom), cofounder, senior VP, business development, 1990-1995

United GlobalCom, president, Asia/ Pacific division; president and COO; president and CEO; 1995-2005

Current title since 2005

Personal:

Born Feb. 6, 1963; married; two daughters, ages 13 and 10

After building and then selling the largest U.S. cable MSO in the
1980s and ’90s, John Malone went offshore in the last decade
to quietly assemble an even larger operator, Liberty Global Inc.

LGI is now the second-largest cable operator
in the world and the largest outside the U.S.,
with more than $10 billion in revenue coming
from 16.9 million video, 7.2 million broadband
and 5.2 million telephony subscribers.

While Malone has provided the financial
backing for the company’s remarkable expansion
and helps guide its strategic direction as
LGI’s chairman, he gives president and CEO
Mike Fries much of the credit.

“Mike is the finest executive I’ve worked
with,” says Malone. “He has seemingly endless
energy, he is strategic, he builds great management
teams and he has been able to reposition the company in market after market.”

In the last year, Fries has also guided LGI
through some major deals—notably, a $4.1 billion
acquisition of cable systems in Germany
that makes LGI the second-largest operator in
Europe’s largest market. The company also has
posted some record-setting results. In the third
quarter of 2011 alone, LGI gained 327,000 additional
new customers, up 96% from a year
earlier and a record for the quarter.

Some of this growth is being powered by
the company’s aggressive strategy of rolling out
blazing fast broadband speeds, deploying DOCSIS
3.0 systems capable of offering 100Mbps
speeds in 25 million of its 30 million homes.

“Mike has played a very innovative role in introducing
DOCSIS 3.0 and pushing it forward
as a competitive tool,” says Dick Green, an LGI
board member and the former head of Cable-
Labs. Green also points to the development of the Horizon next-generation TV platform as an
example of the company’s innovation.

Two out of every three LGI broadband customers
in Europe currently take 25Mbps tiers
or higher. Fries says the company hopes to get
average speeds up to 40Mbps in 2012, a level
almost unheard of in the U.S.

“We are pushing up broadband speeds very
aggressively, and that has really been the secret
sauce in the success of our bundles,” Fries
notes. LGI added a record 535,000 broadband
customers in the first three quarters of 2011.

This success stands in marked contrast to the
experience of many U.S. cable companies and
telcos that rushed into international markets
in the 1980s and ’90s but eventually retreated
back to U.S. shores as they struggled with the
complexities of doing business around the globe.

“Very few Americans are great at adapting to
multiple cultures, but Mike has been very adept
at understanding local politics, regulation, tax
systems and the competitive landscape,” says
Rick Michaels, chairman and CEO of Communications
Equity Associates, who has worked
with Fries on a number of international deals
over the last two decades.

Fries’ long experience in the cable industry
began soon after college when he joined the
investment banking division at PaineWebber
in 1985. After working on a number of major
media and cable deals, Fries was hired by
cable entrepreneur Gene Schneider to raise
funds for his United International Holdings
(UIH), a start-up with plans to build and buy
international cable systems.

Fries liked the idea so much that he took
a pay cut and joined the company as its fifth
employee and early equity investor. “When I
arrived, my first computer desk was a cardboard
box,” he recalls.

Though the company started with $20 million
in capital, UIH quickly attracted investment
money from cable players such as John
Malone and Time Warner Cable; it expanded
rapidly, building up operations in 27 countries
by the end of the 1990s.

After the dotcom bust in 2001, however,
the company, which was then called
UnitedGlobalCom (UGC), had trouble servicing
its $10 billion debt load. Between 2002
and 2005, Malone, whose Liberty Media had
become a $500 million investor in UGC in
1999, carried out a series of complex transactions
that restructured UGC debt. Malone
later bought out the Schneider family.

Since 2005, when UGC merged with Liberty
International to form LGI, Fries has kept the
company locked into fast-track growth. As
part of a strategy to focus on the most promising
European cable markets, LGI has sold
off some $8 million worth of assets in markets
such as Scandinavia, France, Japan and
Australia, and it has spent about $17 billion
to acquire other European systems.

“We have gone from a company in 27 markets
with $1.5 billion in revenue to one that
is in 14, really 13, markets [after the Australian
deal closes] with $10 billion in revenue,”
Fries says.

The consolidation of operations has also allowed
the company to achieve some notable
economies of scale, adds Brian Deevy, the cohead
of RBC Capital Markets’ Communications,
Media and Entertainment Group.

“Mike has done a very good job of piecing
together operations to become a very significant player in a number of major markets like
Germany,” Deevy explains.

The German deal, which was just approved
by regulators last month, will be particularly
important for LGI’s future. “We think Germany
is a fabulous market,” Malone notes. “It is the
economic engine of Europe, but it is kind of
under-developed in terms of the penetration
of broadband and digital. And there is an opportunity
to do IP telephony.”

Early results con! rm that opinion, notes
Fries. He points out that LGI has already been
able to significantly improve average revenue
per subscriber from €11 to €17 and that net
addition subscribers for its services set a record
in the third quarter in Germany. That’s
no surprise—international speed records
seem to be Fries’ specialty.

But along with ramping up broadband speeds, LGI has also developed the innovative next-generation TV effort known as Horizon. This platform, which won an award at IBC, will allow users to access a wide variety of content from outside the traditional cable platform on multiple devices. "Horizon will launch with 2,500 titles, almost 5,000 hours of online content and 60-plus streaming linear channels," Fries says.

Cable operators have "great networks and great content," Fries notes. "But we don't allow customers to move content from TV to other devices and places easily; we don't allow them to integrate Web or personal content into the TV experience and our user interface is a grid-based, text-based interface that is very clunky in a world where everyone has a tablet. Horizon solves all of those problems. It allows you to move content to an iPad or a PC. It has its own online video platform and we are integrating apps and web content into the platform."

Green adds that Fries demonstrated the platform to top U.S. operators at a CableLabs board meeting. It is hardly a surprise that they were wowed by the technology and beautiful user interface.

E-mail
comments to
gpwin@oregoncoast.com

Mike Fries

Title:

President and CEO, Liberty Global Inc.

Education:

B.A., Wesleyan University, 1985; M.B.A., Columbia University, 1988

Employment Highlights:

PaineWebber, investment banking division, specializing in cable, media and telecom, 1985-1990

United International Holdings (later United GlobalCom), cofounder, senior VP, business development, 1990-1995

United GlobalCom, president, Asia/ Pacific division; president and COO; president and CEO; 1995-2005

Current title since 2005

Personal:

Born Feb. 6, 1963; married; two daughters, ages 13 and 10

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