Railroads (BNSF, UNP, CSX, CNI, KSC)

Railroads:

Intermodal represents 22% of 2014 revenues for major US railroads - important indicator because covers broad range of goods, from computers to chickens

Year-on-year change in intermodal traffic since 2006

John Malone:

From 1994 WIRED article: Link

• deal fell through with Bell Atlantic in early 1994 because Bell Atlantic was trying to position itself as more of a growth company - valuation based on earnings growth, not asset or dividends - but they would have to buy Tele-Communications (TCI) where $10 billion worth of assets -- including 20% of Turner Broadcasting -- contributed nothing to short-term earnings, despite the value of them going higher. They had trouble paying the price since you don't see the earnings. 
• Deal with Bell Atlantic falling through: my strategy is we're gonna own a lot of 20-percents-of-things, and we're going to put a fair amount of money into it. Those things are going to be leveraged and grow like hell, and we're going to create a lot of shareholder wealth doing that. As for Wall Street, we're just going to have to keep training them to understand the value of that approach. I mean, I've been doing it my whole career.
• Telephone companies and changing to video-on-demand: All the tests show that the one interactive service that the public has a lot of interest in right now is movies-on-demand. Replacing the video store business with electronics is something that would generate maybe, from our tests, four or five bucks a month of cash flow per cable subscriber. Now, how much capital can you deploy for that little? If you're already basically there -- if you've already got a network in place capable of delivering video, and it's just incremental -- you can do it. But if you've only got copper in the home, and you have to build out a video network from dollar one, then it's going to be real tough. So how do these guys get the money to do it? They've either got to cross-subsidize it very heavily out of their existing telephone customers and raise rates -- which is going to give their regulators problems -- or they've got to raise their debt. But if they do that, their debt rating goes down and that's, like, completely verboten for these people. The only other way is to take it out of the shareholders -- in other words, cut the dividend -- but these guys would rather die than cut the dividend. So when you take a look at all the constraints that an RBOC's balance sheet is really under, you see they've actually got only a limited amount of discretionary capital to work with. They're just not going to be able to do much in the interactive TV business.
• To use capital - can take it from customers (raise prices), bond holders (borrow money), or shareholders (issue equity or cut dividend)
• Cable infrastructure superior to telephony, they felt worried about competition.
• I mean, all of our models say that. So, sure, we can knock the shit out of the cost structure of the telephone business

John Malone Resources

Resources:

1994 WIRED article Link