Masterbuilder Malone: There He Goes Again
cvmag.com
BY TOM KERVER
As usual, Liberty Media chairman John Malone has been all over the news this summer: publicly trying to goad AT&T chairman Mike Armstrong to create a new network division that can be sold off as a tracking stock; partnering with Paul Allen to grab an equity stake of struggling Internet retailer Priceline.com; and making multi-billion deals to expand Liberty's assets in Latin America and Asia.
More quietly, he is also piecing together one of his patented the-hand-is-quicker-than-the-eye financial card tricks by combining part of the all but defunct Phoenixstar (ostensibly a holding entity for 1.4 million shares of General Motors Class H stock -- i.e., DirecTV) into TCI Satellite Entertainment (TSAT), to form the newest member of the Liberty Media family: Liberty Satellite & Technology (LSAT), headed by none other than cable and satellite TV veteran Carl Vogel, TSAT's current CEO and president.
Following a series of transactions with Liberty Media, the new company will shortly march into the publicly traded arena on the NASDAQ exchange. And in true Liberty fashion, it will have two classes of stock, with each share of the B class carrying 10 votes (vs. one vote for each Class A share). Also, 96.4 percent of LSAT's voting control will be directly or indirectly vested with Malone.
Besides the GMH shares, LSAT will own slightly more than five million shares of Sprint PCS (market capitalization circa $300 million). Again in true Malone fashion, it will have more than $390 million in tax loss carry-forwards that don't begin to expire until 2010. "Once again," says Vogel, "you have an example of how John [Malone] created value where none appeared to exist."
In its recent annual 10K filing with the Securities & Exchange Commission, the company said it plans to "take advantage of its industry expertise and relationships and tax loss carry-forwards in various future business opportunities." What sorts of opportunities does Vogel have in mind? "You can characterize us being investors in various broadband distribution companies, both satellite and wire-based. We're particularly interested in companies with a global focus," he says.
The future LSAT has already used its financial leverage and its membership in the Liberty family to create an investment portfolio that includes:
• 31.5 percent interest in Astrolink, a global satellite service designed to provide high-speed connectivity for two-way voice, data and video to 92 percent of the populated world;
• $5 million in Jato Communications, a Denver-based DSL company;
• equity in XM Satellite Radio, iSky (a Ka band two-way satellite service), and -- with Rupert Murdoch -- Sky Latin America;
• control of Asvan Technology, an R&D business involved in emerging technology.
Vogel, appearing much more comfortable than he did as an EchoStar executive, describes the assets as "a nice mix on which to build." |
