Liberty Takes Shares in News Corp.
By SETH SUTEL
AP Business Writer
biz.yahoo.com
NEW YORK (AP) -- John Malone's Liberty Media Corp. is transferring its 21 percent stake in Gemstar-TV Guide International Inc. [NasdaqNM:GMST - news] to News Corp. in exchange for shares in the media conglomerate.
The deal announced Wednesday makes Liberty the largest shareholder in News Corp. after Rupert Murdoch and his family.
It doubles News Corp.'s 20 percent stake in Gemstar-TV Guide, which puts out interactive programming guides as well as the weekly TV Guide magazine.
Some of the Gemstar stake will be folded into Sky Global Networks, a satellite TV subsidiary of News Corp. that is being groomed for an initial public offering. As part of the multi-layered deal announced Wednesday, Liberty will also invest an additional $500 million in Sky Global once it goes public, for a total stake of about 6 percent.
The deal, which had been in the works for several months, shores up Murdoch's satellite division by contributing well-regarded assets as well as a close association with Malone, a pioneer of the cable TV industry who has a sterling reputation with investors.
Investors welcomed news of the deal. Shares of Gemstar-TV Guide rose $6.44, or 9 percent, to $75 in midday trading on the Nasdaq Stock Market. News Corp. shares rose $2 to $55.813 and Liberty's shares rose 37.5 cents to $18.75 on the New York Stock Exchange.
Murdoch is believed to be preparing a bid for DirecTV, the largest satellite broadcaster in the United States, in order to fill a major gap in his satellite broadcasting business that already reaches many homes in Europe, Asia and Latin America.
The deal with Malone, while being done on its own merits, could help Murdoch make more compelling bid for DirecTV, which is owned by Hughes Electronics Corp., a division of General Motors Corp. DirecTV would likely attract bids from other media players as well.
Speaking on a conference call with analysts and reporters, Murdoch declined to comment on a possible bid for DirecTV. ``It's too early to comment on that. But you can certainly confirm that we would be interested if GM decided to do anything,'' Murdoch said.
For Malone, the transaction with Murdoch helps consolidate his complicated array of holdings under Liberty, which includes stakes in about 100 cable channels, including Discovery and BET. Liberty is a unit of AT&T Corp. (NYSE:T - news), which acquired the cable company Malone founded, TCI.
The Gemstar-TV Guide deal further tightens the relationship between Murdoch and Malone, who have been close for many years. Last year the two men effected another complex transaction that gave Malone an 8 percent stake in News Corp. in exchange for several sports programming properties.
After the latest deal closes, Malone will have an 18 percent stake in News Corp., a wide-ranging conglomerate that also owns the Fox television network, the 20th Century Fox movie studio and newspapers in Australia, Britain and the United States.
News Corp.'s satellite services, which include BSkyB in Britain and Star TV in Asia, don't yet use Gemstar's programming guides but the companies are developing new set-top boxes to enable viewers to access the service, Gemstar chairman Henry Yuen said. |
