Liberty Media shuffles the deck:
Liberty Media to Make Its DirecTV Stake Publicly Traded
By REUTERS
Published: September 3, 2008
The Liberty Media Corporation said on Wednesday it planned to spin off its stake in the DirecTV Group and other assets into a new public company.
Liberty’s 50 percent stake in DirecTV will account for more than 80 percent of the value of the new company, which will be called the Liberty Entertainment Group.
Wall Street analysts said the long-anticipated move could eventually lead to Liberty Entertainment and DirecTV being merged into one trading entity.
“We believe that the company would not have announced these spin plans without at least a substantial road map toward combining DirecTV and Liberty Entertainment into a single entity that would be acceptable to DirecTV’s independent directors,” said Vijay Jayant, an analyst at Lehman Brothers.
Liberty, which is based in Englewood, Colo., and is controlled by the cable pioneer John C. Malone, said it planned to distribute shares of the new stand-alone company to holders of Liberty Entertainment tracking stock.
It said it would redeem all outstanding shares of Liberty Entertainment tracking stock, and that it intended the transaction to be tax-free to shareholders.
“We believe converting the Liberty Entertainment tracking stock to an asset-backed security will create a stronger currency and allow greater flexibility to pursue our strategic objectives,” Gregory B. Maffei, the chief executive of Liberty Media, said in a statement.
Liberty expected the executive officers of Liberty Media to also hold those positions at Liberty Entertainment.
Liberty Media has operated under three tracking stocks to allow investors to more closely follow its businesses. The other two tracking stocks are Liberty Interactive, home to QVC shopping channel; and Liberty Capital, which holds passive stakes in companies including Time Warner and Sprint Nextel.
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