Another IATV related article:
TCI Music Shares Skyrocket
On Plan With Liberty Media
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- If John Malone's goal in restructuring the
relationship between TCI Music and its majority stakeholder Liberty
Media Group was to unlock shareholder value, then his plan appears to
be working.
Shares of TCI Music more than tripled Tuesday on news that Liberty
Media plan to turn over its Internet and interactive television assets to
TCI Music in return for a bigger ownership stake in the company.
The proposal by TCI Music calls for the Malone-led Liberty Media to
turn over assets such as its stakes in Internet companies such as iVillage,
Priceline.com, Sportsline.com and Drugstore.com in return for 128.8
million shares of TCI Music. The additional shares will boost Liberty
Media Group's stake in TCI Music to 94% from 86%. TCI Music will
change its name to Liberty Digital and will be headed by Lee Masters, a
media executive credited with building the E! Entertainment Television
cable channel.
"This company is going to be Liberty Media's and John Malone's primary
vehicle for investing in new media, the Internet and related technologies,"
Mr. Masters said.
The plan is to both take small investments in Internet companies and also
to acquire and operate some companies, Mr. Masters said. Liberty Media
is the programming unit of Tele-Communications Inc., which was
recently acquired by AT&T. The company shares trade as a tracking
stock to AT&T.
TCI Music already runs companies such as SonicNet, a network of
music Web sites, and the Box Worldwide, an interactive music television
network. But shares of TCI Music have foundered as the Box never took
off with television users and its other holdings have failed to develop the
kind of traffic seen on the most successful Web sites. Before Tuesday,
the 52-week high for the shares was the 9 15/16 they hit last May -- and
since then have traded as low as 2 11/32.
Under the deal, Liberty Media will get the shares of TCI Music for about
$600 million -- or $4.66 a share. The price was based on the average
value of the shares in the 30 days before the proposal was made. The
value of the stakes in publicly held companies that Liberty Media will
turn over to the new company comes to about $300 million.
Liberty Media will also contribute some of the space that Liberty was
granted on the TCI cable lines when it did the deal with AT&T and with
that Liberty Digital will develop 12 interactive cable channels, Mr.
Masters said. TCI Music shareholders are expected to vote on the
proposed transaction later this month.
Keith Benjamin, an analyst at BancBoston Robertson Stephens, said the
move is part of a trend of old-line companies hoping to capture the
new-line valuations now being afforded Internet companies. "Everyone
wants to monetize their Internet value," he said.
Last week, for example, Ziff-Davis created an Internet tracking stock,
ZDNet, out of its Internet holdings and investment bank Donaldson
Lufkin & Jenrette has filed to do the same.
Jessica Reif Cohen, an analyst at Merrill Lynch, said there was no way to
determine if TCI Music shares deserved the jump they got. She added
that Mr. Malone "is a terrific investor and cable is going to be the
gatekeeper of the delivery system" so it makes sense for him to be
focusing on Internet media and commerce.
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This keeps getting better and better. |
