|
Liberty to spin off DirecTV |
| Print |
|
Forward
|
| Chris Forrester, on 03-09-2008 |
John Malone is to spin off DirecTV plus a cluster of cable channels (including Starz) as part of a plan to focus on other objectives. This suggests that Malone has drawn a line under any plans to merge DirecTV with Charlie Ergen’s DISH Network, which Malone has recently said would in any case be a regulatory challenge.
John Malone, “the cable guy”, is always full of Wall Street surprises.
His quoted Liberty Entertainment (LMDIA) operation will be separated
into a fully stand-alone operation.
Malone’s media interests are held via Liberty Media which currently
trades as three separate tracking shares, each with two classes of
stock. Liberty Entertainment is one, Liberty Interactive (LINTA) -
which tracks home shopping network QVC and other assets - and Liberty
Capital (LCAPA) - which holds other investments - are the others. The
original idea was to permit investors to pick and mix each or any of
the Malone vehicles that most interested them.
Yesterday (Sept 3) Liberty said they would swap the LMDIA entertainment
tracking stock with new shares in the subsidiary, which will then
become a separate company. The company’s existing management would stay
on and supervise the new business.
But the business will have a ton of debt, currently about $2bn-worth,
and this impacted the market yesterday with the company’s bond rating
risk jumping 104 basis points to 473 basis points, which signals some
anxiety in investors’ confidence suggested brokers Phoenix Partners.
“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," said Greg Maffei,
president/CEO of Liberty.
Liberty, in a statement, said the shape of the new unit would comprise
approximately 50% of The DirecTV Group, 100% of Starz Entertainment,
FUN Technologies, and Liberty Sports Holdings, 50% of GSN and 37% of
WildBlue Communications. Entertainment will be the obligor on
approximately $2 billion in debt incurred to acquire 78.3m DirecTV
shares in April 2008.
© Rapid TV News 2008
|
