RiseStar
December 16th, 2008, 09:35 PM
By PETER LAURIA, New York Post
In a move designed to highlight the value of DirecTV, the board of John Malone's Liberty Media Corp. plans to move forward with a spin-off of the unit that houses most of its stake in the satellite-television operator.
Liberty's 52 percent stake in DirecTV is valued at more than $12 billion based on the unit's $24 billion market capitalization. But Liberty itself is only worth $6.7 billion.
According to Liberty CEO Greg Maffei, the spin-off, which had been in the works, "will reduce the discount from fair value" in the company's stock and give it a new currency to "pursue strategic objectives."
DirecTV has long been rumored to be a potential merger partner for AT&T, and now that the tie-up of satellite-radio operators Sirius and XM was approved by regulators, industry observers are whispering that rival EchoStar may make another run at merging with DirecTV.
EchoStar Corp. and DirecTV agreed to merger a few years ago, but regulators subsequently nixed the move.
Terms of the spin-off call for investors in Liberty Entertainment tracking stock to receive shares in a new subsidiary that will hold many of the same assets currently housed within that tracking stock. Among those assets are the 52 percent stake in DirecTV, a 50 percent stake in the Game Show Network, and three regional sports networks.
The new entity will also assume the $2 billion in debt Liberty incurred to acquire its DirecTV position.
Like all of Malone's deals, this one is intended to be tax-free to shareholders.
In a move designed to highlight the value of DirecTV, the board of John Malone's Liberty Media Corp. plans to move forward with a spin-off of the unit that houses most of its stake in the satellite-television operator.
Liberty's 52 percent stake in DirecTV is valued at more than $12 billion based on the unit's $24 billion market capitalization. But Liberty itself is only worth $6.7 billion.
According to Liberty CEO Greg Maffei, the spin-off, which had been in the works, "will reduce the discount from fair value" in the company's stock and give it a new currency to "pursue strategic objectives."
DirecTV has long been rumored to be a potential merger partner for AT&T, and now that the tie-up of satellite-radio operators Sirius and XM was approved by regulators, industry observers are whispering that rival EchoStar may make another run at merging with DirecTV.
EchoStar Corp. and DirecTV agreed to merger a few years ago, but regulators subsequently nixed the move.
Terms of the spin-off call for investors in Liberty Entertainment tracking stock to receive shares in a new subsidiary that will hold many of the same assets currently housed within that tracking stock. Among those assets are the 52 percent stake in DirecTV, a 50 percent stake in the Game Show Network, and three regional sports networks.
The new entity will also assume the $2 billion in debt Liberty incurred to acquire its DirecTV position.
Like all of Malone's deals, this one is intended to be tax-free to shareholders.