DirecTV Group, Liberty Media Make a Deal
Liberty’s chairman John Malone will command a 24% stake in the new DirecTV voting.
May 4, 2009
Liberty Media will spin off its entertainment division, to be merged into DirecTV Group Inc.
“Our existing equity structure was less than ideal,” said Chase Carey, DirecTV’s chief executive and president. “The transaction will improve our ability to pursue strategic initiatives that can enhance value for all DirecTV shareholders.”
Liberty Media chairman John Malone surprised Credit Suisse analysts, who, in a report posted at Thomson Analytics, said they anticipated “his voting stake in the newly formed entity would be more in the neighborhood of 15-17” percent.
As announced in December 2008, Liberty Media will split off Liberty Entertainment, which will hold most of its assets and liabilities attributed to Liberty Entertainment Group tracking stock. Liberty Entertainment will, after the deal, consist of 54% of DirecTV common stock, Liberty Sports holdings, which runs three sports stations, a 65% stake in Game Show Network and FUN Technologies and about $30 million in cash generated by operations, along with $2 billion in debt. DirecTV will provide to Liberty Entertainment up to $650 million in funding pursuant to a term loan facility in order to service its debt.
The new company will have two classes of stock; Class A shares will be listed on Nasdaq under the symbol DTV and Class B shares will be held by Malone, his wife and associated trusts.
Carey will continue to serve as DirecTV’s president and chief executive. All executives and board members of DirecTV Group, including Liberty’s representatives, will serve as the executive officers and board of directors of the DirecTV.
Liberty Starz, the remaining property, will consist of Starz Entertainment, 37% of WildBlue, PicksPal, Fanball and approximately $650 million in cash and cash equivalents. The Series A Liberty Starz common stock and Series B Liberty Starz common stock are expected to be listed on NASDAQ under the symbols LSTZA and LSTZB, respectively.
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