Media
Liberty Media Board Approves Spinoff
TSC Staff
12/13/08 - 07:35 PM EST
Liberty Media announced Friday evening that its board had approved a plan to spin off most of its Liberty Entertainment(LMDIA Quote) unit, which holds a majority stake in DIRECTV(DTV Quote).
Liberty Entertainment already has a tracking stock that trades on Nasdaq. But Liberty Media says that stock is trading at a discount to the assets that the unit actually holds.
"We believe a new asset-backed security will reduce the discount from fair value in our stock, thereby making it a more attractive currency, and will permit us to better pursue our strategic objectives," said Greg Maffei, president and CEO of Liberty Media.
In the planned transaction, Liberty Media will redeem a portion of the outstanding tracking stock in exchange for shares in the subsidiary, which will become a separate public company. Liberty Media said the transaction is intended to be tax-free to shareholders.
The spun-off entertainment company will hold the following assets: 52% of DIRECTV, 50% of GSN, 100% of FUN Technologies and 100% of Liberty Sports Holdings, which holds three regional sports networks. It will also be the obligor on approximately $2 billion in debt incurred to acquire 78.3 million DIRECTV shares in April 2008.
The tracking stock currently reflects other assets. Following the spinoff, they will continue to be attributed to the tracking stock. They are: 100% of Starz Entertainment, 37% of WildBlue Communications and an undetermined amount of cash.
Shares of Liberty Media Capital(LCAPA Quote) closed Friday up 2 cents at $3.02. Shares of Liberty Entertainment tracking stock gained 80 cents to close at $12.96. And shares of another Liberty stock, Liberty Media Interactive(LINTA Quote), gained 2 cents to close at $2.41.