News Corp., Liberty Media Set Satellite Stake Swap

John Malone and Rupert Murdoch are getting cuddlier than ever, and their latest deal could land them a juicy prize.

Murdoch's News Corp. (NWS Quote) said Wednesday that Malone's Liberty Media (LMG.A Quote) will increase its stake in News Corp. as well buy a $500 million stake in Sky Global Networks, the News Corp. subsidiary that houses the company's global satellite holdings. The $500 million stake represents nearly 5% of Sky Global, which is expected to go public before the end of the year.

Wednesday's announcement confirms a deal that analysts have been jabbering about for the last week or so and could lay the groundwork for Murdoch's bid for General Motors' (GM Quote) Hughes Electronics (GMH Quote) unit, which owns DirecTV, the leading satellite TV provider in the U.S.

Complicated

Under the terms of the complicated deal, News Corp. will acquire Liberty's 21% stake in Gemstar-TV Guide International (GMST Quote), increasing News Corp.'s stake in the TV programming guide company to 43% and making it Gemstar's single largest shareholder. In exchange for the Gemstar shares, Liberty will get 121.5 million American depository receipts in News Corp., which represent 486 million shares of News Corp.'s preferred limited voting ordinary shares. Liberty, which currently owns 8% of News Corp., will own 21% of the company should Wednesday's deal close, making it the company's largest shareholder outside the Murdoch clan. ...