John Malone made it official Monday: He wants to be John Malone all over again. The chairman of Liberty Media ( L) -- which on Monday said it would spin off its international assets into a separate company called Liberty Media International -- explained to Wall Street why he plans to take LMI's helm as chief executive. As Malone said on a conference call, he'd like to recreate on foreign soil the success of Tele-Communications Inc., the U.S. cable TV conglomerate that he built up in the U.S. in the 1970s and 1980s. Created from the roll-up of numerous other operators of cable TV systems, TCI became the largest operator of cable TV systems in the U.S., and used its distribution power to make money in the development of new programming as well. "We see the opportunity to build another TCI, perhaps a bit bigger," Malone said -- one that, based on euro- and yen-denominated businesses, would serve as an international hedge against the Malone family's dollar-based investments in the U.S., primarily its stake in Liberty. Malone, who serves as chairman but not CEO of Liberty, plans to remain as Liberty's chairman after he takes LMI's CEO post. "My commitment to Liberty continues," Malone said. "It's the principal place where my family invests its wealth." Malone says his new job reflects his long-standing interest in the international arena. "It's really not a huge change in the focus of my time," he said. "The idea of building a large cable enterprise with its associated programming and technology assets is very appealing to me personally," he said. It should be. TCI -- which Malone sold to AT&T ( T) and which subsequently was absorbed into the nation's current biggest cable operator, Comcast ( CMCSA) -- has served as a model for vertical integration among cable companies, with its ability to trade the privilege of distribution on TCI for stakes in numerous programming companies.
Talking about the opportunity for LMI, Malone said that many cable systems in Europe and elsewhere are privately held, with owners seeking a way to cash out of their holdings. A publicly traded roll-up such as LMI, or UnitedGlobalCom ( UCOMA), the European operator that would be LMI's chief asset, would be a good roll-up vehicle for those investments. Using the TCI model, LMI could use the roll-up process to run these systems more efficiently, to leverage its distribution network to develop new programming, and also to introduce new technology such as interactive commerce. Monday's move is part of CEO John Malone's effort to reduce the discount at which Liberty trades to its components' asset value, estimated recently to be roughly 25%. Liberty's stock has been largely unchanged for five years as investors have fretted about the holding company's complexity and the difficulty of unlocking value in constituent companies whose appreciation represents huge, taxable capital gains. By spinning off the foreign companies, Malone simplifies Liberty's valuation structure without creating a large tax bill for shareholders, while possibly making the remaining company -- which includes a wholly owned QVC plus stake in Time Warner ( TWX), InterActiveCorp ( IACI) and News Corp. ( NWS) -- a more attractive acquisition candidate. Meanwhile, Liberty said revenue rose at QVC to $1.57 billion in the fourth quarter from $1.16 billion a year ago, with domestic revenue up 6% on higher sales of clothing and accessories. Revenue at its Starz/Encore cable network rose to $235 million from $228 million.