Liberty Media To Split Off Entertainment Unit Into Solo Entity
Liberty Media will "split off its Liberty Entertainment unit into a standalone entity in a move that will make it easier for the separate company to acquire full control of DirecTV," according to Georg Szalai of the HOLLYWOOD REPORTER. The move also will "put the spotlight on Liberty Entertainment as a company with content and distribution power and position it for possible further content acquisitions." Liberty Entertainment counts among its holdings three RSNs and a "roughly 50% stake" in DirecTV. Industry observers "expect that Liberty Entertainment will be a separately traded firm in about six months and then will take full control of DirecTV, which also is publicly traded, via a reverse merger" (HOLLYWOOD REPORTER, 9/4). DAILY VARIETY's Dade Hayes reports the 50% stake in DirecTV "will account for more than 80% of the value of the new entity." The move is "seen as a way to enable [Liberty] to acquire the rest of DirecTV or entertain other dealmaking options" (DAILY VARIETY, 9/4). But some analysts "were surprised that the spinoff stopped short of announcing a DirecTV merger." Merrill Lynch analyst Jessica Reif Cohen: "It is not entirely clear why Liberty did not announce a merger with DirecTV, if they were to follow the reverse Morris Trust process" (WALL STREET JOURNAL, 9/4).
THAT'S ENTERTAINMENT: BLOOMBERG NEWS' Tim Mullaney noted the new company will be known as Liberty Entertainment Inc. and will absorb Liberty Sports Holdings, which operates the RSNs. New York-based Gabelli Value Fund Associate Manager Chris Marangi said the move "facilitates an eventual combination of Liberty Entertainment and DirecTV" (BLOOMBERG NEWS, 9/3). In Denver, Jeff Smith reports the move also is "regarded as the next step of a plan to transform Liberty Media from a holding company to a series of operating companies" (ROCKY MOUNTAIN NEWS, 9/4).
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