Asset swap puts Malone back in spotlight
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US cable pioneer John Malone, who has regained a centre-stage position in US media following an $11bn asset swap with Rupert Murdoch's News Corporation, is expected to now play a principal role in the convergence of satellite broadcasting and broadband. Just before Christmas, Malone's Liberty Media took control of leading US satellite broadcaster DirecTV by swapping Liberty's 16.3% stake in News Corp for its 38.5% holding in the pay-TV provider. Liberty also gained three regional sports networks and $550m in cash.
The deal ends a long-running headache for 75-year-old Murdoch who feared Malone, ten years his junior, might use his 19% voting stake in News Corp to challenge the Murdoch family's control of the international media conglomerate, built over a half-century after Rupert Murdoch inherited a single newspaper from his father in 1952. Murdoch imposed 'poison pill' measures to prevent Malone's stake from rising further; they now expire on completion of the deal, which will leave Murdoch with around 38% of the voting shares, up from 31.2%.
Malone said Liberty's investment in DirecTV would create "financial, operating, and strategic flexibility". Chase Carey, DirecTV's CEO, who is expected to stay on, said he had "great confidence" in Malone and Liberty's CEO, Greg Maffei. Carey, a former News Corp executive, also thanked Murdoch for helping to propel DirecTV to its heights over the past three years.
Murdoch fulfilled a long-held ambition of owning a US satellite broadcaster by taking control of DirecTV three years ago after rival satellite pay-TV provider EchoStar had its bid for DirecTV blocked by regulators. Rumours of a merger between EchoStar and DirecTV circulated Wall Street this summer, but analysts said regulators were unlikely to approve the creation of a single player.
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