Liberty to acquire controlling stake of DirecTV
Denver Business Journal - by Bob Mook Denver Business Journal
Liberty Media Corp. will swap its 16.3 percent stake in News Corp. for News Corp.'s controlling 38.5 percent stake in DirecTV Inc. in a transaction worth more than $11 billion, the companies announced Friday.
Under the agreement, Liberty (NASDAQ: LCAPA) will transfer 188 million shares of News Corp. (NYSE: NWS) for 470 million shares of DirecTV (NYSE: DTV) common stock, the Fox Sports Rocky Mountain, Northwest and Pittsburgh regional sports networks and $550 million in cash.
Analysts have said the deal gives provides a distribution platform for Liberty's other holdings, including the home shopping network QVC Inc. and Denver-based television programming subsidiary, Starz Entertainment Group. Liberty is controlled by Denver media mogul John Malone.
"DirecTV and the regional sports networks represent a critical step in our efforts to transform Liberty Media into a well-positioned, focused operating company," said Greg Maffei, president and CEO of Liberty in a released statement.
The also move gives News Corp.'s Rupert Murdoch more control over his company, which also owns 20th Century Fox movie studios, the Fox TV Networks and the popular social networking Web site MySpace. Last year, Murdoch enacted a poison pill provision to prevent a hostile takeover after Malone acquired a 20 percent stake in News Corp.
Observers have speculated that Liberty might seek a larger stake in DirecTV and eventually move the company's headquarters from El Segundo, Calif. to Denver.
DirecTV, which employs a total of 9,200 people, this summer opened a national operations center in Englewood in the 257,000-square-foot building at 161 Inverness Drive West -- a site once occupied by ICG Communications Inc. -- with the goal of hiring 1,000 people by year-end.
As the sole occupant, DirecTV easily could accommodate more workers; ICG once staffed nearly 2,600 people in the building. In addition to the Greenwood Village site, DirecTV's uplink center is located in Castle Rock, where about 110 employees work.
DirecTV is the country's largest satellite TV operation with more than 15 million customers.
Talks of the swap have fueled speculation that DirecTV might eventually merge with Englewood-based EchoStar Communications Corp., which operates the No. 2 satellite TV provider, Dish Network. But analyst say that regulators might not approve such a merger because of anti-trust considerations.
EchoStar employs 21,000 full-time workers, including 5,000 in Colorado. On Friday, EchoStar reported that it reached a milestone of 13 million subscribers.
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