Liberty Media Corp. will distribute entertainment assets, including its 52 percent stake in DirecTV Group Inc. (DTV:US), in a tax-free spinoff to investors.
The move will create a new asset-backed security intended to reduce the discount in Liberty Entertainment tracking stock, Chief Executive Officer Greg Maffei said today in a statement.
The assets being spun off will continue to be attributed to the tracking stock, the company said. Liberty Interactive and Liberty Capital won’t be affected.
The new entity will include Fun Technologies and Liberty Sports Holdings, owner of three regional sports networks, and 50 percent of GSN LLC. The new company will also have about $2 billion in debt, the money used to acquire 78.3 million DirecTV shares in April.
Starz Entertainment, 37 percent of WildBlue Communications Inc. and an undetermined amount of cash will remain part of the Liberty Entertainment tracking stock. When the plan was announced in September, Starz was going to be part of the new company. Liberty Media, based in Englewood, Colorado, is controlled by Chairman John Malone.
“We continue to work on a plan to split-off” Liberty Entertainment, Maffei said in the statement. The stock will be “a more attractive currency, and will permit us to better pursue our strategic objectives.”
Shares of Liberty Entertainment climbed 80 cents, or 6.6 percent, to $12.96 at 5:10 p.m. in Nasdaq Stock Market trading. The tracking stock has declined 48 percent this year. Liberty Interactive rose 2 cents to $2.41 and is off 87 percent this year. Liberty Capital advanced 2 cents to $3.02 and has slumped 75 percent this year.
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