Bloomberg News

Malone Signals Succession Plans With First-Refusal Rights (1)

February 19, 2014

Billionaire John Malone has set his succession plans in motion by giving the chief executive officers of Discovery Communications Inc. (DISCA:US) and Liberty Global Plc (LBTYA:US) the right to buy his stakes should he decide to sell.

Malone, 72, spelled out the plans in regulatory filings yesterday, and said separately in an e-mailed statement that “nothing is changing right now.” The Maryland-based cable-channel owner said he would stay active with both companies and had no plans to transfer any voting shares.

“But, in the event I do in the future decide to pursue the sale of my voting position, I am excited about providing these two strong executives, who have both created significant shareholder value, with a path toward acquiring that stake and preserving the long-term stability and continuity of the companies they have built and will continue leading into the future,” Malone said.

According to yesterday’s filing, Discovery CEO David Zaslav has the exclusive right to negotiate to purchase Malone’s 5.9 million Class B shares if he determines to sell them, as long as he is employed by Discovery Communications. If an agreement isn’t reached and Malone decides to sell to a third party, Zaslav would have the right to match the offer.

Fries Vs. Zaslav

A similar agreement was reached with Michael Fries, the CEO of London-based Liberty Global. He will also have the right of first refusal to buy Malone’s 8.7 million Class B shares in the European cable company, according to a separate filing today. Both executives will also have the right to vote the shares if Malone isn’t voting them.

Discovery has a market value of $27.6 billion, while Liberty Global is valued at $34.4 billion.

Zaslav, who joined Discovery in 2007 from NBCUniversal, helped take Discovery Communications public the following year. Since then he’s doubled its slate of cable networks and created a joint venture with Oprah Winfrey to start the OWN channel.

A former attorney, Zaslav signed a new contract with Discovery last month that keeps him at the cable-channel giant through 2019. He may earn an estimated $110 million this year, including a $3 million salary, $6.6 million in potential bonuses and more than 1 million performance-based restricted stock units.

Former Banker

Fries, the head of Malone’s international cable business, with operations in 14 countries, has served as the head of Liberty Global since 2005. The former investment banker held a variety of roles, including CEO, at UnitedGlobalCom Inc., a former European cable TV and telephone company Malone merged with his former Liberty Media International Inc. to create Liberty Global. In 2012, his total calculated compensation was $14 million, according to calculations by Bloomberg Businessweek.

Malone suffered a loss last week when Comcast Corp. trumped his bid for Time Warner Cable Inc., agreeing to buy the second-largest cable company in a $45 billion deal. It followed an initial setback in June when Vodafone Group Plc beat out Liberty Global for Kabel Deutschland Holding AG with a $10 billion offer.

The Colorado-based billionaire is now left with smaller takeover options such as Sirius XM Holdings Inc. in the U.S. and Grupo Corporativo ONO SA and Com Hem AB in Europe.

To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Kristen Schweizer in London at kschweizer1@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net


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Companies Mentioned

  • DISCA
    (Discovery Communications Inc)
    • $78.71 USD
    • 2.86
    • 3.63%
  • LBTYA
    (Liberty Global PLC)
    • $44.09 USD
    • 0.27
    • 0.61%
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