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Malone to increase Discovery stake

Liberty Media is buying the 25% holding from Cox Communications for $1.28 billion.

March 30, 2007|Meg James | Times Staff Writer

Cable mogul John Malone tightened his grip over television giant Discovery Communications Inc. on Thursday by buying the 25% stake held by Cox Communications for $1.28 billion in cash and other assets.

Malone's Liberty Media Corp. currently owns 50% of the Silver Spring, Md.-based company, which includes cable channels Discovery, TLC and Animal Planet. Liberty's stake in Discovery Holding Co. would increase to 66% with Thursday's deal.

Discovery Communications' other shareholder, Advance/Newhouse Communications, also agreed to increase its stake to 33% from 25%.

Discovery Holding is a public company, but now includes only Malone's non-controlling stake. Investors have been waiting for Cox and Newhouse to roll in their shares so the entire company would be publicly traded -- something that is now more likely, observers said.

In addition to the cash, Discovery said it would give Cox the Travel Channel and a museum audio tour business called Antenna Audio, which Discovery purchased last year.

Merrill Lynch media analyst Jessica Reif Cohen estimated the value of the Travel Channel and other businesses going to Cox at $1 billion to $1.2 billion, making Thursday's deal worth as much as $2.48 billion.

The sale, which needs regulatory approval, is expected to close in May. "This proposed transaction will simplify Discovery's ownership structure, further streamline our operations and give the company more strategic flexibility," Discovery Chief Executive David Zaslav said.

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