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Liberty Media plans spin-off

September 04, 2008|From Bloomberg News

Liberty Media Corp. plans to split off its stake in DirecTV Group Inc., a move that may make it easier for Chairman John Malone to acquire the rest of the largest U.S. satellite-TV provider.

The new company, Liberty Entertainment Inc., will include almost 50% of DirecTV plus all of cable network Starz Entertainment and Liberty Sports Holdings, Englewood, Colo.- based Liberty Media said Wednesday. The sports unit owns three regional cable networks.

Malone could use Liberty Entertainment as a platform to blend DirecTV's distribution with cable and satellite channels, said Chris Marangi, associate manager of the Gabelli Value Fund in Rye, N.Y. Malone obtained his DirecTV stake in a share swap with Rupert Murdoch's News Corp.

"It facilitates an eventual combination of Liberty Entertainment and DirecTV," Marangi said, adding that Malone would save money on taxes if he spun off the entertainment unit before pursuing DirecTV.

Liberty Entertainment's tracking stock rose 41 cents to $27.53. DirecTV fell 8 cents to $27.54. Malone started the tracking stock in March as part of a strategy to boost the value of Liberty Media's assets by letting investors bet separately on its retailing businesses.

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