Liberty Media Chairman John Malone's tender offer to vastly increase… (Nati Harnik / Associated…)
One day after the merger of concert industry giants Ticketmaster Entertainment and Live Nation gained regulatory approval, cable mogul John Malone moved to vastly increase his stake in the newly formed colossus.
Malone's Liberty Media Corp. made a tender offer Tuesday to acquire 34.5 million shares of Live Nation Entertainment for $12 each. If fully subscribed, Liberty's stake in the company would more than double to 35%.
The move strengthens the alignment of Malone and Live Nation Entertainment Chairman Barry Diller, who two years ago battled over plans to split Internet conglomerate IAC/InterActiveCorp into five companies.
Liberty Media portrays the investment as simply an endorsement of a business combination that united Live Nation, the world's largest concert promoter, with Ticketmaster, the dominant seller of tickets and a leading artist management company.
The merger closed late Monday after the companies agreed to concessions required by the Justice Department and 17 state attorneys general to protect competition in the market for ticket sales.
"Liberty has proven themselves to be savvy media investors, and they see an opportunity here," said Christopher Marangi, an analyst with researcher Gabelli & Co.
Others see a classic example of Malone's deft financial maneuvering in the tender offer.
Liberty held a 30% stake in Ticketmaster, which was spun off from Diller's IAC/InterActiveCorp in August 2008. When the Ticketmaster-Live Nation merger was completed Monday, Liberty's stake fell to 15%. Malone's firm is restricted from acquiring more than 35% of any of the companies spun off from IAC, including HSN, LendingTree and Interval. These restrictions expire in August.
Morgan Stanley analyst David Gober wrote that Liberty Capital -- one of three groups within Liberty Media -- made the offer to purchase the Live Nation Entertainment shares. If the tender offer succeeds, Liberty's existing 14.6% stake in Live Nation Entertainment, which is held by Liberty Interactive Group, would be transferred to the capital group for about $280 million to $300 million, he wrote.
The transaction, Gober explained, would increase Liberty Interactive's ability to make future acquisitions.
Live Nation Entertainment declined to comment on Liberty's tender offer or say whether Malone's company would emerge as the entity's single largest shareholder.
Malone was once Diller's benefactor, but the two ended up in court over Diller's plans to peel off some of IAC's assets, including Ticketmaster. A Delaware court sided with Diller in 2008, and Malone ultimately dropped an appeal after the two reached agreements regarding the operation of the spun-off companies.