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John Malone's Liberty Media buys stake in Charter Communications

March 19, 2013|By Joe Flint
  • John Malone's Liberty Media has a stake in Charter Communications.
John Malone's Liberty Media has a stake in Charter Communications. (Associated Press )

Media mogul John Malone is returning to his roots.

Malone's Liberty Media is acquiring 27% of cable television operator Charter Communications for $2.62 billion. Liberty is buying 26.9 million Charter shares and 1.1 million warrants at a per-share price of $95.50 from private equity firms Apollo Management, Oaktree Capital Management and Crestview Partners.

As part of the agreement, Liberty will have four seats on the Charter board. In return, Liberty said it would keep its holdings in Charter under 40% and not engage in lobbying on behalf of other potential board members as long as its own spots on the board were safe. Charter has more than 4 million subscribers.

For Liberty, the deal is significant because it marks the first time in almost 20 years that Malone has had ownership in a U.S. cable operator. A pioneering cable executive who built Tele-Communications Inc. into the largest and most powerful cable operator in the country until selling it off in the 1990s, Malone and his influence over the pay-TV industry drew concern from many lawmakers, including then-Sen. Al Gore, who dubbed him the Darth Vader of cable.

Since then, Malone has focused his efforts on investing in content companies here. Liberty's holdings include stakes in Time Warner and Viacom. It also operates satellite radio broadcaster SiriusXM and the Atlanta Braves baseball team, and has interests in Live Nation Entertainment. Liberty Global, Malone's international operation, owns and operates pay-TV systems in 13 countries and has 20 million subscribers. Malone also has a personal stake in satellite broadcaster DirecTV.

Malone is joining Charter's board at a time when cable companies are becoming increasingly vocal about the rise in programming costs, particularly sports. Malone too has recently complained that sports rights are out of control.

"We’ve got runaway sports rights, runaway sports salaries and what is essentially a high tax on a lot of households that don’t have a lot of interest in sports," Malone said in an interview last November. "The consumer is really getting squeezed, as is the cable operator."

Besides Malone, the chairman of Liberty, other seats will be held by Liberty President Greg Maffei, Liberty Global Executive Vice President Nair Balan and Michael Huseby, chief financial officer of Barnes and Noble, which is a Liberty subsidiary.


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Follow Joe Flint on Twitter @JBFlint.


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