Liberty Media to spin off cable assets
Michelle Clancy
| 11 May 2014
Billionaire John Malone’s Liberty Media has confirmed that it plans to spin off its cable business holdings into a new company called Liberty Broadband. It will include the company’s 26% stake in Charter Communications and a minority investment in Time Warner Cable, along with mobile subsidiary TruePosition.

The company had originally planned to split the company into two tracking stocks, but has apparently decided to go with a hard spin instead. Liberty then announced in March that it would create two tracking stock distributions, Liberty Broadband Group and Liberty Media Group. Liberty Broadband would include the aforementioned cable assets, and Liberty Media Group will include everything else, including shares in Sirius satellite radio. The idea was to sell the rights to the tracking stock to raise money for investments in new business opportunities.

However, the new plan "will offer investors greater choice and transparency and is well-timed with Charter's agreements with Comcast, which will result in Charter owning or serving over 8 million video customers,” said Liberty Media president-CEO Greg Maffei. He was referring to a complex, $20 billion plan with Comcast to swap/purchase 3.9 million customers as part of Comcast’s $45.2 billion acquisition of Time Warner Cable.

To effect the spinoff, holders of Series A-C common stock would get a fourth of a share of the corresponding series of Liberty Broadband common stock for each share of common stock held as of the record date for the spinoff, the company said. Fractional shares would be bought with cash. Additionally, stockholders will also receive a subscription right to acquire one share of Series C Liberty Broadband common stock for every five shares of Liberty Broadband common stock they get from the spinoff.

Malone has made it a priority to help No. 4 US cable TV provider Charter Communications expand its market presence. He bought his Charter stake last year with plans for using it as a launch pad for further industry consolidation. Charter since then made overtures to acquire No. 2 Time Warner Cable, by hostile takeover if necessary, but it was undercut by Comcast’s agreement to buy TWC itself.

“We remain very excited about our investments in the cable sector and Charter Communications,” said Malone in March when he announced the tracking stock. “We think Tom Rutledge and his team are successfully executing their strategy to upgrade the network to all digital and accelerate Charter’s growth. We believe the creation of the Liberty Broadband tracking stock and the concurrent rights offering will provide us greater flexibility to, among other things, support Charter in its expansion efforts.”

Liberty Media reported a first quarter 2014 operating profit of $155 million, $4 million more than the same period in 2013. That was a 20% improvement in revenue, from $1.01 billion to $1.05 billion. inShare3