John Malone is at it again. Liberty Media Company(LMCA), a former tracking stock that was spun out from his core Liberty Interactive(LINTA), will be spinning off its Starz subsidiary. The Starz spinoff will contain the operating assets of Liberty Media, including the Starz and Encore premium cable networks. Liberty Media’s assets after the spin will primarily be its stakes in several public companies, including 46% of SiriuxXM(SIRI), 26% of Live Nation(LYV), and a significant stake in Barnes & Noble(BKS). This likely leads the way to a full takeover of SiriusXM as has been rumored to be in the offing. This is a transaction which will move quickly. It requires no shareholder approval, and the company is aiming to complete this by the end of 2012.
The company describes the spinoff as follows in its earnings report from this morning:
“We are pleased to announce our plan to separate the assets of Liberty Media and Starz, LLC, creating two separate asset-backed stocks,” said Greg Maffei, President and CEO of Liberty. “This transaction will provide better transparency on the Starz operating business; optimize the Starz capital structure; permit us to better pursue our strategic objectives, including creating two currencies that could be used for acquisitions; and create significant liquidity at Liberty Media, which preserves all our options with respect to SiriusXM and Live Nation.
“Starz again posted impressive subscriber gains and we are excited for the upcoming premiere of season two of the STARZ Original series Boss next week,” Maffei continued. “In July, we physically settled our forward purchases of SiriusXM and Live Nation, increasing our ownership positions.”
Liberty’s Board of Directors has authorized a plan to distribute to the stockholders of Liberty Media shares of a subsidiary that will hold all of the businesses, assets and liabilities of Liberty Media not associated with Starz, LLC. The transaction would be effected as a pro-rata dividend of shares of a newly created subsidiary to the stockholders of Liberty Media. The subsidiary, which would become a separate public company, would be called Liberty Media Corporation (“New Liberty”). The businesses, assets and liabilities not included in New Liberty would be part of a separate public company called Starz. Starz will consist of 100% of Starz, LLC, approximately $1.5 billion in debt (assuming full draw down of the Starz bank facility) and an undetermined amount of cash.
The spin-off is intended to be tax-free to stockholders of Liberty Media and its completion will be subject to various conditions, including the registration of the shares to be distributed, the receipt of an IRS private letter ruling, the opinions of tax counsel and required government approvals. The spin-off will not require a stockholder vote. Subject to such conditions, including those described above, the spin-off is currently expected to occur in late 2012.
Disclosure: The author holds no position in any stock mentioned
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