Sponsored By

DirecTV to Spin Off, Gain WeightDirecTV to Spin Off, Gain Weight

DirecTV will have more freedom by having less to do with Liberty

Jeff Baumgartner

May 4, 2009

4 Min Read
DirecTV to Spin Off, Gain Weight

Liberty Media Corp. (NYSE: LMC) plans to spin off DirecTV Group Inc. (NYSE: DTV) as a separately traded company, but the "new" version of DirecTV will be joined by a few other media assets. (See WildBlue Makes Stimulus Pitch .)

Under terms announced Monday, Liberty Media will combine DirecTV, a company that touts 17.6 million U.S. video subs, with Liberty Entertainment Inc. The combined company, which will continue to operate as DirecTV, will also take on operation of regional sports networks based in Denver, Seattle, and Pittsburgh, Game Show Network (GSN), and FUN Technologies Inc., a maker of online and interactive sports games. (See Liberty Entertainment Taking Over DirecTV.)

Table 1: The New DirecTV

Company Name

Ownership Stake (%)

DirecTV Group


Game Show Network


FUN Technologies


Fox Sports Net Northwest


Fox Sports Net Pittsburgh


Fox Sports Net Rocky Mountain


Source: Liberty Media, DirecTV, Sanford C. Bernstein & Co. Inc.

Assets historically covered by the Liberty Entertainment group tracking stock that are not included in the DirecTV spinoff will continue on under a new company called Liberty Starz.

Table 2: The New Liberty Starz


Ownership Stake (%)

Starz Entertainment


WildBlue Communications






Source: Liberty Media

Liberty acquired its 54 percent stake in DirecTV in early 2008. The deal aims to "clarify" DirecTV's capital structure, said Liberty Media president and CEO Greg Maffei.

"Since its inception, DirecTV has been controlled by other corporate entities. For the first time, DirecTV's shareholders will control its future without the risk of conflict," DirecTV president and CEO Chase Carey said during this morning's conference call.

The satellite TV company will issue to Liberty shareholders about 519 million shares for those assets. Of that total, 22 million will be "high-vote" shares, with 15 votes per share, and issued to Liberty Media chairman John Malone. That will give him a big voice in the new company, but less influence than he exerted when Liberty Media fully controlled DirecTV.

Carey, who will continue as DirecTV's top exec, said the breakup fee is $450 million. He was also careful to explain Malone's and Liberty's role at the new DirecTV after the spinoff. "We view Dr. Malone as a positive force and a great supporter of DirecTV," he said. Malone will carry on as DirecTV's chairman, and Liberty's president and CEO Greg Maffei will stay on the board of directors.

"This agreement has never been about eliminating their ability to contribute to DirecTV," Carey said.

Broadband partners
Don't expect the new DirecTV to pursue wireless and broadband technology and service plays on its own. Chase was clear that DirecTV will continue to provide broadband services through its telco partnerships.

Today, DirecTV uses third-party broadband connections to pipe in video-on-demand (VoD) content, and co-markets its service with AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), Qwest Communications International Inc. (NYSE: Q), and Cincinnati Bell Inc. (NYSE: CBB). (See DirecTV Wins AT&T Deal and DirecTV Wins AT&T Sweepstakes.)

— Jeff Baumgartner, Site Editor, Cable Digital News

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Baumgartner, who previously had served as Site Editor for Light Reading Cable from 2007-2013, was most recently Senior Content Producer-Technology at Multichannel News, heading up tech coverage for the publication's online and print platforms, and was a regular contributor to Broadcasting & Cable, a sister publication to Multichannel News. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like