Liberty Seals DirecTV Swap
Under terms of a deal that took more than a year to consummate, Liberty exchanged its 16.3 percent stake in News Corp. (NYSE: NWS) for News Corp.’s 41 percent holding in DirecTV Group Inc. (NYSE: DTV). (See Liberty Closes DirecTV Deal.)
The agreement also gives Liberty regional sports networks in Denver, Pittsburgh, and Seattle, plus $465 million of cash. In a related move, the company has launched Liberty Sports Group, helmed by Mark Shuken, the former GM of Fox Sports Northwest.
As a result of the deal, Liberty chairman Malone and CEO Greg Maffei have been appointed to the DirecTV board, filling seats previously assigned to News Corp. execs. Chase Carey will remain as president and CEO of DirecTV, which is headquartered in El Segundo, Calif.
The Federal Communications Commission (FCC) approved the deal on Monday (Feb. 25), but with the condition that Liberty abide by program access, carriage, and retrans consent conditions imposed in 2003 when ownership of DirecTV was transferred from Hughes Electronics Corp. (NYSE: GMH) to News Corp. Liberty also has a year to release control of DirecTV’s Puerto Rico business and Liberty Cablevision, a cable MSO based in the territory. Although two FCC commissioners were happy about those conditions, they brought up concern about DirecTV’s limited commitment to deliver local channels, which could leave some rural areas of the country wanting. (See FCC OKs Liberty's DirecTV Stake .)
DirecTV posted fourth quarter revenues of $4.88 billon, up 17 percent, and net income of $348 million, down 2 percent year-over-year. It added 275,000 net sub additions in the period, ending 2007 with a grand total of 16.83 million subs, up 6 percent from the year prior.
This year, the company plans to have capacity for 150 “national” HD channels, and serve at least 100 markets with “local” hi-def services.
— Jeff Baumgartner, Site Editor, Cable Digital News