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What's Next After Liberty Entertainment Split-Off News?
Liberty Media's announcement Wednesday that it plans to split off Liberty Entertainment could be a possible first step toward a full consolidation of DIRECTV into the Liberty-controlled entity, said some observers.
Liberty Media said it's eyeing a plan to distribute to holders of Liberty Entertainment tracking stock shares of a subsidiary that will hold the businesses and assets that are part of the Liberty Entertainment group. Once the transaction is completed, Liberty Entertainment will consist of its 50 percent controlling stake in DIRECTV, all of Starz Entertainment, FUN Technologies, Liberty Sports Holdings, GSN, and 37 percent of WildBlue Communications.
Tom Eagan of Collins Stewart said once Liberty Entertainment becomes an asset-backed stock, "we expect it will seek to merge with DIRECTV into a single common stock."
The analyst added, "The transformation into an asset-based stock is important. We believe DIRECTV's board and shareholders are more amenable to accepting Liberty Entertainment shares as a currency if Liberty Entertainment is an asset-backed stock."
Eagan also said the "benefits of a merged company are clear. It would attract more investment capital to the single stock, while reducing the arbitrage that currently translates to short-selling of DIRECTV."
In a statement, Liberty Media CEO Greg Maffei said converting the Liberty Entertainment tracking stock into an asset-backed security "will create a stronger currency and allow greater flexibility to pursue our strategic objectives."
Liberty Media's announcement Wednesday that it plans to split off Liberty Entertainment could be a possible first step toward a full consolidation of DIRECTV into the Liberty-controlled entity, said some observers.
Liberty Media said it's eyeing a plan to distribute to holders of Liberty Entertainment tracking stock shares of a subsidiary that will hold the businesses and assets that are part of the Liberty Entertainment group. Once the transaction is completed, Liberty Entertainment will consist of its 50 percent controlling stake in DIRECTV, all of Starz Entertainment, FUN Technologies, Liberty Sports Holdings, GSN, and 37 percent of WildBlue Communications.
Tom Eagan of Collins Stewart said once Liberty Entertainment becomes an asset-backed stock, "we expect it will seek to merge with DIRECTV into a single common stock."
The analyst added, "The transformation into an asset-based stock is important. We believe DIRECTV's board and shareholders are more amenable to accepting Liberty Entertainment shares as a currency if Liberty Entertainment is an asset-backed stock."
Eagan also said the "benefits of a merged company are clear. It would attract more investment capital to the single stock, while reducing the arbitrage that currently translates to short-selling of DIRECTV."
In a statement, Liberty Media CEO Greg Maffei said converting the Liberty Entertainment tracking stock into an asset-backed security "will create a stronger currency and allow greater flexibility to pursue our strategic objectives."
