19 November, 2009
UPDATE 3-Malone: DirecTV would be "compatible" with a telco
* Malone says DirecTV would like wireless broadband
* DirecTV would like deepen relationship with telcos
* DirecTV split-off from Liberty Media is completed
* "Highly unlikely" Liberty buys MGM
* Benefits of Comcast/NBC deal depend on regulators (Adds completion of split)
NEW YORK, Nov 19 (Reuters) - Liberty Media Corp (LINTA.O) Chairman John Malone said on Thursday that DirecTV Group (DTV.O) would be "compatible" with a telephone company if either of its current partners showed an interest in buying it.
Malone was speaking to shareholders at a special meeting where the split-off of DirecTV was approved.
The move to split off DirecTV and combine it with some Liberty Entertainment assets will create a new, larger independent DirecTV, the company said. The transaction was completed late on Thursday.
The deal has led to Wall Street speculation that DirecTV will eventually be bought by either AT&T Inc (T.N) or Verizon Communications Inc (VZ.N).
DirecTV, the No. 1 U.S. satellite TV operator, has long-term marketing relationships with both phone companies to offer customers bundles of video, phone and Internet services.
Malone wants DirecTV to start selling wireless high-speed Internet services, which would require a deeper relationship with the phone companies.
Asked by a shareholder about speculation DirecTV would eventually be sold to a phone company [ID:nN17519348], Malone said, "We know they've been interested from time to time in it. DirecTV is very compatible with the phone companies."
Malone, who is also chairman of DirecTV, said Liberty would have been taxed on a $12 billion gain if it directly put the satellite company on the block. By splitting off DirecTV into an independent company, Liberty will avoid incurring a large tax bill if the satellite company is acquired.
DirecTV estimated that it will record an expense of about $400 million for the premium to Liberty Entertainment holders, based on its closing share price on Wednesday and the fair value of other assets.
The new company said it does not intend to implement a new share repurchase of program at this time.
Any talk of big mergers in media and telecommunications have generally been put on hold as companies wait to see how U.S. regulators treat Comcast Corp's (CMCSA.O) bid for a controlling stake in NBC Universal.
"It's entirely a function of what the regulators let Comcast do," Malone said of Comcast's ability to benefit from owning a major broadcaster, cable networks, theme parks and a movie studio.
There have been concerns on Wall Street that a Comcast/NBC deal would come with regulatory restrictions which could squeeze out any financial and strategic benefits from the combination of the content and distribution assets.
"If (Comcast) can't rape and pillage, it's probably not a great investment," Malone said on the sidelines of the meeting.
He said DirecTV would likely have a "point of view" strongly implying the satellite operator raise concerns about the Comcast/NBC deal with regulators.
As part of its transaction to split off DirecTV/Liberty Entertainment, Liberty created a new tracking stock for Liberty Starz which includes its pay-TV channel business.
Liberty Starz was seen as a possible bidder for the MGM movie studio, which has been reported to be up for sale. But Malone was doubtful of any bids.
"It's highly unlikely we make an offer to buy the company, but depending on where the debt trades we may be interested it its debt."
DirecTV shares ended up 46 cents to $31.50 on Nasdaq. (Reporting by Yinka Adegoke; Editing by Derek Caney and Richard Chang)
Source: http://www.reuters.com
UPDATE 3-Malone: DirecTV would be "compatible" with a telco Added: (19.11.2009)
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