A/N, Liberty May Swap Terms on Discovery
By R. Thomas Umstead -- Multichannel News, 9/23/2007 8:00:00 PM
Liberty Media is in negotiations with Advance/Newhouse Communications to buy out the cable operator's 33% stake in Discovery Holding, according to financial analyst Rich Greenfield.
Pali Capital's Greenfield, in a research note, reported that a discussion with Liberty CEO John Malone outside Liberty Media's analyst meeting Friday revealed that “terms sheets are being traded back and forth between Discovery and Advance/Newhouse” and that both sides “favor a deal.”
Discovery executives would not comment on the matter. Executives from Liberty and Newhouse could not be reached for comment at press time.
This past June, Greenfield predicted a Discovery buyout of Newhouse, saying then that “while the timing of a consolidation of Newhouse's stake in DCI is uncertain, we sense that the timing could be in the near future.”
This past May Cox Communications sold its 25% interest in Discovery to Liberty and Advance/Newhouse — increasing both companies' stakes in DCI to 66% and 33%, respectively — for $1.3 billion in cash, the Travel Channel and a related Web site in May.
“Governance issues” are the primary holdup to the deal, at this point, Greenfield said.
He predicted that folding Newhouse's ownership into DISCA will be at “market values,” with Newhouse simply wanting to maintain its voting rights within Discovery regarding management hires and other operational issues.
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