Liberty Media CEO Greg Maffei told an audience at an investor conference that the company has made a proposal to the U.S. Department of Justice regarding approval of its acquisition of a controlling stake in DirecTV Group, but was reluctant to set a timeframe for when a deal may be approved.
Liberty agreed to part with its 19% voting stake in News Corp. in exchange for News’s 40% interest in DirecTV, three regional sports networks and cash in December 2006. The deal was at first expected to close by the end of 2007, but is being held up at DOJ and at the Federal Communications Commission.
Maffei said that the main objection from DOJ is Liberty chairman John Malone’s personal equity stake in Liberty Global, which owns a small cable system in Puerto Rico. Malone is also chairman of Liberty Global.
Because DirecTV also provides satellite TV service to the island, DOJ is concerned that by gaining control of DirecTV, Liberty will effectively control two of the three competitive television service providers there – Dish Network is the third.
At the Citigroup Entertainment, Media & Telecommunications conference in Phoenix Wednesday, Maffei said that Liberty has made a proposal to the DOJ that would limit the information exchange between Malone, Maffei and Liberty Global and DirecTV, effectively removing them from any decision-making regarding television service in Puerto Rico.
“There have been attempts to negotiate protections around information flows to ensure that there’s no inappropriate price action and the like, that would keep Malone and myself and others who are involved away from information flows and decision making. We’ll see whether that’s successful. It’s been frustrating. The pace has been glacial.”
On the FCC side, Maffei said that the agency’s concerns are mainly to do with local-into-local programming, which he believes will not be a problem.
“I think it’s Puerto Rico and we’re very close,” Maffei said at the conference. “Whether it comes down to an information flow or whether it comes down to something more concrete like a divestiture plan for one or the other of the Puerto Rican businesses, that’s the end remedy. Other than that I believe there is literally a very, very, small chance this doesn’t get done.”
But Maffei was hesitant to estimate just how long it would take for the deal to gain regulatory approval.
“It feels like [it will happen] in the next few weeks,” Maffei said. “But I’m afraid I might have told you that in December as well.”