Liberty Has a Stock of Its Own

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AT&T Corp. officially split off its Liberty Media Group Inc. tracking stock last Friday, marking the end of the companies' two-year relationship.

AT&T acquired Liberty through its March 1999 acquisition of Tele-Communications Inc. In a statement, AT&T said the split-off is intended to better enable Liberty to raise capital on its own; to allow Liberty to use its stock as currency in acquiring, merging or partnering with other companies; and to help the public markets to better value Liberty.

The action will also eliminate regulatory and competitive conflicts of interest between Liberty and AT&T.

AT&T's board of directors voted June 18 to redeem each outstanding share of Liberty Media Group class A and class B tracking stock for one share of Liberty Media Corp. series A and series B common stock.

The spin-off brings to a close what at times has been a contentious relationship between AT&T and Liberty chairman John Malone, with Malone airing his displeasure over AT&T's depressed stock price in the national press. Malone had called for a Liberty spin-off shortly after the TCI merger was completed in 1999, but it wasn't until AT&T purchased another cable company — MediaOne Group Inc. — that the possibility of a complete Liberty separation became a reality.

One of the several conditions the Federal Communications Commission imposed on AT&T as part of its approval of the MediaOne merger was a divestiture of Liberty.

In November AT&T won a favorable ruling on a tax-free Liberty spin-off from the Internal Revenue Service.

Liberty stock, traded on the New York Stock exchange under the symbol "LMC," opened at $15.85 per share last Friday. In afternoon trading, the stock was down 5 cents each to $15.80.

In a research note, UBS Warburg media analyst Christopher Dixon reiterated his "strong buy" rating on Liberty, setting a $26-per-share, 12-month target price for the stock.

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