Liberty May Spin Off Interactive Assets

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On the heels of its announcement that it has hired former Oracle Corp. and Microsoft Corp. chief financial officer Greg Maffei as its new president and CEO, Liberty Media Corp. said it is exploring spinning off its interactive assets into a separate tracking stock.

Liberty chairman John Malone said on a conference call with analysts to discuss third-quarter results that the company’s board of directors has authorized him to proceed with the creation of the tracker -- which would be called Liberty Interactive and include QVC Inc. and Liberty’s stock holdings in InterActiveCorp, Expedia Inc. and “a few smaller business ventures” -- but no time frame for the tracker has been set yet.

“We’ll be coming back to the shareholders with the specifics on that in the not-very-distant future,” he added.

A tracker would not only simplify Liberty Media -- which would change its name to Liberty Capital and include its 100% interest in Starz Entertainment Group LLC and its public and private stock holdings, including its 18% voting interest in News Corp. -- but it could provide a deal currency to acquire other companies in the interactive arena.

Malone said on the call that the ultimate structure of the two companies hasn’t been worked out yet, but the opportunities are many.

“I’m not sure what Liberty Capital is going to be,” he said on the call. “It could well be that we want to get aggressive in interactive content. There is one model that our internal corporate-development guys are looking at where we get very active in delivering content to wireless devices, for instance -- the issue of portability for Starz Encore. There are a number of possibilities.”

Malone said the focus will be on “solving the easy questions first.” He added that one of the reasons for bringing in Maffei was to “solve the hard ones.”

Maffei, who will replace CEO Robert Bennett, appears to be a good fit for Liberty. He was well-known for his financial engineering skills at Microsoft, and he was in charge of the software giant’s investments in smaller companies. He joined Oracle about four months ago, announcing earlier this week that he would resign to take a CEO position at another company. That company turned out to be Liberty.

Those skills should come in handy as Liberty continues to move to simplify its complicated corporate structure.

Malone had been filling in as CEO since Bennett’s announcement that he would retire in April. Liberty said Maffei will assume the president and CEO titles in the second quarter of 2006 after a brief transition. Malone will continue as chairman, and Bennett will remain on Liberty’s board of directors.

Maffei is well-known by Malone -- Microsoft had been an aggressive investor in cable in the 1990s, and Maffei had been chairman and CEO of telecom company 360Networks, of which Malone was a director, for five years.

And Maffei has been coveted by the cable industry for years. Back in 1999, he was being courted to take the helm of Time Warner Cable’s high-speed Internet service, Road Runner. That, according to published reports at the time, was quashed by Microsoft chairman and founder Bill Gates.

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