Liberty Media Eyes an Asset-Stock Swap

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Liberty Media Corp. has held talks with Comcast Corp. about buying back about 118 million Liberty shares used as part of the of purchase price of Comcast’s interest in home shopping network QVC Inc.

But Liberty CEO Robert “Dob” Bennett said there’s no deal on the table and no rush to get one there.

“Comcast owns a big block of stock,” Bennett said at Liberty’s annual investment conference on May 13. “We’re in conversations to reel all or some of that in. Otherwise, we’ll wait and see. We have the capital available and a real low debt load. It’s something we’re talking to them about.”

Based on Liberty’s closing price of $10.49 on May 19, that stock is worth about $1.2 billion.

Later, after the conference, Bennett said there’s no rush, although it’s likely Liberty would prefer to buy the stock as soon as possible.

Also, in order for the transaction to be tax-efficient, Liberty would likely swap assets of equal value for the shares, rather than pay cash.

Asked what Liberty could offer Comcast other than cash for the stock, Bennett said, “We own 10% of E!, for example.” Comcast owns the other 90% of E! Entertainment Television.

Liberty’s 10% interest would fall short of the total value of the Liberty shares Comcast owns — Janco Partners analyst Matt Harrigan values Liberty’s E! interest at between $350 million and $400 million.

Liberty also owns interests in dozens of networks and ITV concerns, which could be possible deal fodder.

But Harrigan said at least three of those interests are off-limits: Liberty’s 50% interest in Discovery Communications Inc., its 50% of Court TV and its 50% stake in GSN (formerly the Game Show Network).

Liberty has long expressed a desire to own more of Discovery. Time Warner Inc., its other partner in Court TV, would have the right of first refusal in any deal for that network.

As for GSN, Harrigan said Liberty just likes the network. “Game Show, they’re enamored with it,” Harrigan said.

According to some sources in the financial community, Comcast had expressed some interest in Liberty’s Puerto Rico cable assets as part of a deal. But Liberty said those assets, with about 124,000 subscribers, are not for sale.

Harrigan said there are no time limits as to when Liberty could buy back the shares.

“The only sense that they are under the gun is that the discount on Liberty stock is pretty sticky,” Harrigan said. “It’s extraordinary how bad the stock has been.”

Liberty stock is down 64% from its highs of around $30 per share in 2000.

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