Liberty to Spin Off Cable Assets

Liberty Broadband Will Include Charter Investment
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Liberty Media said Thursday that it will go ahead with plans to spin-off its cable interests – mainly its 27% interest in Charter Communications – into a separately traded public company named Liberty Broadband.

Liberty first announced its intention to spin off the assets in a tracking stock in March. But the company said the transaction will be a hard-spin, similar to the one it made with former subsidiary Starz last year.

"We believe a separate Liberty Broadband will offer investors greater choice and transparency, and is well-timed with Charter's agreements with Comcast, which will result in Charter owning or serving over eight million video customers," Liberty CEO Greg Maffei said in a statement.

The move comes days after Charter agreed to a deal with Comcast that would involve the sale, swap and spin of about 3.9 million subscribers valued at about $20 billion.

With that deal, Charter would acquire 1.4 million customers from Time Warner Cable, would receive a 33% interest in a spin-off company with about 2.5 million customers. In addition, Comcast and Charter would swap systems with about 1.6 million customers.

Liberty Broadband would include Liberty’s Charter interest as well as its global positioning satellite subsidiary TruePosition, its minority equity investment in Time Warner Cable and certain deferred tax and deferred revenue liabilities, as well as liabilities related to the Time Warner call option.

Liberty Broadband could go off on its own to acquire cable assets, but Maffei said on a conference call with analysts to discuss first quarter results that Liberty’s respect for the Charter management team, the benefits of scale and the synergies inherent in the Charter assets “make it unlikely that we will go outside of them [Charter] inside the U.S.”

In the spin, Liberty shareholders would receive one-fourth of a share of Liberty Broadband common stock for each share of Liberty Media they own. In addition, stockholders will also receive a subscription right to acquire one share of Series C Liberty Broadband common stock for every five shares of Liberty Broadband common stock they receive in the spin-off.

Liberty said the subscription rights are being issued to raise capital for general corporate purposes of Liberty Broadband and will enable the holders to acquire shares of Series C Liberty Broadband common stock at a 20% discount to the 20-trading day volume weighted average trading price of the Series C Liberty Broadband common stock following the completion of the spin-off.

Liberty expects to complete the Liberty Broadband spin by the end of the year.

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