Liberty to Spin Off International Businesses

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Liberty Media Corp. said it would spin off its international cable assets to its shareholders in a separate, publicly traded company called Liberty Media International Inc.

Liberty first floated the idea of separating its international assets in 2001 -- it had proposed an international tracking stock -- but it held back after its attempts to purchase two German cable systems failed. Now, however, the company believes the climate for international cable has improved considerably.

Included in Liberty Media International will be European cable powerhouse UnitedGlobalCom Inc., Japanese cable MSO Jupiter Telecommunications Co. Ltd., its Jupiter Programming Co. Ltd. programming unit and Liberty Cablevision of Puerto Rico Inc.

Liberty plans to complete the spinoff this summer.

The deal would provide Liberty with a new vehicle to acquire international cable assets while simplifying its balance sheet. The core Liberty Media businesses remain QVC Inc., Starz Encore Group LLC and interests in several publicly traded and privately held television networks.

In a research report, Citigroup Smith Barney cable analyst Niraj Gupta said the spinoff is another move by Liberty to simplify its asset base and could close the gap between Liberty’s stock price and its net asset value.

Liberty currently trades at about $11.45 per share, compared with Gupta’s $16-per-share, sum-of-the-parts valuation for the company.

Gupta valued the international assets at $6.3 billion, or $2.12 per share.

Liberty also posted strong fourth-quarter results -- revenue was up 15% to $2.25 billion and cash flow rose 20% to $582 million.

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