UPDATE 1-Liberty Media close to buying stake in Charter -report

Mon Mar 18, 2013 1:36pm EDT

By Liana B. Baker

March 18 (Reuters) - Liberty Media Corp is close to buying a 25 percent stake in cable operator Charter Communications Inc for about $2.5 billion, the Wall Street Journal reported on Monday, citing unnamed sources familiar with the situation.

Charter Communications shares rose 7.4 percent to $96.74.

A Liberty spokeswoman declined to comment on the report while a spokeswoman for Charter, the eighth largest U.S. cable operator, was not immediately available for comment.

Liberty Media, a holding company controlled by cable pioneer John Malone, has been tweaking its portfolio in recent months. It spun off the premium TV cable network Starz in January, increased its stake to gain full control of satellite radio Sirius XM and is also buying more shares in concert promoter and ticketing company Live Nation Entertainment .

"Malone typically likes subscription businesses that have a fair amount of leverage and I think he's fairly bullish on U.S. cable," said Wunderlich Securities analyst Matthew Harrigan.

Malone, who has been nicknamed "the king of cable," founded Tele-Communications Inc, or TCI, which he grew into the largest cable operator in the United States before selling it to AT&T Inc. Malone is also the chairman of Liberty Global , the international cable operator that purchased Virgin Media Inc, a UK company, for about $15.75 billion in February.

Charter's CEO Tom Rutledge was the chief operating officer of Cablevision before he left in 2011. Charter recently purchased a Western cable unit of Cablevision for $1.625 billion in February.

Liberty Media shares fell $1.35 or 1.2 percent to $109.08 on Monday.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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