UPDATE 1-Liberty Media to push on with entertainment split
NEW YORK, Dec 10 (Reuters) - Liberty Media Corp (LINTA.O), the holding company owned by media mogul John Malone, said on Wednesday it is pressing ahead with plans to split off its Liberty Entertainment unit which owns the majority stake in U.S. satellite TV operator DirecTV Group (DTV.O).
But Liberty said it would not rule out the possibility of combining its tracking stocks Liberty Interactive, Liberty Capital (LCAPA.O) and Liberty Entertainment (LMDIA.O) under the Liberty Media stock ticker.
Liberty Chief Executive Greg Maffei said his company's desired path is to split off DirecTV and other assets into a Liberty Entertainment trading stock but current depressed valuations of media stock had delayed its plans.
The company is hoping to reduce the gap between the value of Liberty Entertainment's assets and its current stock price.
"The DirecTV stock we hold is worth substantially more than we're being valued at," said Maffei, speaking at the UBS Media conference.
"The board has authorized management to explore a split-off ... that's probably the optimal path, it's one we're working towards," he added.
DirecTV currently has a market capitalization of around $24 billion while Liberty Entertainment, which owns more than 50 percent of the satellite operator, is valued at around $6 billion. Liberty Entertainment also owns other assets including pay TV company Starz.
Malone earlier split Liberty's stock into three tracking stocks tied to its various operating and investment assets which include shopping channel QVC, broadband satellite operator Wild Blue as well as stakes in media companies like Time Warner Inc (TWX.N) and IAC/InterActive Corp (IACI.O).
The idea was to allow investors to buy shares tied to specific underlying assets that they found attractive.
Maffei said while recombination was a possibility, it was not the preferred plan.
"We have stockholders who bought into various pieces with the intent that that was what they were owning," he said.
"They know by our charter we can roll the pieces back up but we're trying to honor their wishes that they're invested in those pieces."
One analyst read Maffei's comments partly as a reluctance to stir discontent with investors.
"Although we still expect that recombining all three trackers is the most likely next step, Mr Maffei conceded that this would cause considerable discontent among Liberty Entertainment shareholders," Thomas Eagan, analyst at Collins Stewart, wrote in a note to clients.
"To us, this was a somewhat rare admission that recombining the stocks would not honor Liberty Entertainment shareholders' original intention," said Eagan.
Liberty Entertainment's shares rose 70 cents or 6.1 percent to $12.11 near midday, while shares of Liberty Interactive were down 12 cents or 4.6 percent to $2.54.
DirecTV shares were up 0.5 percent at $22.91 on the Nasdaq. (Reporting by Yinka Adegoke, editing by Matthew Lewis)
