February 26, 2009 / 2:06 AM / in 10 years

Liberty Media mulls asset sales, share buybacks

NEW YORK (Reuters) - John Malone’s Liberty Media Corp is working on plans to buy back more shares and get rid of unfavorable assets, in a bid to boost the value of its tracking stocks that are trading at a discount to its collection of media assets.

The move is the latest sign that Malone, a cable television pioneer, is shifting away from being a passive holder of media and Internet stakes to becoming a more active operator once again.

Liberty holds a variety of equity and exchangeable debt in media and sports properties including Time Warner Inc TWX.N, the Atlanta Braves baseball team, Motorola Inc MOT.N, Sprint Nextel Corp (S.N) and DirecTV Group Inc DTV.O. Most recently, it invested $530 million in Sirius XM Radio Inc (SIRI.O).

Chief Executive Greg Maffei told Reuters on Wednesday that Liberty’s businesses have few synergies, with some held mainly for tax purposes.

“In this market in particular, a conglomerate collection of assets with tax-oriented issues and tracking stocks is going to get a big discount,” Maffei said in an interview.

“So the degree you can chip away at each of those issues and probably add a focus to the business, those will be positives,” he said.

Liberty Media trades under three tracking stocks: Liberty Interactive LINTA.O, Liberty Entertainment LMDIA.O and Liberty Capital LCAPA.O. With media stocks down sharply, Liberty Capital and Liberty Entertainment in particular are trading below the market valuation of assets they hold.

Maffei said Liberty is looking at various strategies to eliminate the value discount. Plans being considered include share buybacks and the possible disposal or exchange of assets that the market does not favor, he said.

“Over time you can continue to liquidate things that are difficult for investors to understand,” he added.

SATELLITE BUNDLES

In December Liberty said it would spin off its stake in DirecTV and other holdings into a new asset-backed Liberty Entertainment stock.

Last week, Liberty beat satellite TV company EchoStar Corp (SATS.O) to a deal with Sirius XM that will ultimately give Liberty a 40 percent stake in the satellite radio provider.

Maffei said Liberty is considering bundling subscriber services between Sirius and DirecTV, the largest U.S. satellite TV provider. He said Sirius Chief Executive Mel Karmazin and DirecTV Chief Executive Chase Carey have met and talked.

“It would not be crazy to think that over time we could have innovative bundling packages marketed to customers of each side,” said Maffei. But he said it had been discussed just as a concept to date.

DirecTV has been one of the few pay-TV companies to beat Wall Street forecasts for subscriber growth in the fourth quarter by adding more 300,000 net new customers, even as major cable rivals lost subscribers.

Collins Stewart analyst Thomas Eagan said there was a risk that bundling DirecTV services with satellite radio could confuse customers. “Right now DirecTV doesn’t need fixing,” he said.

Liberty posted a quarterly operating loss on Wednesday due to writedowns at Liberty Entertainment and falling sales at its QVC cable TV shopping channel.

Liberty Media said it repurchased 1.6 million Liberty Capital shares from October 30 through February 24, representing on a cumulative basis almost 26 percent of those shares.

Reporting by Yinka Adegoke, editing by Tiffany Wu, Richard Chang

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