The DIRECTV Group, Inc. and Liberty Media Corporation today
announced they have entered into definitive agreements for the
combination of DIRECTV Group with Liberty Entertainment, Inc., a
company to be split-off from Liberty Media.
�We are pleased to announce this transaction as it will rightly
put the control of DIRECTV in the hands of DIRECTV shareholders,�
said Chase Carey, President and CEO of DIRECTV. �Our existing
equity structure was less than ideal. The transaction will improve
our ability to pursue strategic initiatives that can enhance value
for all DIRECTV shareholders. Additionally, in Game Show Network,
FUN Technologies and the three regional sports networks, we are
acquiring valuable assets that fit in well with the future of the
DIRECTV business. We look forward to having the benefit of John
Malone�s involvement, as a significant shareholder and as chairman
of DIRECTV�s board post-merger.�
�This transaction clarifies DIRECTV�s capital structure, reduces
its shares outstanding, eliminates stock overhang and arbitrage
issues, and provides DIRECTV with strategic content businesses,�
said Greg Maffei, President and CEO of Liberty. �And this
transaction offers value to Liberty�s shareholders by eliminating
the discount in our tracking stock structure and allowing them to
continue to participate directly in the strong performance of
DIRECTV.�
The steps in the transaction include Liberty Media proceeding
with the previously announced split-off of Liberty Entertainment,
Inc. (LEI), which will hold the majority of the assets and
liabilities currently attributed to the Liberty Entertainment group
tracking stock. LEI will now be comprised of: (i) approximately 54%
of the common stock of DIRECTV, (ii) Liberty Sports Holdings, which
owns three regional sports networks (RSNs), (iii) a 65% interest in
Game Show Network (GSN) and FUN Technologies, (iv) approximately
$30 million in cash in addition to cash generated by operations
after March 31 and (v) $2 billion in debt. DIRECTV will provide to
LEI up to $650 million in funding pursuant to a term loan facility
in order to service the LEI debt.
In the split-off, each holder of Series A Liberty Entertainment
group tracking stock will receive 0.9 of a share of LEI Series A
common stock and will retain 0.1 of a share of Liberty Starz stock,
representing the balance of the assets and liabilities of the
Liberty Entertainment group, for each share of Series A Liberty
Entertainment group tracking stock held at the time of the
split-off, and each holder of Series B Liberty Entertainment group
tracking stock will receive 0.9 of a share of LEI Series B common
stock and will retain 0.1 of a share of Liberty Starz stock for
each share of Series B Liberty Entertainment group tracking stock
held at the time of the split-off.
LEI and DIRECTV Group (DTVG) will merge with subsidiaries of a
newly formed subsidiary of DTVG that will be called DIRECTV. As a
result of the mergers, DIRECTV will become the parent company of
DTVG and LEI. DIRECTV will have two classes of stock, Class A which
will be entitled to one vote per share and Class B which will be
entitled to 15 votes per share. In the DTVG merger, DTVG
shareholders will receive one share of DIRECTV Class A common stock
for each share of DTVG common stock held. The holders of LEI Series
A and Series B common stock (other than John Malone, his wife and
associated trusts) will receive 1.1111 shares of DIRECTV Class A
common stock for each share of LEI Series A or Series B common
stock held (as adjusted pursuant to the merger agreement). John
Malone, his wife and associated trusts will receive 1.1111 shares
of DIRECTV Class B common stock for each share of LEI Series B
common stock held (as adjusted pursuant to the merger
agreement).
The businesses, assets and liabilities of the Liberty
Entertainment group tracking stock not included in the split-off of
Liberty Entertainment will continue to be attributed to the Liberty
Entertainment group, which will be renamed �Liberty Starz�. Liberty
Starz will consist of Starz Entertainment, 37% of WildBlue,
PicksPal, Fanball and approximately $650 million in cash and cash
equivalents. The Series A Liberty Starz common stock and Series B
Liberty Starz common stock are expected to be listed on NASDAQ
under the symbols LSTZA and LSTZB, respectively.
Accordingly, as a result of the split-off and mergers, each
holder of one share of Liberty Entertainment group tracking stock
who retains ownership of LEI stock through completion of the
mergers (other than John Malone, his wife and associated trusts)
will receive one share of Class A common stock of DIRECTV and will
retain 0.1 of a share of Liberty Starz stock, in each case subject
to adjustment. This chart illustrates what holders of Liberty
Entertainment group tracking stock (other than John Malone, his
wife and associated trusts) and DIRECTV Group common stock will
receive if the split-off and mergers occur:
Stock Held Prior to Transactions �
Split-off �
Mergers 100 shares of DTVG common stock N/A 100 shares of
DIRECTV Class A common stock 100 shares of LMDIA 90 shares of LEI
Series A common stock
�
and retain
�
10 shares of LSTZA tracking
stock
100 shares of DIRECTV Class A common stock
�
and retain
�
10 shares of LSTZA tracking
stock
100 shares of LMDIB 90 shares of LEI Series B common stock
�
and retain
�
10 shares of LSTZB tracking
stock
100 shares of DIRECTV Class A common stock
�
and retain
�
10 shares of LSTZB tracking
stock
�
Shares of DIRECTV Class A common stock are expected to be listed
on NASDAQ under the symbol DTV. Shares of DIRECTV Class B common
stock will not be listed on any stock exchange.
As a result of the transactions, John Malone, his wife and
associated trusts will hold shares of DIRECTV Class B common stock
entitling them to approximately 24% of DIRECTV�s total voting
power. The Malones have entered into an agreement that includes,
among other things provisions requiring them to vote their shares
in support of the transaction and agree to certain limitations on
their rights to sell or acquire shares.
The split-off and the mergers are subject to the satisfaction of
various conditions, including the receipt of regulatory approvals,
the receipt of IRS private letter rulings and opinions of tax
counsel, approval of the holders of DIRECTV Group common stock,
other than Liberty, directors and officers of Liberty, John Malone
and his affiliates, and the approval of a majority in voting power
of the holders of Liberty Entertainment group tracking stock, other
than John Malone, his affiliates and officers and directors of
Liberty, and other customary conditions. The companies currently
anticipate that the split-off will occur before the mergers, which
are currently expected to be completed in the fourth quarter of
2009.
Chase Carey will continue to serve as DIRECTV�s President and
CEO. It is expected that the current executive officers and Board
of Directors for DIRECTV Group, including Liberty�s
representatives, will serve as the executive officers and Board of
Directors of DIRECTV.
Conference Call
DIRECTV Group will host a live webcast today at 10:00 a.m. ET
(7:00 a.m. PT) to discuss this announcement. The webcast will be
available on the company�s website at www.directv.com/investor and
will be archived. Access to the call is also available in the
United States by dialing (800) 289-0487 and internationally by
dialing (913) 312-1264. The confirmation code is 3864685.
A replay of the conference call will be available beginning at
8:00AM ET Tuesday, May 5th for one week and can be accessed by
dialing (888) 203-1112 in the U.S. and (719) 457-0820
internationally. The confirmation code is 3864685.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE
SEC
Nothing in this press release shall constitute a solicitation to
buy or an offer to sell shares of Liberty Entertainment, Inc., the
new DIRECTV holding company, The DIRECTV Group, Inc. or any of the
Liberty Media tracking stocks. Liberty Entertainment, Inc. plans to
file with the SEC an amendment to its Form S-4 Registration
Statement filed on April 24, 2009 in connection with the
transactions. In addition, DIRECTV plans to file with the SEC a
Registration Statement on Form S-4 in connection with the
transactions. Liberty Media Corporation plans to file with the SEC
an amendment to its preliminary proxy statement filed on April 24,
2009 and mail to its stockholders a Proxy Statement/Prospectus in
connection with the transactions. The DIRECTV Group, Inc. plans to
file with the SEC and mail to its stockholders a Proxy
Statement/Prospectus in connection with the transactions. The
Registration Statements and the Proxy Statements/Prospectuses will
contain important information about Liberty Media Corporation,
Liberty Entertainment, Inc., DIRECTV, The DIRECTV Group, Inc., the
transactions and related matters. Investors and security holders
are urged to read the Registration Statements and the Proxy
Statements/Prospectuses carefully when they are available.
Investors and security holders will be able to obtain free
copies of the Registration Statements and the Proxy
Statements/Prospectuses and other documents filed with the SEC by
Liberty Entertainment, Inc., DIRECTV, Liberty Media Corporation and
The DIRECTV Group, Inc., as the case may be, through the web site
maintained by the SEC at www.sec.gov.
In addition, investors and security holders will be able to
obtain free copies of the Registration Statements and the Proxy
Statements/Prospectuses from Liberty Media Corporation by
contacting Liberty Media Corporation, 12300 Liberty Boulevard,
Englewood, Colorado 80112, Attention: Investor Relations, Telephone
(720) 875-5408 or from The DIRECTV Group, Inc. by contacting The
DIRECTV Group, Inc., 2230 E. Imperial Highway, El Segundo, CA
90245, Attn: Investor Relations, Telephone (310) 964-0808.
Liberty Media Corporation and The DIRECTV Group, Inc., and their
respective directors and executive officers, may be deemed to be
participants in the solicitation of proxies in respect of the
transactions contemplated by the Reorganization Agreement and the
Merger Agreement. Information regarding Liberty Media Corporation�s
or Liberty Entertainment, Inc.�s directors and executive officers
is contained in Liberty Media Corporation�s Form 10-K for the year
ended December 31, 2008 and its preliminary proxy statement dated
April 24, 2009, which are filed with the SEC. As of March 31, 2009,
Liberty Media Corporation�s directors and executive officers
beneficially owned approximately 1.9% of Series A Liberty
Entertainment common stock and 94.4% of Series B Liberty
Entertainment common stock. Information regarding The DIRECTV
Group, Inc.�s directors and executive officers is contained in The
DIRECTV Group�s Form 10-K for the year ended December 31, 2008 and
its proxy statement dated April 17, 2009, which are filed with the
SEC. As of April 3, 2009, The DIRECTV Group, Inc.�s directors and
executive officers beneficially owned less than 1% of The DIRECTV
Group, Inc.�s common stock. A more complete description will be
available in the Registration Statements and the Proxy
Statements/Prospectuses.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this press release regarding the proposed
transaction between Liberty Media Corporation, Liberty
Entertainment, Inc., DIRECTV and The DIRECTV Group, Inc., the
expected timetable for completing the transaction, future financial
and operating results, benefits and synergies of the transaction,
future opportunities for the combined company and any other
statements about Liberty Media Corporation or The DIRECTV Group,
Inc. managements� future expectations, beliefs, goals, plans or
prospects constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any
statements that are not statements of historical fact (including
statements containing the words �believes,� �plans,� �anticipates,�
�expects,� estimates and similar expressions) should also be
considered to be forward-looking statements. There are a number of
important factors that could cause actual results or events to
differ materially from those indicated by such forward-looking
statements, including: the ability to consummate the transaction,
the ability of The DIRECTV Group, Inc. to successfully integrate
Liberty Entertainment, Inc.�s operations and employees; and the
other factors described in Liberty Media Corporation�s and The
DIRECTV Group, Inc.�s Annual Reports on Form 10-K for the year
ended December 31, 2008. These forward looking statements speak
only as of the date of this press release and Liberty Media
Corporation and The DIRECTV Group, Inc. disclaim any intention or
obligation to update any forward-looking statements as a result of
developments occurring after the date of this press release.
About DIRECTV Group
The DIRECTV Group (NASDAQ:DTV) is a world-leading provider of
digital television entertainment services. Through its subsidiaries
and affiliated companies in the United States, Brazil, Mexico and
other countries in Latin America, the DIRECTV Group provides
digital television service to more than 17.6 million customers in
the United States and about 5.6 million customers in Latin
America.
About Liberty Media Corporation
Liberty Media Corporation owns interests in a broad range of
electronic retailing, media, communications and entertainment
businesses. Those interests are attributed to three tracking stock
groups: (1) the Liberty Interactive group (NASDAQ:LINTA)
(NASDAQ:LINTB), which includes Liberty's interests in QVC, Provide
Commerce, Backcountry.com, BUYSEASONS, Bodybuilding.com,
IAC/InterActiveCorp, and Expedia, (2) the Liberty Entertainment
group (NASDAQ:LMDIA) (NASDAQ:LMDIB), which includes Liberty's
interests in The DIRECTV Group, Inc., Starz Entertainment, Game
Show Network, LLC, WildBlue Communications, Inc., and Liberty
Sports Holdings LLC, and (3) the Liberty Capital group
(NASDAQ:LCAPA) (NASDAQ:LCAPB), which includes all businesses,
assets and liabilities not attributed to the Interactive group or
the Entertainment group including its subsidiaries Starz Media,
LLC, Atlanta National League Baseball Club, Inc., and TruePosition,
Inc., Liberty�s interest in Sirius XM Radio, Inc., and minority
equity investments in Time Warner Inc. and Sprint Nextel
Corporation.
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