DIRECTV, Liberty Entertainment to Merge

EL SEGUNDO/ENGLEWOOD: DIRECTV is to be merged with Liberty Media’s Liberty Entertainment division, which is due to be spun-off from the company.

As previously announced, the spun-off Liberty Entertainment, Inc. (LEI) was to be comprised of approximately 54 percent of the common stock of DIRECTV; Liberty Sports Holdings, which owns three regional sports networks; and a 65-percent interest in Game Show Network (GSN) and FUN Technologies. Once the spin-off is complete, LEI and DIRECTV Group (DTVG) will merge, with DIRECTV serving as the parent company. The operations under Liberty Entertainment that will not be included in the spin-off will be renamed Liberty Starz and will consist of Starz Entertainment, among other assets.

“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, the 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,” added Greg Maffei, the president and CEO of Liberty Media. “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.”

John Malone will have a 24-percent voting stake in the new entity.