DirecTV, Dish merger downplayed

Still, Liberty chair John Malone emphasizes benefits

Liberty Media chairman John Malone and CEO Gregg Maffei on Monday downplayed the likelihood of a merger of satellite giants DirecTV and Dish Network while also making sure to emphasize the financial benefits it would have.

In their earnings conference call, they also again signaled other possible deals, including a play for IAC's home shopping network HSN, a deal to swap a stake in Time Warner for AOL's dial-up business and transactions that would unlock the value of the Liberty Media Entertainment tracking stock.

Asked about a merger between Dish and DirecTV, which Liberty controls, Malone said it would still be "problematic to try to merge the two companies in the current regulatory environment." Regulators rejected the deal a few years ago.

Malone did, however, add that a transaction would be "very synergistic."

Maffei expressed surprise that the Dish merger talk returned with a vengeance following the approval of the Sirius-XM satellite radio merger. "There really hasn't been anything that has changed" in terms of market conditions and regulatory thinking on the sat TV front, he argued. But he, too, added, "Clearly, there are a ton of synergies."

As for HSN, Barry Diller's IAC, in which Liberty has a stake, said Monday that it will spin off the channel and other units Aug. 21. Maffei said Liberty will see where HSN shares end up trading and how the business is doing before deciding on any moves.

Under an agreement with IAC, Liberty can't raise its 30% stake in HSN beyond 35% for two years unless the firms agree on a friendly deal.

Asked about TW, Liberty brass said that no deal is under review and suggested that a swap for AOL's dial-up business would not add to Liberty's core assets. But they also said such a deal could work, and Liberty has good relations with TW CEO Jeffrey Bewkes.

Maffei also expressed disappointment Monday about the price of Liberty Media Entertainment shares, saying management is still looking at options.

Liberty Media on Monday reported second-quarter financials for all its key businesses.

Among others, Liberty Entertainment's revenue jumped 32%, with adjusted operating income before interest, depreciation and amortization up 13% thanks to growth at Starz Entertainment and the addition of sports assets as of February.

Starz revenue rose 8% to $275 million and adjusted OIBDA climbed 24% to $68 million.
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