Liberty Media Boss John Malone Sells Some Discovery Communications Stock

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Liberty Media chairman John Malone recently sold about 2.2 million shares of his stock in cable networks firm Discovery Communications for an estimated $106 million, but at least one analyst says the sale is "a positive (not negative) signal."

Malone is sitting on the board of Discovery since Liberty used to control the company before a spin-off in 2005. Typically, stock sales from insiders raise concerns on Wall Street as they can signal less confidence in a company's outlook.

But Sanford C. Bernstein analyst Todd Juenger said in a report that this wasn't the case here. He highlighted that Malone continues to own more Discovery stock and suggested that the cable channel group may have purchased the shares itself with money from a recent $1 billion debt offering. Stock buybacks are often seen as a positive since they reduce the number of shares available and thereby boost earnings-per-share figures.

"Open market purchases of size in [Discovery Class C stock] are often difficult given liquidity constraints, so a purchase from Malone directly would make sense," Juenger said. "If that is true, we view this not as a negative insider-selling signal, but more of a confirmation that Discovery will use the majority of its $1 billion to repurchase stock."

Malone had disclosed the stock sale in a regulatory filing on Wednesday.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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