John Malone to resign as DirecTV chair
Mogul converting stock to shares with smaller voting stakeNEW YORK -- John Malone will give up a big chunk of DirecTV stock with bigger voting power and convert it to regular shares with a smaller voting stake, plus he will resign as the satellite TV giant's chairman and leave the board.
The two parties unveiled the transaction, which will cut the DirecTV voting stake held by Malone and his family from 24.3% to 3% and is expected to be completed in the coming months, late Tuesday.
It allows the Malones to continue to benefit from any stock upside but eliminates DirecTV's dual voting share structure. Importantly, it is expected to satisfy a condition imposed by the FCC when Malone's Liberty Media acquired its DirecTV stake from News Corp. in February 2008. The FCC recently told DirecTV management that a trust arrangement it had set up wasn't enough to assuage concerns over potential overlaps between a Liberty Global business and DirecTV's Puerto Rico subsidiary.
The planned deal calls for all of the Malones' Class B stock, which was established when DirecTV merged with Liberty Entertainment in November and conferred 15 votes per share, to be canceled and exchanged for Class A stock. The premium being paid in the transaction is an additional $160 million worth of Class A stock.
Malone will resign from DirecTV's board. Liberty Media president and CEO Greg Maffei and Paul Gould, who sits on the DirecTV and Liberty Global boards, are also expected to resign from the DirecTV board.
"While we will miss John Malone's experience, knowledge of our industry and keen business insight, we believe that this is in the best interests of DirecTV and its shareholders," DirecTV president and CEO Mike White said.
Said Malone: "I'm a big fan of DirecTV and am pleased to have contributed to its strong performance over the past two years. I'm leaving DirecTV in great shape to take on the competitive challenges that it is facing and will face in the future."