Liberty adds to its stake in DirecTV

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John Malone's Liberty Media looks ready to take a majority stake in DirecTV after boosting its recently acquired interest in the satellite TV giant from 41% to 48%.

If the company takes a majority, it could consolidate DirecTV's revenue and cash flow, giving it access to money that Liberty could redeploy into possible further content investments or acquisitions of content producers or cable networks.

However, a Liberty spokesman also said that DirecTV's charter requires that if anyone acquires more than 50%, they must offer to buy all 100%.

Liberty management had so far left its options open on whether to increase, lower or keep steady the DirecTV stake, but executives have in recent months repeatedly lauded the company's performance. DirecTV last year handily outpaced Dish Network and its cable competitors in terms of subscriber momentum.

Liberty president and CEO Greg Maffei said last year that buying 100% could have its benefits. "Having access to those cash flows, being able to have it operate synergistically with our content businesses, can be attractive under the right conditions," he said.

Liberty said Thursday that it has acquired 78.3 million additional DirecTV shares in a private transaction to boost its stake to 48% -- leaving it within arm's reach of a majority holding.

To fund the purchase, Liberty borrowed $2 billion against a new equity collar on 110 million DirecTV common shares. An equity collar is a series of puts and calls that kick in when a stock hits certain prices.

"These transactions reaffirm our belief in DirecTV, the quality of its service and the performance of Chase Carey and his management team," Maffei said. "The additional shares and equity collar each increase our exposure to DirecTV's equity and further align Liberty's interests with those of the DirecTV shareholders."

Liberty's DirecTV holding is attributed to the company's Liberty Entertainment Group business and tracking stock. The group also houses Liberty's interests in TV network firms Starz Entertainment and GSN, casual and fantasy sports games provider Fun Technologies, broadband service provider WildBlue Communications and Liberty Sports Holdings.

In February, Englewood, Colo.-based Liberty completed a swap with News Corp. that gave it the stake in El Segundo, Calif.-based DirecTV.
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