By Ben Fox Rubin
John Malone's Liberty Media Corp. said Thursday it plans to spin
off its cable-business holdings into a new publicly traded company,
called Liberty Broadband.
The new entity, to be spun off to Liberty Media shareholders by
the end of the year, will house Liberty Media's roughly 26% stake
in Charter Communications Inc., a minority investment in Time
Warner Cable Inc. and a mobile subsidiary called TruePosition.
The spin-off plan replaces a previous plan, announced in
mid-March, for creation of a Liberty Broadband tracking stock to
reflect the value of the same group of assets. Unlike spin-offs,
tracking stocks don't formally divide a company.
Since the tracking stock was announced, Charter has reached a
deal to acquire subscribers that will be divested by Comcast Corp.
if Comcast completes its proposed takeover of Time Warner Cable. In
a statement on Thursday, Liberty Media CEO Greg Maffei said the
Liberty Broadband spin-off was "well timed" given the
Charter-Comcast deal.
A person familiar with Liberty's thinking said the
Comcast-Charter deal means there is more clarity how much money
Charter will need to raise and that it no longer needs
deep-pocketed Liberty as a parent.
Liberty has used tracking stocks for many years but a couple of
years ago, acknowledging that many investors don't like the
concept, began to pull back on their use. Mr. Maffei acknowledged
their unpopularity with some investors on a conference call on
Thursday, noting that removing the negative halo of the tracking
stock should be a "positive on valuation."
Also on Thursday, Liberty said that operating profit rose to
$155 million for the first quarter, up 2.6% from $151 million a
year earlier. Revenue grew 28% to $1.01 billion.
Liberty Interactive Corp., another company controlled by Mr.
Malone, said its quarterly revenue edged up, driven by its QVC
home-shopping network.
Liberty Interactive has sharpened its focus on QVC, as well as
its e-commerce businesses. The company said in October that it
would reorganize its tracking stocks to create new holdings called
QVC Group and Liberty TripAdvisor Holdings.
Liberty Interactive's operating profit for the quarter declined
to $244 million, from $260 million. Revenue rose 0.5% to $2.45
billion.
At QVC--Liberty Interactive's largest business--revenue inched
up 0.6%. Revenue at Liberty Interactive's e-commerce business edged
up 0.2%.
Jeffrey A. Trachtenberg and Martin Peers contributed to this
article.
Write to Ben Fox Rubin at ben.rubin@wsj.com
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