BY K. C. NEEL After a year of disappointing and unsuccessful deal-making, John Malone remains undaunted. Any of the deals his Liberty Media is contemplating now could significantly change the way the company looks and operates in the future. Liberty plans to join News Corp. in a bid to gain control of DirecTV, is angling to buy Vivendi Universal Entertainment (VUE) and is evaluating its 43% stake in QVC. All this, and the year isn’t even a month old. One thing is clear: Liberty wants assets it can control. Malone could only watch as his minority investments in Teligent and ICG Communications melted away when the companies filed for bankruptcy last year. “We would like to have one or two more operating businesses in our portfolio,” Liberty Media CEO Robert Bennett told analysts at last week’s Salomon Smith Barney Entertainment, Media and Telecommunications conference in La Quinta, Calif. Liberty wants to be the sole or at least dominant investor in VUE, which owns USA Networks, Universal Studios and Universal Music. “The combination of the studio and the networks is a natural fit with [Liberty’s] Starz [Encore Group].” Bennett told analysts. Liberty also wants a significant stake in DirecTV parent Hughes Electronics, although potential partner News Corp. would likely run the company. Liberty and News Corp. are putting the final touches on their offer for GM’s 30% interest in Hughes, which Janco Partners analyst Matthew Harrigan values at around $4.5 billion. “Given our history of relationships and our history of transactions with News Corp., we’re reasonably optimistic that we’ll be able to work that out,” Bennett told analysts. Liberty is also considering either getting rid of or gaining control of QVC. Comcast controls and consolidates the home shopping network on its balance sheet, but Liberty has the option of activating a clause in the contract that would force the MSO either to buy Liberty’s stake or to sell its interest to Liberty. Regulators would likely balk at Liberty having stakes in both cable and DBS companies should it get its hands on DirecTV. Moreover, Comcast’s debt levels may prevent it from coming up with the estimated $5 billion in cash it would need to buy Liberty’s stake. Harrigan believes Liberty may be using the “put” as a negotiating chip in other talks with Comcast. “These two companies have a lot of issues to grapple with, including the lawsuit Comcast filed against Starz,” Harrigan says, referring to Comcast wanting out of the Starz contract it inherited when it bought AT&T Broadband last year. “Remember, Malone is a master negotiator. This doesn’t have to be just about money.” “Regardless of what happens,” says Stifel, Nicolaus analyst Ted Henderson, “it’s a liquidity event for both companies. It would be good for both sides to see how QVC is valued.”

The Daily


Short Takes

Commentary by Steve Effros There was a fleeting moment when I thought that maybe I could cut down on the number of columns I write each month as we approach the new year. What the heck, so many of the issues I

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