Two of the smartest and toughest negotiating moguls in the media world are about to part ways, according to Business Week’s Steven Rosenbush. Liberty Media Chairman John Malone and News Corp. Chairman Rupert Murdoch have been entwined for years through a series of complex business deals that gave Malone 19% voting control of News Corp. and therefore, in effect, control over Murdoch and his business plans.
These two giants were like-minded allies for many years, but the power Malone has had over News Corp. has turned the alliance of kindred spirits into an uneasy pairing. The solution, or so it seems, is that Malone will trade his voting stake in News Corp. for News Corp.’s 38% stake in DBS provider DirecTV. Murdoch’s also going to fork over some cash — Malone’s News Corp. stake is worth about $16 billion, while 38% of DirecTV is worth only about $7.4 billion.
I can’t see this deal generating a financial benefit for either company. News Corp. is paying off Malone to get out of the company’s hair while Malone is getting what Murdoch himself referred to as a “turd bird.”
At first blush, it looks News Corp. is getting the short end of the stick. But, Malone’s going to be stuck with an asset, DirecTV, that can only expect to shrivel and die over time — unless, of course, Liberty Media is willing to add terrestrial broadband capability to the satellite-delivered video service via the construction of WiMax networks, an idea that Murdoch briefly considered. Rosenbush quotes IDT Chairman Howard Jonas, a friend of both moguls, as saying that Malone also might want DirecTV to round out his global portfolio.
Liberty Media is already the top cable operator outside the U.S., but currently has no U.S. video distribution business, a void that the DBS provider could fill.
“Liberty already is the largest operator of cable systems outside the U.S. By getting control of DirecTV, he would become the only truly global distributor of media,” Jonas said. That would give him a unique role in an increasingly global media market.
But, nothing is a done deal, yet. Both moguls are terrifically complex and tough negotiators and time will tell just how the final pact shakes out.
Cynthia Brumfield at 9:50 AM|Comments(0)
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