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Cable Technology Feature Article

August 13, 2012

Liberty Media Sections off Starz into Separate Company

By Brittany Walters-Bearden, TMCnet Contributor

Liberty Media Corporation announced that its Starz cable channels will be sectioned off into a separate company. This is the latest development in the narrative of the Liberty family’s financial machinations, overseen by John Malone (News - Alert). 

This decision will give Starz investors a better idea of how the network is doing, improve its overall capital structure, and create two separate currencies of shares that can be used in acquisitions, according to CEO Greg Maffei. The separation will also create some cash flow wiggle room at Liberty Media. The company has been busy buying up shares of Sirius XM radio, the satellite radio broadcaster, and arranger of concerts, Live Nation Entertainment. 

The spinning off should wrap up later this year, according to Liberty Media, and will occur with no tax to current Liberty Media shareholders. Liberty Media will still have stakes in various companies, including but not limited to the Atlanta Braves baseball club. 

Back in September, Liberty Media first split off Liberty Interactive, owner of the home shopping network QVC and holder of stakes in other businesses. Liberty Interactive reported that it would separate its stock into what it’s calling two tracking stocks—this category includes Starz, which had been considered a tracking stock up until November. 

Along with the announcement concerning Starz, Liberty reported in the same breath that it currently owns 46 percent of Sirius XM Radio and has every intention of buying more in its effort to overtake control of the company. Starz’s mother network has over 20 million subscribers and the attached Encore channel has nearly 15 million more than that.

In total, the Englewood, Colorado-based Liberty Media reported earnings of more than $150 million in its second quarter. Because of an income tax benefit, this is substantially higher than the numbers a year ago. With this latest decision, figures are expected to improve even more in Liberty’s favor. 

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2012, taking place Oct. 2-5, in Austin, TX.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Brooke Neuman

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