|
Malone goes global
|
 |
August 22, 2001: 8:51 a.m. ET
Liberty Media to boost holdings in Europe, seen in bid for German cable co.
A weekly column by Staff Writer Luisa Beltran
|
NEW YORK (CNNfn) - Free from the shackles of AT&T Corp., John Malone and Liberty Media will probably step up their acquisition pace in Europe and ignore the U.S. —for now.
Cable visionary John Malone, 60, and Liberty Media got their walking papers from AT&T Corp. (T: up $0.04 to $19.40, Research, Estimates), the No. 1 U.S. telecommunications and cable concern, earlier this month. Liberty had been trading as a tracking stock but is now officially out on its own, listing on the New York Stock Exchange under Class A (LMC.A: Research, Estimates) and Class B (LMC.B: Research, Estimates shares.
|
|
Luisa Beltran
covers mergers and IPOs for CNNfn.com | |
Malone owns most of Liberty's Class B shares while the Class A are widely traded. The cable titan has majority ownership of Englewood, Colo.-based Liberty, which has stakes in more than 100 cable channels such as Discovery Channel, E!, and USA Networks.
Now liberated, rumors are circulating that Malone may bid to get back the cable assets he sold to AT&T (T: up $0.04 to $19.40, Research, Estimates) for $48 billion in 1998.
But don't bet on it. Malone will probably pass on AT&T Broadband and focus his attention elsewhere, especially overseas, where the cable markets are less developed than in the United States.
"Liberty is focused externally now, toward Europe and Germany specifically," said analyst Tom Wolzien, of Sanford Bernstein.
Liberty declined to comment.
Malone, through several complex transactions, is all over Europe. Liberty is currently buying six regional cable television companies in Germany from Deutsche Telekom for an undisclosed amount. The purchase, expected to close in the fall, will give Liberty access to more than 10 million homes in Germany, the second largest TV market in Europe.
Malone is expected to continue rolling up German cable systems, including PrimaCom AG. Shares of PrimaCom surged last week in Germany on the rumors.
Liberty also is expected to boost financing of United Pan-Europe Communications NV (UPC), Europe's leading cable television company with 7 million subscribers in 17 European countries as well as Israel.
Liberty owns a large stake in Denver-based UnitedGlobalCom Inc. (UGC), an international broadband provider, which owns 53 percent of UPC. UPC, in turn, holds a 25 percent stake in PrimaCom (PCAG: down $0.31 to $2.99, Research, Estimates).
In May, Liberty completed a private placement providing $800 million in financing to UGC, which is being funneled to the Netherlands-based UPC. Liberty is also in the process of giving another $543.2 million cash to a holding company that will control UGC (UCOMA: down $0.47 to $4.14, Research, Estimates) and may pony up more.
With the additional financing, Liberty will end up owning around 45 percent to 52 percent of UGC and through UPC will have access to Germany, Holland and Australia.
Since UPC shares have plunged 90 percent this year, Malone is expected to be more aggressive.
"There is a chance for Malone to go further and control 100 percent of UPC," said analyst Stuart Linde, of Lehman Brothers.
Insiders believe that Malone will have the UPC/UGC financing set by the time of Liberty's analyst meeting Sept. 7 in New York City.
Both UPC and UGC could not be reached for comment.
The push for Britain
The United Kingdom looks like it will be another focus for Liberty and Malone. Liberty currently has a 25 percent stake in Telewest Communications Plc, the No.2 cable operator in the U.K, offering services to more than 1.7 million homes.
Telewest trails New York-based NTL Corp. currently the top U.K. cable provider with more than 8.4 million cable providers. Telewest and NTL (NLI: up $0.14 to $6.39, Research, Estimates) have struck an alliance to build customer awareness of broadband services in the U.K, a Telewest spokesman said.
Insiders expect that the two cable rivals could merge or partner in other ways. NTL could not be reached for comment while Telewest declined comment.
If Telewest and NTL do merge, Malone will probably take a smaller equity stake in the combined entity.
With UPC, Telewest and the 6 systems from Deutsche Telekom (DT: down $0.44 to $15.10, Research, Estimates), Malone now has interests in cable systems covering all of Europe.
"Malone is out there in a time when the Euro cable industry does not have access to capital markets," said one analyst who declined to speak for the record. "He's out there looking for deals."
In for DirecTV?
Malone isn't shunning the United States altogether -- he may yet play a part in News Corp.'s bid for Hughes Electronics, which controls the 10-million subscriber DirecTV satellite service.
Rupert Murdoch's News Corp. (NWS: down $0.11 to $35.60, Research, Estimates) hopes to combine DirecTV with its own Sky Global Networks, the world's largest satellite-television company.
Rival EchoStar (DISH: up $0.55 to $27.67, Research, Estimates) , the No. 2 U.S. satellite-television provider, has also made an unsolicited $30.4 billion bid for Hughes. General Motors Corp., which controls Hughes, is now talking to both.
Many expect Malone to play a strong role in News Corp.'s bid for Hughes. Liberty holds an 18 percent stake in News Corp. and Malone and Murdoch are longtime friends and business associates.
"Malone is closely aligned with News Corp. and has a stake in a lot of what Murdoch is doing," said one analyst who declined to speak on the record.
Liberty will trade shares for a stake in SkyGlobal once it goes public, a spokeswoman said.
"Malone is a real chess player," said Adam Bird, co-head of the global media and entertainment group at Booz Allen & Hamilton. "He's always thinking a few steps ahead of everyone else." 
|
|
|
|
|
 |
|
