John C. Malone’s media empire has been in a prolonged restructuring phase for quite some time now. The past few years have been characterized by mergers and twists.
In the latest twist of events, Malone’s Liberty Interactive Corp (NASDAQ:LMCB) (NASDAQ:LMCA) (NASDAQ:LINTA) (NASDAQ:LINTB) has revealed that it will part ways with its premium cable business, Starz. The latter, which is synonymous with its action packed program listing, will now operate separately as a publicly traded company. As Starz walks out the door, it carries with it an uncertain amount of cash, and an estimated debt of $1.5 billion.
Liberty’s current assets, liabilities, and businesses will now be placed under a new company, and shares will be distributed to shareholders.
The spinoff, which is slated for later this year, will not require a shareholder vote, as it will be tax free to Liberty Media’s stockholders.
Chris Albrecht, the chief executive at Starz, noted that this particular restructuring measure would be instrumental in unlocking the full growth opportunities for the business.
“This transaction will provide better transparency on the Starz operating business; optimize the Starz capital structure; permit us to better pursue our strategic objectives, including creating two currencies that could be used for acquisitions; and create significant liquidity at Liberty Media, which preserves all our options with respect to Sirius XM Radio Inc (NASDAQ:SIRI) and Live Nation,” noted Greg Maffei, Liberty’s president and CEO.
Maffei, through his statement, hinted that both Liberty and Starz would be able to benefit from the spinoff.
While Starz is still neck deep in debt, hope has been restored, as this move may just be the all important break that it needs. Its business has been in a somewhat moribund state, as its revenue for the outgoing quarter stands at $403 million- the same as last year.
At the fall of the second quarter, Starz had 20.7 million subscribers. On the other hand, Encore- its sister business- had subscribers of 34.2 million. The former draws a bulk of its views from “Spartacus” and “Boss”.
The general outlook suggests that the restructuring phase is geared towards making Liberty’s stock more attractive. Apparently, the company has been able to enjoy some huge tax benefits during its restructuring.
This latest spinoff is a materialization of an earlier foresight by Richard Greenfield, BTIG Research analyst. Last year in November, he was noted for saying that Liberty was preparing to hard-Spin Starz. His insight came after the September restructures, which saw Liberty part ways with its online and video businesses.