Just weeks after Charter Communications slashed prices for its Spectrum Mobile offering to $29.99 per month, chairman and CEO Tom Rutledge said charges for wireless cable offerings could drop further as the cost to provide service continues to decline.

“I think the mobile opportunity is very similar to the wireline opportunity that existed 15 years ago,” Rutledge said at the virtual/in-person Liberty Media Investor Day in New York. “Look at what happened there — we had a high-priced wireline phone service — in the metro area here, it was about $72 a month. That product now is less than $15 a month. And the biggest wireline phone companies in America are Comcast and Charter. So, I think the opportunity in mobile is similar. It’s got its own complexities, but the opportunity is there to create value for consumers. Consumers actually save money and we make money. That’s a pretty attractive business model that is available to us. And yeah, I think it leads toward convergence.” 

Charter introduced its $29.99 price point — for a minimum of two lines each — in October, a big discount from its previous charge of $45 per month, per line. That price reduction came on the heels of Comcast introducing a $30 per line service (for a minimum of four lines) which took effect in April. 

In a research note, Bernstein media analyst Peter Supino wrote that Rutledge’s comments provided “a muscular reminder of Charter’s ambitions and competitive advantages.” 

“Charter will sell wireless as aggressively as necessary to ensure that it achieves growth of customers and EBITDA per customer,” Supino added.

Also: Analyst Says It’s Time to Take Cable Wireless Seriously

Liberty Media chairman John Malone said that while convergence of fixed and wireless assets is common in Europe, where Liberty, a major Charter shareholder, has substantial holdings, it hasn’t yet taken hold in the U.S. While European companies have made bigger strides in deploying fiber networks compared to their U.S. counterparts, Malone stressed that every company and every market is different. 

“I’d start by reminding everybody that Europe is largely converged, the broadband companies are also wireless companies,” Malone said at the Investor Day. “That’s been true in every market we’re still operating in. In terms of technology, existing network structure, the nature of technological upgrade, the pressure from competition, etc. Every market is different.”

Malone added that in the U.K. for example, Liberty overbuilt itself with fiber, initially to capture more B2B business and because it was relatively cheap to build. The U.K., he said, also is relatively underbuilt — there isn’t a lot of fiber capacity and areas will be built out as opportunities present themselves. In the U.S., Malone said the biggest area for growth could be in boosting upstream capacity. 

“That may be more of a political reality than a business reality in the near term,” Malone said.  “And the cable industry contemplated that, and does have the capability of vastly expanding the upstream capacity.”

Malone said outside of the U.S., there has been a movement toward collectively building networks.

“In some places there is only one fiber backbone network that will be built and everyone will share and use it. So the models vary and in each location it depends on capital efficiency, the current state of play, cooperation between multiple players. It’s not uncommon. For instance in the U.K. there are four meaningful cell phone providers but only two networks, and those four competitors share  those two 2 nets as a matter of capital efficiency.”

Liberty CEO Greg Maffei added that the path U.S. cable companies have taken by upgrading using DOCSIS and other technologies to boost capacity and efficiency gives them some leeway before having to decide whether to go deeper into fiber expansion.     

“It’s a long ride for U.S. cable,” Maffei said. ■ 

Cable legend John Malone, just days after converting his super-voting shares in Discovery Inc. to common stock for no premium to help facilitate its merger with WarnerMedia, has agreed to sell his Class B shares on TV and online retailer Qurate Retail Group to long-time lieutenant Greg Maffei, for about $400 million in cash or stock.

News of the filing first appeared in The Information. 

Qurate includes the two largest home shopping channels -- QVC and HSN -- as well as online retailer Zulily, Cornerstone Brands and green energy and other investments. .  

Malone, 80, helped found the modern cable business as chairman of Tele-Communications Inc., and has left his mark on practically every major cable deal in the past 20 years. He agreed on May 18 to sell his Qurate super-voting shares, which give him 41% voting rights in the company, to Maffei for $14 per share, according to Securities and Exchange Commission documents. Qurate stock currently trades around $13 per share. According to the filing, Malone would get paid in either cash, stock “or such other form of consideration as to which Mr. Maffei and Mr. Malone may mutually agree.”  

Maffei, who is CEO of Liberty Media and chairman of Qurate and several other Liberty holdings, joined Malone in 2005 after stints at Microsoft,  360Networks and Oracle. The two have been partners on several big deals, including the 2013 purchase of a 27% interest in Charter Communications. 

According to the SEC document, Malone agreed to the sale on May 18, pending board approvals. The document added that while he supports Qurate’s long-term strategy, he wanted to accept Maffei's offer “because it would provide flexibility for certain long-term estate and tax planning goals in light of potential changes in federal tax laws.”

The document continued that the sale is contingent on the approval of Qurate’s board of directors. Qurate also has call rights to Malone’s Class B shares, and if the company exercises that right, Malone said he would prefer to receive payment in the form of Qurate common stock, “such that he would continue to hold a substantial investment in Qurate Retail.”

Malone earlier agreed to convert his Class B super-voting shares in Discovery, which usually carry 10 votes each, on a 1:1 basis into common shares for no premium, a move that helped Discovery move forward with its planned merger with WarnerMedia. In a statement after that deal was announced, Malone said that he neither asked for nor received a premium for converting his Discovery stake. 

“I believe we are creating real value for shareholders and a legacy investment for my grandkids,” Malone said in the statement. 

Discovery’s super voting shares usually trade at around the same price of its common stock, but in the past several months, because of a sell-off by hedge fund Archegos Capital (which also shorted ViacomCBS stock), their value has soared. Bloomberg estimated that Discovery’s Class B shares have traded as high as $128 each at one point -- more than four times the Class A share price of around $32 per share. By converting his Class B shares on a one-for-one basis, Bloomberg estimated that Malone could lose about $280 million on the deal. 

That is in contrast to Discovery’s other major holder of super-voting shares -- Advance Publications, controlled by publishing giants the Newhouse family -- which according to Bloomberg will receive 13.1 shares of the new entity for every Class B share they own. Advance also will receive  the right to nominate two board members to the new entity.

Some analysts saw Malone’s Discovery deal as his way of helping to push the transaction forward. And he still will be a large shareholder after the deal closes, meaning he will participate in any upside in the stock price in the new entity. Some have predicted that the new Discovery-WarnerMedia could be valued at as much as $46 per share, well above the current $32 price of the stock on Thursday. 

Liberty Media CEO Greg Maffei saw his total compensation rise about 7% in 2020 to $47.1 million from $44 million, fueled mostly by stock awards and other incentive payments, according to the company’s proxy statement filed with the Securities and Exchange Commission April 14. 

Maffei’s annual base salary fell 27% to $871,880 in 2020, compared to $1.2 million in the prior year, but he received a big bump in his stock awards -- $8.3 million compared to $3.6 million in 2019. Maffei also received $11.3 million in non-equity incentives in 2020, compared to $8.4 million in 2019.

Other Liberty Media executives saw even bigger increases in total compensation. Chief Accounting Officer and Principal Financial Officer Brian Wendling received $2.4 million in total compensation for the year, an 85% increase over the $1.3 million he received in 2019. Chief Corporate Development Officer Albert Rosenthaler received a 45% increase in total compensation to $4.5 million from $2.6 million in the prior year, while Chief Legal Officer Renee Wilm’s total haul stayed constant at $2.9 million for the year.  

Liberty Media chairman John Malone’s total compensation dipped 22% to $1.09 million from $1.4 million in the prior year.  

Liberty Media CEO Greg Maffei was the latest media chief to speculate on Amazon’s reported increased interest in sports rights, telling an industry audience earlier this week that he expects streaming video companies to get more involved in sports, which should drive rights fees skyward.

Speaking at the virtual Deutsche Bank Media, Internet and Telecom conference on Monday, Maffei said the time is ripe for big tech to boost its involvement in streaming sports.

"Amazon is certainly looking pretty actively, it looks like, at the NFL. You’ve seen a lot of interest from various players,” Maffei said. “Have we seen the execution yet? No. Amazon has moved from a bit player in the NFL to being a serious player and I suspect they're only going to get more serious over time and they won't be the only ones."

Amazon first dipped its toes in sports programming in 2017, agreeing to pay about $50 million for 10 Thursday Night Football games broadcast by NBC and CBS. It stepped up that involvement in 2020, renewing its TNF for three years and opening up speculation that it could expand its sports involvement, to possibly include the entire TNF slate. Fox CEO Lachlan Murdoch has hinted that the programmer may concentrate on its NFL Sunday package and give up rights to TNF. Amazon had been considered to be a possible bidder for the NFL’s out-of-market Sunday Ticket package, a notion that has gained more steam after AT&T agreed to spin off its TV distribution unit -- including DirecTV, U-verse and AT&T TV Now -- and selling a 30% interest in the new unit to TPG Capital for about $8 billion. As part of that deal, AT&T said Sunday Ticket, to which it holds the rights through the 2022 season, would move to the new company. 

Sunday Ticket negotiations are expected to wait until next year, as the league and potential suitors continue to circle around other rights. According to Sports Business Journal, Disney’s ESPN hammered out a deal to renew Monday Night Football and its ABC broadcast network will return to the Super Bowl rotation for the first time since 2006. 

On March 10, Disney said ESPN had reached a seven-year deal with the National Hockey League to air games on the cable channel as well as its ABC network and Hulu streaming service. 

But Amazon finally stepping up to the sports plate could have a huge effect on the way fans consume sports content.

"Amazon Prime taking over Thursday Night Football is a watershed moment in TV history that will undoubtedly accelerate the demise of linear TV and the multichannel bundle,” LightShed Partners partner and media and technology analyst Rich Greenfield wrote in a recent blog posting. 

In a research note, Barclays analyst Kannan Venkateshwar cited published reports that speculate Amazon would pay about $1 billion annually for TNF rights, above the $780 million he estimated Fox is paying in the last year of its five-year deal.

Thursday Night Football ratings have been significantly lower than other NFL packages, Venkateshwar wrote. According to the analyst, Amazon streamed the 11 games Fox carried in the 2020 NFL regular season and one Saturday game. The Saturday game generated about one-third of the viewership of an average nationally televised NFL game, and streaming TNF added between 200,000 and 500,000 viewers, according to the Barclays analayst. However, he noted the new deal may be for more games, driving down the cost per contest.  

And ratings may not be the ultimate game for Amazon when it comes to sports or anything else involved with Amazon Prime. 

Back in December, Amazon’s VP of global sports video Marie Donoghue said the online retailer’s interest in sports is tied specifically to what benefit it would have for the Amazon Prime service.

“We are opportunistic,” Donoghue said at the SportsPro OTT Summit in December. “I think sometimes that confuses people, that we do look at everything, but everything has started with the customer and we only do it if it provides value to the customer and particularly their Prime membership.” 

Later in that interview, Donoghue, who spent about 20 years at ESPN expanding its programming offerings before joining Amazon in 2018, stressed that Amazon isn’t a 24-hour sports service, but an entertainment service, and its inherent nature is vastly different from the other types of companies that normally bid on sports rights. 

“We literally start with the customer and work backwards,” she said

Amazon Prime offers free shipping to customers and has about 150 million people worldwide paying about $119 per year for the privilege. So while it would be nice if sports on Amazon Prime Video drew in more subscribers, the value of that add-on to the service is not in drawing in more customers who watch games and leave. The purpose of the video offering, Amazon chairman and CEO Jeff Bezos said back in 2016, ultimately lies in how many consumer products those viewers buy. 

“From a business POV for us, we get to monetize that content in an unusual way," Bezos said at the ReCode Code Conference in 2016. "When we win a Golden Globe, it helps us sell more shoes in a very direct way." 

The entrance of big video streamers into sports rights negotiations has been expected for years, but so far their involvement has been minimal. Any involvement from those companies -- Facebook and Google have been cited as potential major rights bidders -- would bode well for Liberty, which owns Major League Baseball’s Atlanta Braves, and the Formula One racing circuit. At the same time, the traditional cable bundle is showing signs of unraveling -- MVPDs lost about 7 million customers in 2020, according to reports -- and regional sports networks have been under pressure because of their high affiliate fees. 

Also Read: Sports an OTT Streaming Could Squeeze the Past Vestige of Appointment TV

"The most important thing that drives sports rights is competition. To the degree we see new large digital distributors and the like enter the markets, that's a positive," Maffei said. “To the degree we have seen tradeoffs between free-to- air and pay and then a new version of pay, digital, I think having new players, new entrants is probably the most positive effect we have. I do see that likely to happen for some of the sporting events in the countries we have.”

Maffei also said that for smaller sports, breaking into the standalone streaming business can be tricky. Liberty’s own Formula One launched F1 TV in 2018, and earlier this week said it would revamp the streaming service with new features allowing fans to more easily find archived content and adding Brazil, Slovakia and the Czech Republic to the more than 82 countries where the service is available. 

At the Deutsche Bank conference, Maffei said that in the future he sees sports rights holders, especially smaller ones, offering a hybrid of subscription, broadcast and pay TV content. 

“We’ve learned that that can be an unbelievably  powerful fan engagement tool,” Maffei said of F1 TV. “But it’s hard at the amount of content we have -- 23 races and even shoulder content -- to build enough content to probably build a compelling service for a broad, board group of people. To be a fan engagement tool, great, to be something that is amazing for a really dedicated hardcore fan group, perhaps. But to be something which substitutes or overruns our traditional partners or the large pay partners or the large digital partners, I think that is going to be harder to see. I think you’re going to see a lot of sports find difficulty in building -- and we don’t have enough content --  a broad enough content interest on an ongoing basis to build a subscription product that really replaces what they have. Look at what happened to WWE pulling back and going to Peacock. And they have a lot more content than we do.”

Liberty Broadband and GCI Liberty, two investment vehicles of cable legend John Malone, have agreed to a merger that will combine Liberty Media’s two largest cable interests -- Charter Communications and Alaskan cable and telecom company GCI -- in a deal that hopefully will unlock value for both.

Liberty Broadband’s main asset is its 24.4% interest in Charter, a position it acquired in 2013. Analysts have long expected a combination of GCI and Liberty Broadband, mainly to unlock value.

Related: Northern Exposure

Liberty Broadband began trading as a tracking stock on Nov. 5, 2014.  Its stock price has increased by about 203% in that time, compared to Charter, whose shares have risen 244% in the same time frame. GCI Liberty has been a different story.

Liberty Media subsidiary Liberty Interactive purchased GCI in April 2017 for $1.1 billion. The GCI asset was spun out of Liberty Interactive (now Qurate Retail Group) into another tracking stock (Liberty Ventures) and began trading as GCI Liberty (NASDAQ symbol: GLIB) in March 2018. The stock opened March 12, 2018 at $54.29 each and in the past two years has risen about 54%, closing at $83.62 per share on Aug. 7.

“This process was driven by independent special committees of Liberty Broadband and GCI Liberty, and John Malone and I fully endorse the combination,” Liberty Broadband and GCI Liberty CEO Greg Maffei said in a press release. “The transaction is financially attractive and beneficial for both companies.”

According to the deal terms, each holder of GCI Liberty shares will receive 0.588 shares of Liberty Broadband stock in exchange for their GCI shares. At the close of he deal, expected in the first half of 2021, former GCI Liberty shareholders will own 30.6% of the newly combined company. 

Aside from its Charter stocks, Liberty Broadband includes Boston-based location technology company Skyhook. GCI Liberty’s principal assets consist of GCI Holdings, and non-controlling interests in Liberty Broadband, Charter, and online lender LendingTree.

According to the companies, the combination will allow the two to save on overhead costs, simplify its management and administrative structure, reduce trading discounts to its equities, and improve flexibility for future acquisitions.

In addition, the merger will allow Liberty Broadband to take advantage of the lower pierced GCI Liberty equity, and gives it another attractive cable asset. GCI Liberty in turn gets a premium price for its stock, is tied to a more strategic equity, gets a more liquid currency in Liberty Broadband stock and gains access to a larger, more stable balance sheet.

Malone will continue to control 49% of the combined company’s vote. Liberty Broadband said the deal values GCI Liberty at $8.7 billion. Malone will remain chairman of Liberty Broadband and CEO Maffei also will retain his role in the combined entity. GCI CEO Ron Duncan and other GCI management will continue in those roles after the close. 

Liberty Media CEO Greg Maffei’s total compensation more than doubled in 2019 to $44 million, fueled mainly by a new employment deal he signed in December.

Maffei’s annual haul was more than twice the $20.2 million he received in 2018. In December, he renewed his employment deal, ensuring he would remain CEO through 2024. As part of that agreement, Maffei received a one-time bonus of $2.2 million and option awards of $27.8 million, nearly $20 million more than the $8.8 million in options he received in the prior year.

Maffei’s annual salary rose slightly to $1.17 million from $1.1 million in the prior year, and his stock awards increased to $3.6 million from $3 million in 2018.

Liberty Media operates and owns interests in a range of media businesses, mainly attributed to three tracking stock groups — Liberty Sirius XM Group, the Braves Group and the Formula One Group. It also holds interests in Live Nation Entertainment and a minority stake in AT&T.

Qurate Retail CEO Gregg Maffei received $47.8 million in total compensation in 2017, more than three times the $13.3 million payday he got in the prior year, mainly in the form of option awards from the newly minted company, a combination of former Liberty Interactive Group holdings QVC, HSN Inc. and several other online retail brands.

Maffei received his 2017 compensation as president and CEO of Liberty Interactive. With the name change to Qurate Retail Group – effective in March – Maffei is now chair of the new company, while QVC CEO Mike George was named CEO of Qurate. George received total compensation of $7.7 million in 2017 as QVC CEO, 42% higher than the $5.4 million he received in 2016.

Maffei received $1.06 million in base salary in 2017, about the same as the year before. But his biggest windfall was in the form of option awards -- $41.8 million in 2017, more than five times the $8.1 million he received in the prior year. Maffei also received $2.3 million in stock awards – up from $1.96 million in the prior year, and non-equity incentive plan compensation of $2.5 million, up from $2 million in 2016.

Related: Ergen Sees Pay Rise in 2017

Other executives received about the same amount of compensation in 2017 as they did in the previous year. Chief legal officer Richard Baer took a pay cut – he received total compensation of $3.2 million in 2017, down from $5.1 million in 2016 – but others stayed fairly even. Chief financial officer Mark Carleton received $1.9 million in total compensation in 2017, even with the $1.9 million he netted in 2016; and chief corporate development officer Albert Rosenthaler received $2.7 million in total comp in 2017, slightly higher than the $2.4 million he received in the prior year.

New York – Liberty Media chair and cable legend John Malone stood before a rapt, standing room-only audience at his company’s annual investors meeting here Thursday, telling analysts and investors that politics appears to be clouding what once was expected to be a more streamlined merger approval process.

Malone didn’t mention AT&T-Time Warner by name, but the chances of that merger passing regulatory muster have been under a cloud in recent weeks, as reports have said the government could move to block the deal if certain assets like CNN aren’t divested.

Related: Missed Connection for AT&T-Time Warner?

“I personally have very little insight into what the Antitrust Division is smoking these days,” Malone joked at the investor meeting. “Normally, verticals [mergers] have always been regarded as pretty straightforward, low-risk. To the degree politics gets into it, it becomes difficult to predict.”

Malone said that he hasn’t experienced much push back from regulators in his own business, although he added that the approval process for Discovery Communications’ (of which Liberty is a major shareholder) purchase of Scripps Networks Interactive has taken longer than expected.

“It has been a little bit delayed, more than I would have guessed,” he said.

Read More: Complete Coverage of the Discovery-Scripps Deal

But Malone still believes that smaller content companies, so-called “free radicals,” will be able to combine with little resistance from the government. But he said the current regulatory environment could be spurred by Justice Department officials wanting to rectify perceived misses in the 2011 approval of Comcast-NBC Universal. Comcast agreed to about 150 conditions for that deal, most of which expire in the middle of next year.

But those conditions were largely behavioral, centering on ensuring that Comcast did not favor its own networks more than others in terms of carriage and that it made those network available to all distributors.

“We have a new Antitrust Division, the FCC has gone more flexible, more capitalistic,” Malone said, adding that he wasn’t sure what the department’s concerns may be. “The only noise I picked up is that the professionals at Justice were not happy with the behavioral agreements they reached with Comcast on the NBC Universal deal. So they’re kind of rethinking behavioral versus structural change.”

But he added when Charter, another big Liberty holding, purchased Time Warner Cable last year, the cable operator agreed to “a number of rigorous agreements, some of which the government has voluntarily backed away from.”

Malone said the content business, both on the linear and social media side, appears to be more politically sensitive now than ever.

Liberty Media CEO Greg Maffei put the situation more bluntly, adding that consolidation in the content business is happening because of obvious pressures on the model.

“In my judgment, the traditional linear content business is severely challenged,” Maffei said. “I get the idea that there should be limitations on ensuring Starz [another Liberty holding] for example,  should get carriage on DirecTV. But the content business has gone from 200 original shows five years ago, 450 this year, the cost per hour at least doubled. We’ve seen a 5x increase in content. These guys can’t pay for it, we’re not going to pay for it at Charter, I suspect. Guys like Netflix have an amazingly advantaged model compared to the traditional guys. …The traditional content business is really challenged. The idea that you’re going to block consolidation here is crazy.”

Malone also touched on the wireless business, adding that despite his continued belief that a cable company will eventually acquire or be acquired by a wireless company, Charter’s decision to offer a wireless product through an MVNO with Verizon was the right move.

Malone added that MVNO’s effectively create “more competition instead of less,” and is probably the best way to get into the wireless space.

Malone said he isn’t particularly in love with the wireless business, but over time it becomes an important part of the connectivity picture.

European cable operator Liberty Global already has a strong wireless component and Malone said the synergies are “ultimately enormous.”

Malone was particularly high on Charter’s prospects, adding that cable’s two-way capabilities and broadband business will win the day.

“When you stick stuff out there and don’t have some kind of two-way path with the consumer, how do you know who’s watching, who’s paying?” Malone said. “…The reason got we out of the satellite business when we did was because it’s a one-trick pony – video only, very high ARPU and no return path. It was clearly going to come under assault.”

But Malone added practically every new communications technology, voice, video, internet search, 5G wireless, will need some kind of robust terrestrial network to make the final connections.

“The wind is at our back,” Malone said. “And all this noise about everybody wants to buy Charter, everybody wants to have some deal with Charter, well it’s actually true. It’s a fabulous company. It’s going to go in a great direction.”

“Timing is finally right,” Liberty Interactive CEO Greg Maffei said before ticking off the reasons for having QVC join forces with home-shopping channel rival HSN in a deal for $2.1 billion in stock.

The reasons mostly had to do with HSNi’s stock price falling to the point where it made sense for Liberty Interactive — which already owned 38.2% of HSNi — to buy out the rest of HSNi.

At points over the last couple of years, HSNi’s share price had been nearly 3 times that of QVC Group, Maffei said, but had slid to about 1.3 times. Measured by multiples of cash flow, QVC actually moved ahead of HSN, he said. “It seems like finally the market had come to our point of view.”

For the cable companies carrying QVC and HSN, the impact will take longer to measure, because those contracts are for relatively long terms. But the message from QVC CEO Mike George on a call with analysts on July 6 was: “Our distributors should win when we’re winning.”

Maffei, George and Rod Little, the chief financial officer at HSNi, told analysts on the conference call that after the transaction closes they will begin talks with distributors that carry the companies’ five channels: QVC, in 104 million homes; QVC2, in 60 million; BeautyiQ, in 40 million; HSN, in 91 million homes; and HSN2, in 48 million.

Barton Crockett, of FBR Capital, asked about differences in what QVC and HSN pay TV distributors. HSNi, he said, pays about 10% of revenue back to U.S. distributors while QVC pays out more like 4% of revenue in deals that have differing structures.

George said differences in deals, but also in channel positions and high-definition versus standard-definition carriage, will all be discussed to find out “what configuration would best optimize viewership for the customers and drive growth and then help restructure arrangements where our distributors benefit from the growth.”

A projected Q4 closing of the HSNi deal won’t be tied to Liberty Interactive’s pending purchase of Alaska cable operator General Communication Inc. (see cover story). Liberty Interactive plans to spin GCI into Liberty Ventures after that transaction closes.

Liberty Interactive Corp. and HSN Inc. (HSNI) have entered into an agreement that will see Liberty Interactive acquire the 62% of HSNi it does not already own in an all-stock transaction.

The deal is valued at $2.6 billion, including debt, or $2.1 billion in equity. HSN and QVC will remain separate brands. 

HSNi assets include 40-year-old multichannel retailer HSN (which launched its TV channel in 1994) and Cornerstone, which comprises home and apparel brands.

READ MORE: Liberty Interactive to buy Alaskan cable operator GCI for $1.1B

Liberty owns shopping network QVC. QVC is the bigger of the two retailers, with more than 8 million customers, while HSNi has more than 5 million, with about 2 million customers overlapping, the companies said. QVC is in 104 million homes and HSN is in 91 million homes, they said. 

HSNi shareholders will receive fixed consideration of 1.65 shares of QVCA for every share of HSNi. Former HSNi shareholders (excluding Liberty Interactive) will own 10.6% of QVC Group’s undiluted equity and 6.9% of undiluted voting power when the transaction concludes. The price reflects a 29% premium on HSNi, the companies said: HSNi closed on July 5 at $31.30 and opened today at $42.50 after the deal was announced. After 11 a.m. the stock was at about $40 per share, up about 28%. QVC A shares, at $24.36, was down about a half a percentage point at that time.

The companies project $75 million to $110 million in annual cost savings will be achieved in three years' time. 

HSN and QVC carriage agreements with TV distributors have different structures, with HSN paying out at a higher rate as a percentage of revenue, analysts pointed out during a call discussing the deal. Liberty Interactive CEO Greg Maffei and the heads of HSNi and QVC said they would be working with distributors, after the transaction closes, to find the best deals for all parties, including on variables including channel positioning and HD versus SD carriage in addition to payouts. Maffei said the distribution contracts are for relatively long terms so that won't be an immediate issue over the next 12 months. "Our distributors should win when we're winning," QVC CEO Mike George said.

Related: Internet Can’t Kill the Retail Star

HSNi headquarters will remain in St. Petersburg, Fla., and will be overseen by George. The acquisition, which awaits regulatory approval, is expected to be completed by the fourth quarter. Approval of the Liberty Interactive stockholders is not required. 

QVC has more than 17,000 employees and its ecommerce unit zulily has more than 3,000, while HSN has 6,500 employees.  

As for why the deal is happening now, Maffei said on the call that the "timing was finally right.” HSN has been trading lower, including on a cash-flow multiple basis, making the deal more affordable to QVC, he said. Management changes at HSNi also played a role: former CEO Mindy Grossman left in May to become chief at Weight Watchers. A year ago, HSN traded in the $50 per share range on NASDAQ.

"The addition of HSN will enhance QVC's position as the leading global video eCommerce retailer. Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms," said Maffei in a release. "The value of the combined QVC, HSNi and zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures."

Liberty Interactive executives said the acquisition of HSNi will increase the scale of the QVC Group and boost cross-marketing “to better engage existing and potential customers.” It also noted HSNi’s lower debt leverage.

“Joining the QVC Group will give us instant access to global consumer markets, a leadership team with deep expertise and a global perspective, and the opportunity to further strengthen our content-based brand portfolios in a changing retail landscape,” said Arthur C. Martinez, HSNi’s chairman of the board of directors, also in a release. “We have both been innovators in a growing and dynamic retail environment with a unique vision of what shopping should be, and as new technologies continue to change our everyday lives, together we can develop the next generation of shopping for the next generation of consumers.”

Cornerstone’s brands include Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements.

Upon closing, the Liberty Interactive board of directors will be expanded to include a director from the HSNi board, selected by Liberty Interactive.

The companies said Allen & Company is serving as financial advisor and Baker Botts LLP is serving as legal advisor to Liberty Interactive. Centerview Partners and Goldman Sachs Group are serving as financial advisors and Davis Polk & Wardwell LLP is serving as legal advisor to the Special Committee of the Board of Directors of HSNi.

Liberty Media said it will issue Series C common stock worth $1.55 billion to third party companies in an effort to help fund its $4.4 billion purchase of motor racing icon Formula 1.

In a statement, Liberty said it issued the Series C common stock at $25 per share to Coatue Management, L.L.C., the D. E. Shaw group, JANA Partners LLC, Ruane, Cunniff & Goldfarb Inc., Soroban Capital Partners LP, SPO Advisory Corp., and Viking Global Investors LP. The issuance of the shares will be completed concurrently with the completion of the Formula 1 acquisition.

"We are excited that this impressive list of investors will participate in the acquisition of Formula 1,” Liberty CEO Greg Maffei said in a statement. “This group shares our enthusiasm for the sport and our belief in the opportunity to develop and grow it for the benefit of the fans, teams, sponsors and our shareholders. We look forward to closing the transaction in early 2017.”

Liberty agreed to purchase Formula 1 in September.

Liberty said the proceeds from the issuance will be used to increase the cash portion of the consideration payable to the selling Formula 1 shareholders, led by CVC Capital Partners. As a result, the number of Series C Liberty (LMCK) shares issuable to the Selling Shareholders at the closing of the Formula 1 acquisition will be reduced from approximately 138 million to approximately 76 million. The total number of LMCK shares to be issued by Liberty Media in connection with the acquisition of Formula 1, to both the selling shareholders and the third party investors, remains unchanged at approximately 138 million shares.

“This is a significant step in Liberty Media’s transformative acquisition of Formula 1 and is further confirmation that the future of the sport is bright,” Formula 1 chairman Chase Carey said in a statement.

John Malone’s systematic transformation of Liberty Media continued last week, after the former programming juggernaut agreed to purchase international racing icon Formula One in a $4.4 billion deal.

After the deal is sealed — expected in early 2017 — Liberty Media Group will change its corporate name to Formula One Group and retire its NASDAQ stock exchange ticker symbol “LMCA,” replacing it with “FWON.”

The Liberty Media Corp. name will live on, at least in the ether — Liberty Media Group is officially a tracking stock of Liberty Media Corp., along with Liberty Braves and Liberty Sirius, which will remain separate.

Malone, Liberty Media chairman, has spent the better part of the past decade breaking apart and spinning off the Liberty assets in a flurry of deals. Liberty Media, which used to house interests in major programmers like Discovery Communications and QVC, has long since spun those holdings out to shareholders.

DEALMAKER’S LATEST DEAL

The deal is the latest over the past three years by the mogul known for dealmaking, beginning with his purchase of a 27% interest in Charter Communications in 2013. In the wake of that deal, Malone helped engineer Charter’s $78.7 billion purchase of Time Warner Cable and its $10.4 billion buy of Bright House Networks.

Other Malone holdings have gone on international buying sprees, like Discovery Communications, which earlier this year bought sports network Eurosport in 2015 and European Olympics rights for the 2018-2024 games.

In addition, Malone was a key part of Lionsgate’s $4.4 billion purchase of premium channel Starz in June.

Liberty has been in pursuit of Formula One since 2014, when speculation was high Liberty would team with Discovery to buy a 49% interest in the racing icon for about $4 billion. That deal never materialized, but with the most recent transaction, Liberty will get control of one of the hottest properties in international sports.

Formula One splits its revenue between race promotions — it holds the FIA F1 World Championship, among other races — broadcasting, advertising and sponsorship, and other businesses including TV production, hospitality and licensing, according to Liberty. With revenue of about $1.8 billion in the past 12 months, Formula One said it has $9.3 billion in revenue under long-term contracts through 2026.

Liberty shareholders will own 35% of Formula One’s equity (including about 3.1% for Malone personally), with partner CVC Capital Partners controlling 65%. In addition, former 21st Century Fox executive Chase Carey, long a confidante of Fox chairman Rupert Murdoch, will become Formula One’s new chairman after the deal closes, replacing Nestle chairman Peter Brabeck-Letmathe. Controversial British financier Bernie Ecclestone, who built Formula One into a global operation after nearly 40 years, will remain as CEO.

In typical Liberty fashion, the deal is a complicated one. Liberty closed the first part of the deal on Sept. 7, purchasing an 18.7% stake in Formula One for about $746 million. In the second stage, expected to be completed in the first quarter of 2017, Liberty will purchase the remaining voting interest in the company for about $300 million in cash, $350 million in notes and by issuing about 138 million shares of stock worth about $2.9 billion.

On a conference call with analysts to discuss the transaction, Carey said he would build Formula One’s fan base by telling its story. Formula One already is one of the most popular sports properties in the world, with more than 400 million global viewers, but has had difficulty cracking the U.S. market, which is dominated by NASCAR stock car racing. But U.S. viewership is growing, up by about 40% since NBC Sports won domestic broadcast rights in 2013.

DIGITAL GROWTH OPPORTUNITY

Liberty Media CEO Greg Maffei said on the call that the company believes there is opportunity to grow Formula One’s “underdeveloped” digital assets, adding that the company could grow its fan base and revenue through new technologies like virtual reality and via video games.

“There’s interest in this sport around the world,” Carey said on the call. “We want to continue to intelligently explore the opportunities and continue to grow it.”

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak, called Formula One a “prototypical Malone investment” in that it has a high barrier to entry, a lasting business, evidenced by the $9.3 billion in long-term contracted revenue, and appears to have strong expansion opportunities.

“As we have seen with the NFL, you can expand your broadcast rights fees and create alternative distribution channels (national nets, to DirecTV [NFL] Sunday Ticket, to Thursday Night Football to the RedZone channel),” Wlodarczak wrote in an e-mail message. “They could also look into expansion of races from 21 to the current contractual limit of 25 (the U.S. could be a massive driver of growth long term), repricing of TV contracts materially higher, leveraging ‘sister’ Liberty companies [Liberty Global] and [Discovery’s] Eurosport, expanding digital opportunities.”

Liberty Media said it has named Mark Carleton chief financial officer, effective Oct. 1, replacing long-time executive Christopher Shean, who will become a senior advisor to the company.

Carleton, who will report to Liberty CEO Greg Maffei, has been with Liberty Media since 2003, most recently as Chief Development Officer. Prior to joining Liberty, Carleton served as a partner in accounting firm KPMG, where he was responsible for the communications sector and served on KPMG’s board of directors.

Shean, who had served as Liberty’s CFO since 2011, has been named Senior Advisor, reporting to Maffei and overseeing certain of Liberty Media’s significant investments. Shean has been with Liberty Media since 2000.

In conjunction with Carleton’s appointment as CFO, Liberty said Albert Rosenthaler has been appointed Chief Corporate Development Officer, reporting to Maffei. In that position he will be responsible for identifying and pursuing investment and other opportunities and will assist in setting strategic direction to maximize shareholder value.

Rosenthaler also will also oversee Liberty Media’s senior tax officer who will have day-to-day responsibility for aspects of Liberty Media’s tax strategies and compliance.

Rosenthaler most recently served as Chief Tax Officer, and has served as top tax officer for Liberty Media and its predecessors since 2002. Prior to joining Liberty Media’s predecessors, he was a tax partner at Arthur Andersen serving clients in the cable television, telecommunications, oil and gas, public utilities and financial services businesses.    

"We are pleased to announce these management changes, which will benefit the organization," Maffei said in a statement. "We congratulate Mark, Chris, and Albert and look forward to their continued service at Liberty Media in these new roles.”

QVC Group CEO Michael George will be able to buy a lot more baubles, bangles and beads from the home shopping conglomerate he runs, raking in a total of $19.7 million in total compensation in 2015, according to a proxy statement filed with the Securities and Exchange Commission Friday. 

QVC is part of Liberty Interactive, one of several companies that have spawned from cable legend John Malone Liberty Media. QVC is the largest holding of Liberty Interactive, which also includes online retailer Zulily and Liberty Ventures, which holds online companies Bodybuilding.com, CommerceHub, Evite and Right Start and minority interests in Time Warner Inc. and other companies.

George’s 2015 compensation increase was mainly due to $17.5 million in stock option awards the CEO received in 2015. George received no option awards in 2014. His total 2014 compensation was about $1.99 million.

The option awards are tied to a new five-year employment deal George reached with the company in September. As part of that agreement, he was eligible to receive a one-time grant of 1.7 million options to purchase QVC shares at a strike price of $26 per share. Half of those options vest on Dec. 31, 2019 and the rest on Dec. 31, 2020.    

In contrast, Liberty Interactive president and CEO Greg Maffei took a pay cut in 2015, reaping a total of $14.87 million in total compensation, compared to the $32.5 million he received in 2014. Option awards were the difference for Maffei as well – he received $3.6 million in option awards in 2015 compared to $28.6 million in 2014.

Options also played a big role in compensation gains for several other executives. Chief financial officer Christopher Shean received $7.7 million in total compensation in 2015 (up from $893,368 in 2014), including $6.3 million in option awards. Senior vice president Albert Rosenthaler saw his total compensation rise to $7.6 million in 2015 from $828,111 in 2014, mainly on the basis of a $6.3 million option award.

Liberty Media chairman John Malone said he doubted that Altice chairman Patrick Drahi will be able to achieve the cost synergies he has claimed in his $17.7 billion purchase of Cablevision Systems, adding that the European telecom company risks damaging the cable company’s competitive position.

In announcing its deal with Cablevision in September, Altice said it expected to extract $900 million in cost synergies from Cablevision over time, a figure many analysts said was overly optimistic. At an industry conference shortly after the announcement, Drahi offered more detail, saying the telco could remove amplifiers and other electronics from the network to make it more efficient. 

At Liberty Media’s investor day in New York, Malone said that Altice will be able to extract some synergies from Cablevision; the level they have been talking about would be hard to achieve.

Malone said Altice had tremendous success in its purchase of French wireless company SFR, and applying cable operating tenets to the much more loosely run wireless business resulted in big savings. But teh cable business is a lot different than the wireless business.

“I suspect he [Drahi] is being pretty aggressive in his projection of savings in his Cablevision transaction,” Malone said. “I think he will find some efficiencies, but I would be very surprised if he could generate operating savings at the level that had been talked about without damaging his competitive position in the market place. New York in particular is a tough market.”

He noted that Cablevision has a deep-pocketed, high-quality competitor in New York – Verizon’s FiOS TV.

“I think Patrick will end up being fine, but I doubt that he’ll generate as strong a wealth-building enterprise as he’s predicted,” Malone said.

Charter Communications CEO Tom Rutledge, who presented at the Liberty conference and ran Cablevision as chief operating officer for almost a decade, added that Drahi may be applying European operating metrics to the U.S. industry, which have  much higher content costs. He added that if you put cable operating margins in the European model, they would work out to be more than 50%. Drahi has complained that Cablevision’s margins are in the 32% range.

“When you take out all of that stuff, I think you have comparable margins,” Rutledge said. “Some of the things Patrick said involved taking out electronics from the network. These are multi-year projects. To assume you could do that in one fell swoop I think is really difficult. Could it be done through time? Possibly, with investment.”

Liberty CEO Greg Maffei added that he has told Altice CEO Dexter Goei, a long-time friend, that there are three ways Altice’s entrance in the U.S. cable market could play out.

“Either you’re going to do something really well and we’re going to learn and be better for it and we’re going to go to school, or you’re going to do something really well and get so wealthy that you can buy us for a really big price, or you’re going to fail in which case we’re going to buy you cheap,” Maffei said. “All three of those scenarios are actually pretty additive for Charter.”

Liberty Media CEO Greg Maffei said he didn’t believe that the regulatory concerns that helped kill Comcast’s merger with Time Warner Cable would apply to any future consolidation deals involving Charter Communications, particularly if you consider the Connecticut-based operator’s focus on high speed data service.

“If you’re looking at broadband as being the direction of the future and speeds over 25 Mbps as being the most appealing, the fact that Charter has the highest beginning packaging at 60-to-65 Mbps and has raised speeds faster than any other major cable company would hopefully make them be viewed favorably by any regulator,” Maffei said on a conference call to discuss Liberty Media’s quarterly results.

Liberty has been one of Charter’s biggest cheerleaders and owns about a 25% interest in the cable operator through Liberty Broadband, a separate entity it spun off last year to house its stake. Charter is widely expected to launch a bid for Time Warner Cable – it pursued the cable company for months before it was outbid by Comcast in February 2014 – but regulatory concerns have caused some observers to question the deal. Federal Communications Commission chairman Tom Wheeler said at the recent INTX: The Internet & Television Expo in Chicago that Comcast’s decision to terminate the TWC deal was “directionally correct”  but hinted that too much scale, particularly on the broadband front, would not be looked upon favorably.

Maffei said that while any deals would be up to Charter to pursue, he envisioned that any overtures by the Connecticut-based operator toward TWC would be cordial.

“I believe that any transaction that goes forward or if one were to occur would be a friendly transaction, looking for the best in breed for both management teams and trying to drive an improved experience both for consumers and shareholders going forward,” Maffei said.

Maffei would neither confirm nor deny reports that its deal to acquire Bright House Networks was dead. Reuters reported Thursday http://www.reuters.com/article/2015/05/07/us-brighthousenetworks-m-a-charter-commu-idUSKBN0NS2HU20150507 that Bright House had backed out of negotiations with Charter. Although the Bright House transaction was contingent on approval of the Comcast-TWC deal, Charter has an exclusive 30-day window to negotiate a new deal. Even though there are about two weeks left in that period, Bright House has reportedly said it is no longer interested.

But Maffei said that consolidation is critical for the industry if it is serious about moving further into the Internet age.

“The opportunity to build scale to combat not only the scale of the content companies but the scale of potential technology competitors is an attractive option both for shareholders and also for consumers,” Maffei said. “Because the need to make technology investments requires that scale, the need to make improvements in the user interface and to make improvements in the products and services delivered. I think there is every logic for consolidation to go forward. Obviously it has to be done in a way the regulators find workable, and hopefully we’ll be able to find a transaction that makes sense somewhere down the road.”