ANALYSIS: Verizon Calling Charter: Anybody Home?

As investors continued to try to wrap their heads around the possibilities of a Verizon-Charter merger, influential media analyst Craig Moffett, while not totally dismissing a deal, saw some major hurdles for the latest Deal of the Century to clear.

Moffett, principal and senior analyst at MoffettNathanson and a long-time cable watcher, wrote in a blog posting that while he doesn’t doubt the logic of a Verizon-Charter pairing, he said justifying a deal of the size is tough.

The Wall Street Journal reported Thursday that Verizon chief Lowell McAdam has made a preliminary approach to officials close to Charter about a possible merger.

There are obvious regulatory uncertainties. Even in an expected less onerous environment under President Donald Trump, Charter-Verizon would remove a formidable competitor (Fios, with about 5 million video customers) and would represent a concentration of broadband customers under one roof that would approach Comcast-Time Warner Cable, a deal that was withdrawn after it became clear it would not receive approval.    

But that aside, Moffett wrote that while it makes sense for Verizon to lust after Charter’s broadband connection to 17 million homes, it may come at too high a price.

Verizon would have to pay a hefty premium for Charter – Moffett estimates that could mean a deal valued at between $400 and $550 per share. While Charter stock has been on a tear after the news broke – it closed at $333.15 each, up 7.4%, or $22.84 per share on Jan. 26 – Moffett noted that the structure of the deal will also play a factor.

Verizon’s quarterly dividend – currently at 59 cents per share – could affect how much stock is used for the deal. And it overall debt leverage, now at about 3.2 times cash flow (Charters is at 4.3 times), could determine how much cash is part of the deal.

“To avoid taking on an unsustainable debt load, a transaction would therefore have to be relatively heavily-skewed toward equity,” Moffett wrote. “Depending on the premium paid, and the mix of cash and stock in the transaction, the leverage of the combined entity could otherwise become unsustainable.”

While the solution to that could simply mean using more equity in the deal, it isn’t that simple for Verizon. Moffett noted that anything less than 50% equity in a deal that values Charter at $400 per share or more would result in leverage of more than 4 times cash flow. But issuing more shares doesn’t just mean diluting the overall investor base for Verizon, Moffett noted. It also means laying out more cash for a dividend.

While leverage limitations argue for a more equity-rich transaction, dividend payout ratios argue for a more debt-heavy one,” Moffett wrote. “There may be no feasible solution that satisfies both of these considerations.”

Moffett offered an example: at a 4 times leverage ceiling and an 80% dividend payout ratio, the number of solutions that fit those criteria is zero.

While one solution would be to cut the dividend, that is usually only used as a last resort and has a checkered history in the cable business. When Bell Atlantic – Verizon’s predecessor company – tried to buy Tele-Communications Inc. – Charter investor John Malone’s former cable holding – in 1994, Moffett noted that the deal was “hailed as strategically brilliant.” But Bell Atlantic stock cratered after the telco said it would have to cut its dividend to get the deal done.  It withdrew its offer almost immediately.

Moffett wrote that while anything can happen, especially in the ever-changing regulatory environment in the Trump administration, he thinks the deal is "unlikely."

Some in the investment community have argued that Verizon has been setting the stage for just this type of scenario for years – divesting its Fios assets outside the Northeast and shifting its focus toward mobile video. And they argue that there are several ways to structure a deal, including separately spinning off Fios to help finance the deal.

Others, like Barclays media analyst Kannan Venkateshwar, were skeptical of the urgency for Verizon to do a deal.     

Venkateshwar wrote in a note to clients that the only scenario he saw where Verizon had to be a first mover was if it feared Charter would be acquired by another party or that Charter was moving to buy a wireless carrier like T-Mobile or Sprint. He didn’t see any indication that either of those scenarios was imminent.  

Pressured by a declining subscriber base for its flagship sports channel, Liberty Media chairman John  Malone speculated Thursday that The Walt Disney Co. could spin off ESPN, merging the rest of its operations with a deep pocketed suitor, perhaps Apple.

Disney has been under sharp criticism as its ESPN subscriber base has plunged in the past few years. In October, those losses mounted as Nielsen estimated monthly customer declines doubled to more than 600,000 subscribers.

Talking to CNBC anchor David Faber Thursday, Malone said that Disney could be ripe for the taking because it is one of the few remaining large content-owning distribution companies left and doesn’t have a dominant shareholder. Those were attributes that many analysts said attracted AT&T to Time Warner.

“If someone went after Disney, my guess is Apple would have to finally make a decision,” Malone said, adding that in that scenario Disney would spin off ESPN as a separate entity. “ESPN could be owned and protected by a distributor in the U.S. and Apple would be more interested and have a lot more in common in terms of international branding. Fundamentally [Apple CEO] Tim Cook is a global player and fundamentally ESPN is a domestic service.”

Malone claimed no inside knowledge of a potential deal, adding that “When these tectonic plates start moving, it’s just fun to speculate.” He also gave his opinion on what could be in store for Facebook and its founder and CEO Mark Zuckerberg.

“At what point is he [Zuckerberg] going to want to step into this video space in a meaningful way,” Malone told Faber. “The question is when his growth slows and he’s looking for his next thing, what’s his next thing? My guess is he starts looking at video more seriously.”

Malone added that wouldn’t mean that Facebook would have to start producing its own content, but that “it might make sense for him to own some.”

Malone commented on the pressure for Disney chairman and CEO Bob Iger to reverse recent subscriber trends.

“I think the equity market has got that bug in their head that this is a longer term problem that he [Iger] has, and that somehow or other there is going to be some solution,” Malone said. “Otherwise, Disney should be trading at a substantially higher multiple. …It’s a quality global brand. ESPN in order to solve the issue of having to pay more every time the contract went up, they went long. At the moment that looks adverse.”  

Liberty Global chairman John Malone is reportedly close to buying up a local cable operator in Poland in a deal that would consolidate the cable company’s holdings in that country.

According to Reuters, reports in Polish business newspaper Puls Biznesu said that Liberty is close to a deal with cable operator Multimedia and combining it with its UPC Polska operations,. The combined companies would cover half of the country with about 2.2 million subscribers.

UPC Polska is the largest cable operator in Poland. Any deal would have to be approved by regulatory  authorities. Terms of the deal weren’t disclosed but reports said the combined company would have annual revenue of about $574 million.

Liberty Global has been aggressive on the deal front – it completed a $7.4 billion buy of Caribbean telecom provider Cable & Wireless in May and has made a big splash in the European cable market in the past, snapping up Virgin Media in 2013 and partnering with Vodafone in February in a 50-50 joint venture to combine their Dutch operations in a deal valued at about $29 billion.

Malone was a big player in U.S. cable consolidation – his Liberty Broadband spinoff owns a 27% interest in Charter Communications and helped fund that cable company’s purchases of Time Warner Cable and Bright House Networks. After that landmark deal, the cable legend has apparently turned at least some of his attention to Europe, with reports saying he would be open to a deal with Vodafone, the continent’s largest wireless company. Talk of a Liberty-Vodafone deal has been common over the past several years – as early as 2014 the wireless conglomerate was reportedly considering a takeover -- but haven’t materialized, largely over valuation issues. That could still be the case although it hasn’t stopped the speculation.

On the domestic side, Malone also has been looking for a suitor for premium channel Starz, which was spun off from Liberty Media in 2013. In February 2015 Malone swapped a 4.5% stake in Starz for a 3.4% interest in movie studio Lionsgate, which fueled speculation that a combination was imminent. In February of this year, Lionsgate filed documents with the Securities and Exchange Commission noting it intended to start merger talks with Starz, but those discussions were cut off after Lionsgate stock fell hard on disappointing box office from the final installment in the Hunger Games franchise – Hunger Games: Mockingjay Part 2.

At the Gabelli Movies & Entertainment conference yesterday, Starz CEO Chris Albrecht echoed what he has said in the past, that more deals will happen in the space, whether it be between Viacom, Time Warner Inc., Starz or Lionsgate, but it all depends on the timing.

"Once something happens, there are going to more things that happen,” Albrecht said. “…I don't predict any particular occurrence, but I do predict that we will see more activity in the M&A space among the companies I mentioned and more, and young Dr. Malone will be somewhere, you can be sure," Albrecht said at the conference.  

The FCC has received responses from Liberty regarding its relationship, and that of Liberty chairman John Malone, to New Charter, the company resulting from the proposed merger of Charter Communications, Time Warner Cable and Bright House Networks.

The commission has also issued a request to Level Three related to its interconnection agreement with Bright House, all part of its ongoing review of the proposed three-way merger.

The commission on Jan. 4 stopped its informal 180-day clock for 15 days, pointing to various submissions and supplemental filings from the merging parties through Dec. 22. "Pausing the clock will ensure that commenters have sufficient time to review and comment on this new information," the FCC said in pausing the clock. But more info has been coming in since then, plus the new request to Level Three.

On Jan. 8, the FCC asked Level Three for the most recent interconnection agreement with Bright House and with others.

On Jan. 11, Time Warner Cable supplemented its response to an earlier filing to clarify certain data. Also on Jan. 11, Liberty Corp. (Malone has a 27% stake in Charter) supplied answers to a bunch of questions, though conceding that the documents it supplied related to terms and conditions of affiliation, distribution and program license agreements and negotiations were not responsive "at this time" to the FCC requests.

Liberty did supply documents in response to FCC questions about Liberty's relationship to Starz and Discovery, Malone's involvement in programming and distribution decisions, including making that programming available to over-the-top providers, and Malone's or Liberty's "incentive or ability" to withhold programming from OVDs or MVPDs other than New Charter.

The FCC is concerned about ensuring that mergers do not adversely affect competing over-the-top video providers.

Charter CEO Tom Rutledge has said that favoring Charter would not make sense for Liberty, and pointed out that Malone's 27% stake in Charter would be diluted to 18% by the merger. There was even an FCC question about such public statements, with the commission wanting to know what specific precautions had been taken to insure that Liberty and Malone can't "improperly" influence New Charter. 

Just what cable legend John Malone has in mind with the recent deal between three of his holdings – Lions Gate Entertainment, Liberty Global and Discovery Communications – is truly only known to him, but that hasn’t stopped the speculation wheels from turning at break neck speed.

Lions Gate announced Tuesday that Discover and Liberty Global will each pay $195 million for a 3.4% interest in the movie studio and content production house, buying a collective 10 million shares from a private equity firm MHR Fund Management, controlled by Lions Gate CEO Mark Rachesky.

The deal adds to Malone’s holdings – he is chairman of Liberty Global and is a board member at Discovery – and fits nicely with his own 3.4% interest in Lions Gate, which he acquired in February. IN that deal, Malone swapped a 4.5% interest in premium channel Starz for the Lions Gate interest. At the time, the transaction fueled speculation that Lions Gate would eventually purchase Starz, which had been looking for a buyer for years, outright.

The latest deal has heated up the Starz talks again, although Lions Gate CEO John Feltheimer, on a conference call with analysts to discuss third quarter results Tuesday said he would not talk about Starz from an M&A standpoint. He did say that he thought the premium channel had hit a “bump” in recent quarters.

“I think they're transitioning right now,” Feltheimer said.   

Whatever the outcome, Malone is known for his patience and a knack for doing exactly what his competitors expect him not to do – the deal does bring three of his holdings closer together. Whether that could mean a Starz deal for Lions Gate or some other transformational transaction, only time will tell.

But the deal allows both sides to increase their stake in the studio up to a point and with Liberty Global Lions Gate gets access to the largest cable operator in Europe for its content.

Lions Gate has had an impressive run over the past few years in the studio business – it owns franchises like teen vampire series Twilight and The Hunger Games – and has produced several cable hits like Mad Men, Nurse Jackie and Weeds.  

While the deal allows both Discovery and Liberty Global to enter into separate commercial agreements with Lionsgate for licensing rights to theatrical and television content across their markets, Liberty Global sold off its content arm – Chellomedia – to AMC Networks for $1 billion more than a year ago and Lions Gate’s past output seems distant from Discovery’s usual fare of documentaries and reality shows. In a statement, Discovery CEO David Zaslav, who along with Liberty Global CEO Mike Fries will get a seat on Lions Gate’s board, said he was looking forward to the partnership.

"Lionsgate has created a strong television business and we are proud to take this ownership stake to gain access to terrific storytellers, creative leadership, and global formats and IP, in both nonfiction and scripted programming,” Zaslav said in a statement.  “As with all of our creative partners, we look forward to telling world-class stories with Jon and the deep management team at Lionsgate, and further strengthening Discovery's content pipeline across our linear and digital platforms around the world."

EARLIER:Reports: Charter Near Deal to Buy Time Warner Cable

Charter Communications has agreed to purchase Time Warner Cable in a cash and stock deal valued at $78.7 billion, just weeks after the second largest cable operator in the country watched its deal with Comcast crumble amid growing regulatory opposition.

Charter, which began pursuing Time Warner Cable about two years ago, finally snagged the prize, agreeing to pay $100 per share in cash and 0.5409 shares of Charter stock. The deal values Time Warner Cable at $195.71 per share based on Charter’s closing price on May 20, or $200 per share based on Charter’s 60-trading day volume average price. TWC shareholders can opt to take $115 in cash and 0.4562 shares of Charter stock.

Comcast terminated its $67 billion merger with TWC on April 24, 14 months after agreeing to merge with the company, after it became clear regulators would not approve the deal. Charter, which has substantially fewer customers than Comcast, is expected to have an easier go at it during the regulatory aproval process.

At the same time, Charter agreed to purchase Bright House Networks for $10.4 billion, another deal that has been in the works for a while. Combined, the deals will give the combined companies 23.9 million customer relationships, or about 14.8 million video customers. 

Liberty Broadband, the tracking stock that holds about 25% of Charter shares, has agreed to purchase about $5 billion in newly issued shares of the combined company.

The deal, expected to close by the end of the year, is a substantial premium to the Comcast deal, which valued TWC at more than $158 per share.

When the dust settles, TWC shareholders will own between 40% and 44% of the new company (depending on which option they take).

In a statement, Charter said the deal will result in faster broadband speeds, greater deployment of WiFi and more advanced services.

“The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry. Representatives of each of these companies have invented some of the most revolutionary communications products ever created; innovations like video on demand, VOIP phone service, remote storage DVR, cable TV through an app, downloadable security and the first backward-compatible, cloud-based user interface. That spirit of innovation will live on, and it will create real benefits and great long-term value for the customers, shareholders and employees of all three companies,” said Charter CEO Tom Rutledge in a statement. “With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully–featured voice products, at highly competitive prices. In addition, we will drive greater competition through further deployment of new competitive facilities-based WiFi networks in public places, and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business services marketplace. New Charter will capitalize on technology to create and maintain a more effective and efficient service model. Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.”

Rutledge will serve as CEO and a board member of the new company, which will have a 13-member board of directors. The remaining 12 directors will include seven independent directors nominated by the independent directors serving on Charter’s Board of Directors, two directors designated by Advance/Newhouse, and three directors designated by Liberty Broadband. Charter’s current chairman, Eric Zinterhofer, will continue to serve on the new company’s board.

“With today’s announcement, we have delivered on our commitment to maximizing shareholder value,” said TWC’s chairman and CEO Robert Marcus in a statement. “This agreement recognizes the unique value of Time Warner Cable, and brings together three great companies that share a common philosophy of strong operations, great products, robust network investment and putting customers first. This combination will only accelerate the great operating momentum we’ve seen over the last year and provide enormous opportunities for our 55,000 dedicated employees. We remain wholly committed to bringing the very best experience to our residential and business customers coast to coast.”

Bright House CEO Steve Miron seemed equally pleased.

“Today’s announcement is good news for customers and potential customers, as well as our employees, since we will be in a stronger position to deliver competitive services, invest in advanced technology, and develop innovative products that will compete with global and national brands,” Miron said in a statement. “In addition, I am very pleased that Tom Rutledge will be the CEO of the new company. Tom recognizes the importance of placing a high priority focus on customer care drawing from the expertise of all three companies, and I believe this will be a strong pillar of the new company’s culture.”

UPDATED:Altice to Buy Suddenlink Stake for $9.1B

The continuing cable M&A soap opera took a new turn Tuesday night, as reports surfaced that European telecom company Altice was in late stage talks to acquire mid-sized operator Suddenlink Communications in a deal that values the St. Louis-based company at between $8 billion and $10 billion.

 According to a report in The Wall Street Journal, which was confirmed by outside sources familiar with the talks, a deal could be announced as early as this week.

The Journal, citing unnamed sources, said that Luxembourg-based Altice has been looking for U.S.-based assets for months and recently acquired French wireless carrier SFR in a $23 billion deal. Suddenlink, which is owned by private equity fund BC Partners and Canadian pension fund CPPIB, has about 1.4 million customers in a dozen states, including Texas, West Virginia, Oklahoma, Arkansas and Louisiana.

According to sources in the financial community, BC Partners had expected to use Suddenlink and its founder, chairman and CEO Jerry Kent, a long-time cable executive, as a vehicle to roll up smaller operators in the cable industry.

The price, if accurate, would be a nice premium to BC Partners’ $6.6 billion valuation for the company in 2012.

Consolidation and the added scale it would bring has been a buzzword in the cable business for about two years, particularly after cable legend and Liberty Media chairman John Malone invested about $4 billion for a 27% stake in Charter Communications. Shortly after that investment Charter began a year-long pursuit of Time Warner Cable, which ultimately led to it being outbid by Comcast in February 2014. On April 24, after 14 months, Comcast terminated the TWC deal, after it became clear regulators would not approve the transaction.

Suddenlink could be a vehicle for Altice to expand its presence in the U.S., rolling up some of the estimated 600 independent cable operators scattered across the country. 

But Suddenlink is not without its problems. The midsized operator has been a vocal critic of rising programming costs and, in October, it dropped Viacom’s cable channels, a move that initially led to a sharp rise in basic-video customer losses, which has since leveled off.

Suddenlink spokesman Pete Abel declined to comment on rumor and speculation.

Suddenlink would give the Luxembourg-based Altice a foothold in the U.S., but the Journal said the telecom giant is looking for an even bigger slice of the market and has held preliminary talks with Time Warner Cable about a possible deal.

But TWC, which recently terminated its $67 billion merger with Comcast and has been the target of Charter Communications, may be too much for Altice to swallow. With a market capitalization of about $32 billion, Altice is smaller than TWC, which has a market cap of about $45 billion.

Time Warner Cable officials could not be reached for comment.

And with about 10.8 million customers, federal regulators may be unwilling to let such a large provider of television and broadband services as TWC slip into the hands of a foreign company. Any deal would have to pass muster with the U.S. Treasury Department’s Committee on Foreign Investment in the United States, as well as the Federal Communications Commission and the Department of Justice.

Shares in movie studio Lions Gate Entertainment soared by as much as 10% in early trading Wednesday after the company said cable legend and Liberty Media chairman John Malone would swap his 3.4% interest in premium channel Starz for a 4.5% stake in the studio.

Lions Gate stock rose as much as 10.8% ($3.20 per share) to $32.89 in early trading Wednesday, after the Malone investment was announced. The stock was trading at $32.52 each (up 9.5%, or $2.83 per share) at 11:18 a.m.

Starz shares also got a lift. The premium channel’s stock was priced as high as $32.80 (up 7%, or $2.10 per share) in early trading. As of 11:18 a.m. Starz stock was priced at $31.64 per share, up 94 cents each or 3.1%.

Lions Gate finished the day up 9.2% ($2.73 per share) to $32.42, while Starz closed ahead 3.45% ($1.06 per share) to $31.76.

Analysts saw the Malone investment as a positive and Starz as a possible vehicle for Lions Gate content.

“Lionsgate gets incremental leadership and perspective by adding Malone to the Board, and possibly gets a stronger content-buying client,” wrote Evercore ISI media analysts Vijay Jayant and David Joyce in a research note. “Perhaps there can be some synergies in time with Lionsgate's other premium movie channel investment partnership, 31%-owned EPIX (with Viacom and MGM Studios). Starz possibly gains more content access and evolving platform insight, as well as potential new international exposure given Lionsgate's platform.”

Jayant and Joyce increased their 12-month price target on Starz to $33 per share from $31 as a result.

Liberty Media chairman John Malone has reached a deal with Lionsgate, swapping a 4.5% interest in premium channel Starz for a 3.4% stake in the movie studio and production company. The deal also gives Malone  a seat on the studio's board of directors.   

Under terms of the deal, Lionsgate will issue newly issued shares representing about 3.43% of its outstanding common stock on a pro forma basis for a portion of Series A and Series B Starz common stock held by Dr. Malone and his affiliates representing approximately 4.51% of Starz common stock outstanding and 14.50% of the total voting power of Starz common stock. Dr. Malone will remain Starz's largest voting shareholder, with an approximate 6.1% equity interest and approximately 32.1% of the total voting power of Starz. Upon completion of the transaction, Dr. Malone will join Lionsgate's Board of Directors.

“Lionsgate has emerged as a leader in developing global content, and this transaction creates the potential for a number of strategic opportunities around the world with them,” Malone said in a statement. “I’m delighted to add my voice to the Board of Directors of one of the most exciting content companies in the industry.”

In addition to its movie studio, most well-known for horror films like the Saw series and teen blockbusters like The Hunger Games franchise and Ender’s Game, Lionsgate also is one of the leading production companies for cable, producing such hits as Mad Men, Weeds and Nurse Jackie. Most recently the studio has produced the hit series Orange is the New Black for Netflix.

“We look forward to welcoming John to our Board of Directors and working together to create additional shareholder value,” Lionsgate Chairman Mark Rachesky said in a statement.  “Now that Lionsgate has grown into an industry leader, we are excited to take the company to the next level as we continue to exploit the robust global demand for content.”

Malone was an early backer of Starz and has hinted after the premium channel spun off from Liberty Media in 2013 that it could use a “big brother,” in the form of a partner or outright buyer.  Starz has entertained some initial interest but hasn’t landed a solid suitor.

“John has been a pioneer in content distribution to the next generation consumer, and we’re delighted to add an investor of his caliber, experience and vision to our Board of Directors,” Lionsgate Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns said in a statement. “We see tremendous value in Starz as well as the potential to explore a broad range of strategic initiatives in the future.”

One of those initiatives has been a big push into original programming. Since hiring former Home Box Office CEO Chris Albrecht in 2009,  Starz has spent heavily on originals and has gained some buzz, especially around series like Outlander and Black Sails.

 “Lionsgate has been a great partner for us on projects in the past,” Albrecht said in a statement. “We have tremendous respect for the business they have built and their leadership position in the entertainment industry. We’re pleased that they will be joining Dr. Malone as shareholders who support our vision.”

The transaction is subject to customary closing conditions, including the condition that all waiting periods applicable to consummation of the exchange under the HSR Act shall have expired or been terminated.

A month after its chairman and chief operating officer repeatedly told analysts and the media that it had no acquisitions targets on its radar in the wake of its abandoned bid for Time Warner Inc., 21st Century Fox executives, apparently not getting that particular memo, have reportedly held preliminary talks with premium cable channel Starz about a possible deal.

According to a report in the Los Angeles Times, several unnamed Fox executives held a meeting Tuesday on its studio lot in Los Angeles with Starz CEO Chris Albrecht and investment bankers. A source familiar with the situation told Multichannel News that the talks were held Tuesday as a courtesy and that there is no interest on Fox’s part to do a deal.

That seems to jibe with statements made recently by Fox chairman and CEO Rupert Murdoch and chief operating officer Chase Carey, who had repeatedly told analysts and the media that it is not pursuing acquisitions.

“Let me be clear, we are done,” Carey said shortly after the company dropped its pursuit of Time Warner, adding that it would not seek out alternative acquisitions, pledging instead to focus on organic growth.

Fox had made an unsolicited $80 billion for Time Warner back in June, which Time Warner summarily rejected. In August, Fox formally withdrew its offer.

Recently Murdoch told Fox Business Network anchor Neil Cavuto that he decided to drop the Time Warner pursuit in part because he didn’t want to take on a massive amount of debt.

A Starz deal wouldn’t require a huge borrowing – while reports said a deal could be worth as much as $3.2 billion, some analysts value the premium service as high as $4.7 billion. Fox, which recently sold its interest in its European satellite ventures Sky Italia and Sky Deutschland to its other satellite holding -- British Sky Broadcasting – netting about $7.2 billion in cash after taxes, could finance a Starz deal internally.

But there are roadblocks to a combination, particularly Fox’s commitment to sell its movie studio output to Time Warner’s Home Box Office until 2022.   

The reports seem to suggest that Starz, which spun off from Liberty Media in 2013, is putting itself in play, which has pretty much been the case since its separation from Liberty. Back in 2012 Liberty chairman John Malone said that Starz would benefit from a post-spin off “big brother.”

While Starz has beefed up its original programming slate of late and is headed by former HBO chief Chris Albrecht  and has scored recent critical and ratings success with series like Outlander, Black Sails andPower.

John Malone’s Liberty Interactive engineered a deal Wednesday to sell the floral and gifting business of its e-commerce unit Provide Commerce to FTD that will give Liberty a 35% stake in the combined company, but will put its plans to split into two tracking stocks on hold.

According to the deal, Liberty will receive 10.2 million shares of FTD common stock (about 35% of shares outstanding) and $121 million in cash. In return Liberty will contribute its floral and gifting e-commerce brands ProFlowers, Shari’s Berries and Personal Creations. The deal is expected to be completed by the end of 2014.

But the combination will delay Liberty Interactive plans to split into two separate tracking stocks –  QVC Group to house its interests in home shopping channels QVC and HSN, Inc., and Liberty Digital Commerce for its e-commerce businesses like Provide Commerce and Bodybuilding.com. That deal was expected to be completed sometime this year but in a statement, Liberty Interactive said while it expects to continue with plans for the QVC tracker, the FTD transaction is putting plans for Liberty Digital Commerce on hold.

“In light of the pending Provide Commerce transaction, and other factors, Liberty is reevaluating the optimal structure and best alignment of the Liberty Digital Commerce Group assets,” the company said in a statement.” As a result, the timing of the transition to the QVC Group has been delayed.”

The combined FTD/Provide Commerce will have more than $600 million in annual revenue and the addition of the Provide Commerce brands will enable FTD to provide greater support to its member florists by expanding their resources and helping them create new programs and services.

FTD provides floral, gift and related products and services to consumers, retail florists, and other retail locations primarily in the U.S., Canada, the U.K., and the Republic of Ireland. The business uses the highly-recognized FTD and Interflora brands, both supported by the iconic Mercury Man logo that is displayed in nearly 40,000 floral shops in 150 countries. FTD’s portfolio of brands also includes Flying Flowers, Flowers Direct, and Drake Algar in the U.K.

“This transaction provides the opportunity to create significant value for our stockholders and offers immediate benefits for consumers and our premier network of member florists, said FTD CEO Robert Apatoff in a statement. “The combination of these businesses will expand the breadth of our brands, provide opportunities to further diversify our revenue streams and open up additional avenues for growth and innovation.”

Moelis & Company is serving as financial advisor to FTD and Jones Day is acting as legal counsel. Baker Botts L.L.P. and Cooley LLP are acting as legal counsel for Liberty and Provide Commerce, respectively

FTD shares soared 14% ($4.31 per share) to $33.85 in early trading Wednesday. Liberty Interactive shares were down 1% (30 cents) to $28.23 per share.

“We are excited to become the largest shareholder in the complementary businesses of Provide Commerce and FTD,” said Liberty CEO Greg Maffei in a statement. “FTD has an extensive florist network while Provide Commerce has a proven ability to source their flowers directly from top growers. The combined company will be able to offer comprehensive and unique gifting services in the U.S. and around the world.”

Liberty Media said Thursday that it will sell off most of its stake in book retailer Barnes & Noble, ending a foray into the electronic book market the cable giant made three years ago.

In a statement, Liberty said it will sell its interest in B&N to “qualified institutional buyers,” retaining about 2% of its interest in the book seller. Liberty said the sales should close on April 8.

As a result of its reduced ownership, Liberty said it will no longer have the right to elect two members to Barnes & Noble’s board of directors, and effective April 8 Liberty CEO Greg Maffei will cease to serve on the B&N board. Liberty senior vice president Mark Carleton has been re-elected to the B&N board effective April 8.

“By reducing our preferred position and eliminating some of our related rights, Barnes & Noble will gain greater flexibility to accomplish their strategic objectives,” Maffei said in a statement. “We look forward to maintaining our relationship with the company.”

Liberty first invested about $204 million for a 17% stake in B&N in 2011, in what some analysts believed was an attempt to gain control of the retailer’s Nook electronic book technology. But as the Nook has foundered under competition from the Amazon Kindle, Liberty’s interest appeared to wane.

 “Liberty Media has been a strong supporter of the company and Greg Maffei and Mark Carleton have been and continue to be tremendous partners at an important time in the company’s history,” said Barnes & Noble chairman Leonard Riggio in a statement. “Liberty’s decision to retain a portion of its investment and have active involvement on our board underscores Liberty’s ongoing commitment to Barnes & Noble.”