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Liberty Adds to Japanese Holdings

Liberty Media Corp. is expanding its holdings in the Japanese cable market, announcing Monday that it would invest up to $82 million in Mediatti Communications Inc., an operator with systems passing about 600,000 homes in the Tokyo area.

In a prepared statement, Liberty said it would initially acquire a 23% ownership stake in Mediatti, with the option of increasing that investment over time.

Mediatti is controlled by Olympus Capital Holdings Asia, a private equity-fund manager, in partnership with Tomen Corp.

This is Liberty’s second foray into the Japanese cable market. It already owns a 45% stake in Jupiter Telecommunications Co. Ltd. (J-COM), the largest cable operator in Japan, with about 1.5 million video subscribers.

Liberty said the money will be used by Mediatti for acquisitions. Mediatti has about 50,000 video subscribers.

In a research report, Merrill Lynch & Co. media analyst Jessica Reif Cohen estimated that Liberty could acquire as much as 44% of Mediatti if it were to invest the full $82 million.

She added that the deal could eventually lead to a combination of Mediatti and J-COM.

"We regard the Mediatti investment as a vehicle for Liberty to participate in consolidation activities in the Japanese cable sector," Reif Cohen wrote. "In addition, we would not be surprised if Mediatti is eventually folded into J-COM."