After months of negotiations that seemed to going nowhere, the Wall Street journal reported yesterday that News Corp and Liberty Media are close to a swap involving Liberty's stake in News Corp and News Corp's stake in DIRECTV Group. Once close friends and business associates, News Corp Chairman Rupert Murdoch and Liberty Media Chairman John Malone have seen relation deteriorate since Malone purchased a 19% voting stake in Murdoch's News Corp. The swap would save Liberty much in taxes, according to its CEO Greg Maffei and would effectively see Liberty take a controlling role in DIRECTV, which would allow it to protect its various media holdings such as QVC and Discovery channel. Shares of DIRECTV (chart pictured) have increased 20% in value since news of the talks broke in September - something which has been a sticking point in the talks. By adding some cash and other assets to the swap, Liberty will increase the effective price it is getting for its News Corp shares, since at current time, its News Corp stake and News Corp's DIRECTV stake are about equal in value.
• Sources: WSJ, CNN/Money, Reuters
• Related commentary: It's Time for a Liberty Media--News Corp. Split, Murdoch--Malone Deal Reportedly in "Decisive Stage", Murdoch-Malone Hopefully Closing in on News Corp. Stock Buyback Deal, News Corp. and Liberty Media Looking to Wiggle Out of as Much as $4.5 Billion in Taxes
• Potentially impacted stocks and ETFs: Liberty Media (LINTA), News Corp (NWS), DIRECTV Group (DTV). Competitors: Time Warner (TWX), Viacom (VIA), Comcast(CMCSA), EchoStar Communications (DISH), TiVo (TIVO), Cablevision (CVC). ETFs: PowerShares Dynamic Media Portfol. (PBS)
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