Liberty Media Rethinks Entertainment Spinoff

Liberty Media Corp., which had considered spinning off its Liberty Entertainment unit (LMDIA), which includes premium content company Starz Entertainment, is having second thoughts about such a move, fueled by the recent dive of the U.S. and global economies.

Liberty is but one of several conglomerates, including cable giants, that had been considering spinning off some of its content assets.

On Sept. 3, Liberty Media announced that its board of directors had authorized its management to proceed with development of a plan to distribute to the holders of Liberty Entertainment tracking stock shares of a subsidiary that will hold the businesses and assets currently attributed to the Liberty Entertainment group.

The transaction would be effected as the redemption of all outstanding shares of Liberty Entertainment tracking stock in exchange for shares of the subsidiary. And it’s intended to be tax-free to stockholders, according to a company statement. The subsidiary, which would become a separate public company, would be called Liberty Entertainment, Inc.

"We believe converting the Liberty Entertainment tracking stock to an asset-backed security will create a stronger currency and allow greater flexibility to pursue our strategic objectives," said Greg Maffei, president and CEO of Liberty, in the September announcement.

But times have changed since the September surprise that was the collapsing financial markets.

“Although several of our businesses, including Starz and our e-commerce companies, produced solid results, Liberty has not been immune to the volatile economic climate,” said Maffei, in prepared comments covering the companies earnings statement yesterday. “In light of the financial turmoil, we continue our focus on balance sheet management.”

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