Cable Operators

Liberty, Comcast Go Swapping

7/21/2004 5:53 AM Eastern

Liberty Media Corp. bought back 120.3 million shares of its class-A common stock from Comcast Corp. in exchange for its interests in two cable networks and $545 million in cash.

According to the agreement, Comcast will receive 100% of Liberty subsidiary Encore ICCP Inc., which includes Liberty’s 10% interest in cable channel E! Entertainment Television, 100% of International Channel Networks and all of Liberty’s rights, benefits and obligations under a TCI Music agreement.

The TCI Music portion resolves litigation between the two parties that Comcast inherited as part of its acquisition of AT&T Broadband in November 2002.

Comcast acquired the Liberty shares as part of the sale of its 57% interest in cable shopping channel QVC Inc. for $7.9 billion in cash and stock last year. Liberty had been negotiating with Comcast to buy back its stock ever since.

With the acquisition of Liberty’s E! stake, Comcast will own about 60% of the network. The Walt Disney Co. owns the rest.

In a research report, Lehman Bros. Inc. cable analyst Vijay Jayant valued the stakes in the Liberty networks at about $360 million. Combined with the $545 million in cash, Jayant estimated that the $905 million purchase price represents a 13% discount to the value of the Liberty shares based on a July 20 closing price of $8.35 each.

September