Deal includes Encore and Starz!
NEW YORK — Liberty Media Group. is to acquire full ownership of Encore Media Group, the parent of cable networks Encore and Starz!, Liberty said Friday.
That follows revisions to an earlier deal with Liberty’s affiliate Tele-Communications Inc. in which TCI kept 20% of Encore Media. The new deal reduced the payment that Liberty is to make to TCI for its interest in Starz! to $288 million from $400 million.
At the same time TCI is to reduce the payments it makes to Encore for “unlimited” use of Encore services by $55 million a year — bringing the payments into line with the existing affiliation agreement. TCI will pay $215 million this year, rising to $305 million in 2003.
Until last year, Encore was 90% owned by Liberty (and 10% owned by Encore chairman John Sie) while the money-losing Starz! was owned 50.1% by TCI, 20% by Encore and 29.9% by Liberty. Last year’s deal reshuffled the shareholdings so Liberty owned 80% of both channels, under the Encore Media Corp. umbrella, while TCI owned the rest.
Bringing together Starz! and Encore into Encore Media means Liberty has to bear Starz! losses, which more than offset Encore’s profits.
Liberty CEO Robert Bennett said Friday that at the time of the original deal, “we were less comfortable with the overall financial implications” of taking full ownership of Encore Media Corp. He said Liberty is “now more comfortable with the general financial situation.”
Bennett said the deal put a value on Encore Media at $1.4 billion to $1.5 billion.
TCI president Leo Hindery said in a statement that the deal was “consistent with our desire to consolidate ownership of programming assets under Liberty where they receive the best value recognition.”
Liberty closed down 6¢ Friday to $26.43 while TCI fell 25¢ to $29.75.