News Corp., Liberty ink Gemstar deal

Malone ends up with 18% of stock in Murdoch conglom

NEW YORK — Rupert Murdoch’s new Sky Global Networks announced its first big strategic investor Wednesday as John Malone’s Liberty Media confirmed plans to take a 6% stake in the satellite venture along with a big chunk of News Corp. stock.

Murdoch said it was “too early to comment” on whether News Corp. or a beefed up Sky Global will make a run for DirecTV, but he’d certainly be interested in buying the U.S. satellite group if parent “General Motors decides to do anything.”

The latest deal involves a shuffle of shares of Gemstar-TV Guide Int., as News Corp. buys out Liberty’s 23% stake in the tech company best known now for its electronic TV program guides. News Corp. will then own 43% of Gemstar with a path to control and plans to fold it all into Sky Global.

“This is a very important and exciting day for each of our companies,” said News Corp. Chairman-CEO Murdoch. He called Gemstar “one of the world’s most exciting new media companies” and Malone “a trusted friend and advisor” who’s worked with News Corp. in the past to grow assets like Fox/Liberty Sports. Malone sold Murdoch Liberty’s stake in the regional sports net in exchange for News Corp. stock a year and a half ago. Now, he’s boosting his 8% stake to 18%.

During a conference call, Murdoch thanked Malone, who is highly-regarded as an investor, for the vote of confidence and News Corp. stock at one point rose $2.25 to $56.06.

The deal calls for Liberty to transfer 80% of its Gemstar stake to News Corp. in exchange for about 486 million preferred, non-voting shares and to place the remaining 20% of the Gemstar stake directly into Sky Global, which is about to launch an initial public offering. Liberty will also contribute its interests in the Sky Latin America satellite platforms (Sky Brazil, Sky Mexico and Sky Multi-Country Partners) to Sky Global in exchange for stock, with the two transactions giving it a 4.76% stake in Sky Global.

Liberty will also make a $500 million cash investment in Sky Global which Murdoch said would bring Malone’s total stake in the Sky Global to 5.9% and put a valuation on Sky Global of close to $40 billion.

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