News Corp and Liberty make swap

Murdoch exchanges more stock for DirecTV

News Corp. and Liberty Media have completed a long-awaited swap that gives Rupert Murdoch greater control of his own stock but hands DirecTV to John Malone.

Under the deal, formalized Wednesday, Liberty traded its 16% stake in News Corp. for a controlling 41% interest in DirecTV, plus three regional sports networks (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain) and $625 million in cash. The effective buyback of shares is valued at $10.1 billion, which News Corp. noted was the largest stock buyback in the company’s history.

The transaction is a peaceful end to a rancorous dispute pitting Malone against longtime rival and friend Rupert Murdoch. The News Corp. topper, seeing a threat in Malone’s accumulation of more than 500 million News Corp. shares, initiated a “poison pill” provision that would thwart takeovers, a move that drew objections from many shareholders.

Company shareholders shrugged at the news, which had long been expected. News Corp. shares added 15¢ to close at $19.53. Liberty Capital, the listing that reps Malone’s media assets, gained 1% to $118.70.

The completion of the deal ends a yearlong period of transition for DirecTV, the nation’s leading satcaster. News Corp. and Liberty struck the asset swap deal in December 2006, and it had been expected to close by the end of last year.

It also brings to a close Murdoch’s effort to augment News Corp.’s global satellite TV assets — which include British Sky Broadcasting and Sky Italia — with a footprint in the lucrative U.S. market. After a long chase to acquire DirecTV earlier this decade, insiders said Murdoch quickly became frustrated with the company in part because of its limitations vs. the cable biz in offering high-speed Internet and broadband connectivity to subscribers.

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