John Malone’s Liberty Media announced plans to spin off its cable holdings, largely comprising its stake in Charter Communications, into a new publicly traded company called Liberty Broadband by the end of 2014.
The move comes after the company in March said it would create two new tracking stocks, Liberty Media Group and Liberty Broadband Group, with the latter encompassing Liberty’s stake in Charter, plus its 1% interest in Time Warner Cable as well as it subsidiary TruePosition, a provider of location-based solutions for public safety and national security markets.
Now Liberty Broadband will come an independent entity. The spinoff decision was driven by the deal announced last week between Charter and Comcast, under which Comcast will divest about 3.9 million video subscribers to Charter following its merger with Time Warner Cable.
If the Comcast-TW Cable deal is approved, Charter would become the second-biggest U.S. MSO with about 8.2 million TV subs. On Thursday, Liberty Media said it purchased 897,000 Charter shares for $124.5 million, resulting in 26.4% beneficial ownership of Charter’s equity.
“We believe a separate Liberty Broadband will offer investors greater choice and transparency, and is well-timed with Charter’s agreements with Comcast which will result in Charter owning or serving over 8 million video customers,” Greg Maffei, Liberty Media president and CEO, said in announcing the plan.
Liberty Media has made other big moves to realign its portfolio. In April, it sold 340 million of its SiriusXM shares back to SiriusXM and also sold 90% of its stake in Barnes & Noble.
The company said the spinoff of Liberty Broadband is intended to be tax-free to stockholders of Liberty Media, with completion of the divestiture expected to occur in the second half of 2014.
For the first quarter of 2014, Liberty Media posted revenue of $1.01 billion, up 28% (largely thanks to SiriusXM), while operating earnings inched up $4 million to $155 million.