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Liberty’s freedom

AT&T spinoff opens Malone's opportunities

John Malone is free. On Friday, his investment powerhouse Liberty Media was spun off from parent AT&T into a separate public company with shares it can use in acquisitions, and more power to raise cash and expand its businesses.

Liberty, formerly a tracking stock of AT&T, now trades on the New York Stock Exchange under the symbol LMCa. It ended its first day of trading up 2.16% to $16.10.

Malone’s Liberty has a finger in just about every media pie, with holdings in News Corp., AOL Time Warner, USA Networks, E!, QVC and a host of other content and tech companies. It owns Starz Encore and 49% of fast-growing Discovery Communications plus post-production and digital assets.

The spinoff will eliminate regulatory and competitive conflicts of interest between Liberty and AT&T. The telecom giant’s cable business, for instance, made it hard for Liberty to own TV stations outright. The divorce also could result in a restructuring of Liberty’s minority interest in Spanish-lingo television network Telemundo and further expansion by Liberty in the satellite TV biz.

Malone has been aggressively expanding in European cable. Liberty owns United Pan European Communications parent UnitedGlobalCom and recently bought a handful of German cable systems from Deutsche Telekom. Wall Streeters say Liberty may create a separate stock to track the performance of its European biz.

TCI hook-up

Liberty entered the AT&T orbit in 1999 when the telco bought TCI, the cable company Malone built and Liberty’s parent. The transaction left Liberty cash rich and Malone one of AT&T’s biggest shareholders.

That wasn’t much fun, and Malone wasn’t pleased as AT&T stock tanked. He recently exited the company’s board.

To revive the stock, AT&T announced earlier this year plans to split into four separate companies to realize value for shareholders. The Liberty spinoff was part of the revamp. AT&T had planned to do the same with its cable business, AT&T Broadband, but has delayed that move while it considers a merger proposal by Comcast and explores other options.

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