Malone to reduce control of DirecTV to satisfy FCC
EL SEGUNDO, Calif. (AP) – Media mogul John Malone has agreed to reduce his voting control of satellite TV operator DirecTV Inc. to 3 percent by trading in his super-voting shares for common shares worth some $162 million more.
Malone also agreed to resign from the board of directors, the company said Tuesday.
The transaction was necessary to satisfy a concern the Federal Communications Commission had about Malone essentially controlling two TV signal providers that do business in Puerto Rico, DirecTV said. The Malone family controls Liberty Global Inc., which owns Liberty Cablevision Puerto Rico.
Under the new arrangement, Malone, his wife and two trusts for the benefit of his children will exchange 21.8 million Class B shares, which have 15 votes each, for 26.5 million Class A shares, which have just one vote each.
The Malones acquired 4.7 million more Class A shares than they had Class B shares, meaning they end up with shares worth $161.6 million more than they previously had.
The Malones' control of DirecTV will drop to about 3 percent from about 24.3 percent, the company said.
Since the Malones controlled all of the Class B super-voting shares, that class will be eliminated.
Class A shares fell 74 cents, or 2.1 percent, to $34.10 in after-hours trading following the announcement.
The company said it expects the new arrangement will satisfy FCC concerns, which dated back to Liberty Media Corp.'s acquisition of its interest in DirecTV from News Corp. in February 2008.
Liberty came to acquire its 41 percent interest in DirecTV in a huge deal in which it agreed to sell its 16 percent stake in News Corp. back to News Corp. in exchange for the DirecTV shares and $625 million in cash.
News Corp.'s lead shareholder, Rupert Murdoch, had thereby gotten rid of Malone as a large minority shareholder in News Corp. and a potential rival for control of the media conglomerate.
In that agreement, DirecTV got a capital injection of about $160 million, roughly the same amount the Malones will receive in the most recent deal for giving up control.