Copyright 2002 Reed Elsevier Inc.

Daily Variety…03/27/2002

From LexisNexis

Liberty Media topper and dealmaker extraordinaire John Malone is trying to deal himself a sweeter hand with his big AOL Time Warner holdings — and maybe also a seat at the conglom's board meetings.

Malone has asked regulators to remove rules preventing him from exercising voting power via Liberty's 4 percent stake in AOL TW. Through Liberty, he's already one of the biggest individual shareholders in AOL TW, and his request to regulators has prompted speculation he'd like to acquire even more stock in the media giant.

The shares are certainly cheap enough right now. AOL TW shares have fallen 27 percent this year, shedding almost 4 percent Wednesday to $23.30.

As for how to finance a major new push for AOL TW shares, some believe Liberty's large holdings in cable programmer Discovery Communications could be sold to raise capital for acquiring AOL shares.

Much of Liberty's holdings in the media conglom date to Time Warner's 1996 acquisition of Turner Broadcasting. Back then, Malone ran Liberty's then-parent Tele-Communications Inc. — a large cable-systems operator that's since been folded into AT&T — and TCI was an investor in Turner Broadcasting.

Worried that TCI would become too closely allied with cable systems operated by Time Warner, the Federal Trade Commission demanded Liberty enter into a consent decree that limited Malone's shareholder voting rights and capped his conglom stake at under 10 percent.

Liberty now has asked regulators to lift those limits, because Liberty owns no U.S. cable systems, and there's no chance for a conflict of interest, a Liberty spokeswoman said Wednesday.

The request was disclosed in a recent AOL regulatory filing. Talk about a possible AOL board seat for Malone has quickly followed on spec he's actually wrangling for more control to protect Liberty's investment in the stock.

That would be true to form, mirroring an earlier power play with AT&T. Until last year, Liberty was a unit of the telecom giant, and Malone its biggest — and most critical — shareholder.