Blog Post

Liberty Media Sets Up Interactive Tracking Stock

In the latest chapter in the endless saga to unlock the value of Liberty Media without selling major assets in a taxable manner, John Malone announced during Wednesday’s earnings call that the holding company would set up a tracking stock for its Interactive group. The group includes QVC, Liberty’s holdings in IAC/Interactive and Expedia, and QVC’s interest in GSI Commerce. It also would be a landing zone for future acquisitions that fit in with the e-commerce-internet bent.
Liberty has done tracking stocks before, usually favoring them over IPOs. (The current company started as a tracking stock of AT&T.) “I don’t see any reason to take an IPO haircut to deliver value to our existing shareholders,” Malone explained. As envisioned, the tracking stock would run for two to three years as a precursor to a full spinoff.
Many analysts expected — hoped, in some cases — that Liberty’s 18-percent interest in News Corp. would be the next spin off but Malone said the tax issues are too complex for a solution now. Instead, the equity in News Corp., Time Warner and others, along with operating company Starz Entertainment Group and some other assets (including various mobile and tech companies) would be part of another company now being called Liberty Capital. The companies essentially are being split into one holding the components being dragged down by the other.

I just got off the phone with Liberty spokesman John Orr, who says the target for the changes is the first half of 2006, when the company can deliver fresh financials. “Liberty Interactive” and “Liberty Capital” are internal names and not neccessarily what the companies will be called. More to come, I’m sure.