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WSJ: Liberty Media Nears Deal To Buy 25% Stake In Charter Communications

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3/19/2013 12:02 AM ET

Billionaire John Malone's Liberty Media Corp. (LMCA: Quote, LMCB) is close to a deal to buy a 25 percent stake in cable operator Charter Communications Inc. (CHTR: Quote) for about $2.5 billion, the Wall Street Journal reported Monday, citing people familiar with the situation.

Shares of Charter gained more than 8 percent in the regular trading session on Monday following the WSJ report, giving the Stamford, Connecticut-based company a market capitalization of $9.92 billion. The company provides advanced video, high-speed Internet, and telephone services to about 5.2 million residential and business customers in 25 states.

According to the WSJ report, Liberty Media is expected to buy the 25 percent stake from a group of private-equity firms that control Charter. The group includes Apollo Global Management, LLC (APO: Quote) and Oaktree Capital Management (OAK: Quote).

In early March, Apollo Global Management and Oaktree, Charter's largest shareholders, announced plans to sell about 6.2 million and 3.1 million of Charter shares respectively in an offering underwritten by Goldman Sachs.

The purchase would reportedly be Malone's first big investment in a cable operator in the U.S. following his sale of Tele-Communications Inc. or TCI to AT&T Inc. (T) for $48 billion in 1999.

Malone is also chairman of broadband service provider Liberty Global Inc. (LBTYA, LBTYB, LBTYK), which recently agreed to buy U.K. cable operator Virgin Media Inc. (VMED: Quote, VMED.L) for about $23.3 billion in cash and stock.

Liberty Media owns a 27 percent stake in Live Nation Entertainment Inc. (LYV). The company's other interests include its subsidiaries Atlanta National League Baseball Club, Inc. as well as TruePosition, Inc., and minority equity investments in Barnes & Noble Inc. (BKS) and Time Warner Inc. (TWX). In addition, the company recently gained a controlling stake in satellite radio company Sirius XM Radio Inc. (SIRI).

Charter, controlled earlier by Paul Allen, Microsoft Corp.'s (MSFT) co-founder, filed for bankruptcy in March 2009 after it was saddled with about $22 billion in debt. Paul Allen had bought a controlling stake in the company in 1998. Charter emerged from bankruptcy in November 2009.

Charter said in early February this year that it agreed to buy Cablevision Systems Corp.'s (CVC) Bresnan Broadband Holdings, LLC or "Optimum West" for $1.625 billion in cash. Optimum West manages cable operating systems in Colorado, Montana, Wyoming and Utah that pass more than 660,000 homes and serve 304,000 video subscribers and 366,000 customer relationships.

CHTR closed Monday's trading at $98.04, up $7.95 or 8.82 percent on a volume of 5.33 million shares.

LMCA closed Monday's trading at $110.66, up $0.29 or 0.26 percent on a volume of 566,899 shares.

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by RTT Staff Writer

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