DirecTV and Liberty Media Merger

On May 4, El Segundo-based DirecTV revealed a definitive contract with Liberty Media Corporation. Under this agreement, DirecTV and Liberty Entertainment, formerly owned by Liberty Media, will combine.

"We are pleased to announce this transaction as it will rightly put the control of DIRECTV in the hands of DIRECTV shareholders," said Chase Carey, President and CEO of DIRECTV. "Our existing equity structure was less than ideal. The transaction will improve our ability to pursue strategic initiatives that can enhance value for all DIRECTV shareholders. Additionally, in Game Show Network, FUN Technologies and the three regional sports networks, we are acquiring valuable assets that fit in well with the future of the DIRECTV business. We look forward to having the benefit of John Malone's involvement, as a significant shareholder and as chairman of DIRECTV's board post-merger."

"This transaction clarifies DIRECTV's capital structure, reduces its shares outstanding, eliminates stock overhang and arbitrage issues, and provides DIRECTV with strategic content businesses," said Greg Maffei, President and CEO of Liberty. "And this transaction offers value to Liberty's shareholders by eliminating the discount in our tracking stock structure and allowing them to continue to participate directly in the strong performance of DIRECTV."

Liberty Entertainment will now include about 54% of DirecTV's common stock; Liberty Sports Holdings, including three regional sports networks; 65% interest in FUN Technologies and Game Show Network; about $30 million cash, as well as cash produced by proceedings after March 31; and $2 billion in debt.

DirecTV will become the parent company of the merged entities. The above-mentioned transaction is expected to meet various conditions, such as the receipt of IRS private letter rulings and opinions of tax counsel, the receipt of regulatory approvals, approval of the holders of DirecTV common stock, and the approval of a majority in voting power of the holders of Liberty Entertainment tracking stock.