Three days before Christmas, two of the most powerful men in the media business, Rupert Murdoch and John Malone, formally ended a long-running feud.
Under a deal announced on Friday, Malone's Liberty Media Corp will give its 16.3 percent stake in Murdoch's company back to News Corp, putting an end to what Murdoch had seen as a potential threat to the control of his globe-spanning media empire.
In exchange, Liberty will get a controlling stake in DirecTV Group Inc -- a major satellite TV broadcaster with 15.6 million subscribers -- plus three regional sports networks and US$550 million in cash.
Malone, Liberty's chairman, had surprised Murdoch two years ago by suddenly amassing a stake in News Corp. Murdoch responded by adopting a "poison pill" antitakeover tactic that was met with protests from shareholders.
Talks between the two companies have dragged on, and both were frequently peppered with questions over how the situation would be resolved. Two weeks ago, the two reached a tentative agreement, and a formal deal was announced on Friday.
In addition to eliminating a potential threat to Murdoch's control over News Corp, the company also benefits by effecting a stock buyback equivalent to US$11 billion by taking in the shares owned by Malone, without having to buy them back with cash.
With the deal with Liberty complete, News Corp said it expected to cancel its "poison pill" antitakeover measure.
News Corp also said it would consider eliminating its staggered board, another measure that is unpopular with shareholders. Under a staggered board, not all directors stand for election each year.
The transaction must still be approved by regulators and a majority of News Corp's Class B voting shareholders, with the exception of Liberty and the Murdoch family. Assuming it gets those approvals, it should close in the second half of next year, News Corp said in a statement.
Murdoch and Malone -- a cable industry pioneer and a longtime powerhouse in media investing -- have known each other for years and have been business partners before. The tensions between the two date back to 2004, when Malone accumulated a large voting stake in News Corp as Australian investors unloaded their stakes when Murdoch's company relocated its headquarters from Australia to the US.
Malone's stake is currently worth about 16 percent of News Corp, but since many of the shares are the Class B voting shares, Malone's voting power was about 19 percent, potentially rivaling the Murdoch family's voting power of about 30 percent.
News Corp is a major global media conglomerate that includes the Twentieth Century Fox movie and TV studio; the Fox broadcast network; the Fox News Channel and FX cable networks; a large portfolio of newspapers in the UK and Australia as well as the New York Post; and the social networking site MySpace.
For Liberty, the deal further simplifies a complex financial structure for the Englewood, Colorado-based company, which holds stakes in a number of other companies, and gives it another operating business to run. Liberty owns the home shopping network QVC and the pay TV channel Starz.
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