TCI Music Soars On Liberty Bid
Shares of TCI Music screamed 140 percent higher Tuesday on news that John Malone plans to fold Liberty Media's lucrative Internet and interactive television assets into TCI Music.
TCI Music (TUNE) vaulted 11 3/4 to 20 in recent trading on volume of 2.84 million shares, shattering the old 52-week high of 9 15/16 set last May. At one point in the session, the stock reached 24 3/4. Liberty's Class A shares (LMG.A) rose 1 13/16 to 57 11/16, while the Class B shares (LMG.B) tacked on 1 1/4 to 57 1/2.
Liberty, which would also assume $50 million in debt related to those assets, will lend TCI Music as much as another $50 million pursuant to a convertible note.
Liberty is a subsidiary of AT&T Corp.
Under the terms of the bid, Liberty will contribute its Liberty Digital subsidiary and equity investments in priceline.com, IVillage, SportsLine USA (SPLN) and drugstore.com to TCI Music.
Liberty would also hand over the rights to provide interactive video services to AT&T (T) cable systems under an agreement forged in connection with the $48 billion AT&T-TCI merger, which just closed last month.
In exchange, 128.7 million shares of TCI Music's Series B common stock would be issued to Liberty, bumping up Liberty's interest in TCI Music to 94 percent of the outstanding shares of TCI Music's Series A common stock and Series B common stock, vs. approximately 86 percent currently.
If the transaction closes, TCI Music will change its name to Liberty Digital, and will be used as Liberty's "primary vehicle for investing in and developing Internet and other interactive media businesses," the company said in a statement.
Liberty Media's vast cable programming holdings include wholly owned Encore Media Group and numerous other ventures, including Time Warner, Discovery Communications, QVC, USA Networks, United Video Satellite Group, BET Holdings, Court TV, Odyssey Channel and E! Entertainment Television.
TCI Music's interactive video services include The Box and Digital Music Express, which allow viewers to select videos on a pay-per-view basis.
Shares of AT&T rose 11/16 to 78 1/8.
Written By David B. Wilkerson, CBS MarketWatch