Liberty Media Corporation's Strategic Moves in 1999

Strategic Insights -

In 1999, Liberty Media Corporation made significant strides in its expansion and consolidation of assets in the telecommunications and entertainment sectors. The company's definitive agreement with AT&T to acquire AGI in a tax-free all-stock transaction valued at $3 billion marked a major milestone in its growth strategy. This acquisition aimed to strengthen Liberty's presence in the telecommunications industry, leveraging AGI's substantial holdings in AT&T common stock, LMG.A and LMG.B, and Teligent, Inc.

Key Takeaways:

  • Liberty Media Corporation acquired AGI in a tax-free all-stock transaction valued at $3 billion, with AGI shareholders receiving 51.8 million LMG.A shares and 19.7 million shares of AT&T common stock.
  • The transaction was subject to the approval of AGI stockholders and various governmental authorities, with a completion date expected in early 2000.
  • Liberty and TCI Music (renamed Liberty Digital) executed a definitive agreement, with Liberty contributing internet content and interactive television assets to TCI Music, resulting in Liberty holding approximately 95% equity interest and 99% voting interest in Liberty Digital.
  • MTV Networks and Liberty Digital completed a transaction, with Liberty Digital acquiring a 10% stake in MTV Networks Online music ventures in exchange for SonicNet and THE BOX.
  • Liberty Media Corporation completed its first long-term debt placement, issuing $1.25 billion in debt with a rating of investment grade from Moody's and Standard & Poors.
  • EMG and Buena Vista Television signed a new licensing deal for up to 10 years for all theatrical releases from Touchstone, Hollywood Pictures, Miramax, and Dimension labels for all present and future EMG managed and controlled pay TV services.
  • Liberty sold CSG Systems International, Inc. ("CSG") warrants to AT&T, with Liberty repaying the warrants at AT&T's cost plus interest at 6% from April 12, 1999.
  • LMI sold its Polish cable and telephony assets to Elektrim S.A. for $309 million, with LMI receiving $69 million in initial proceeds and a final payout of approximately $11 million in the fourth quarter of 1999.

Statistics:

  • The AGI acquisition valued at $3 billion ($187 million in debt assumption) and 51.8 million LMG.A shares and 19.7 million shares of AT&T common stock distribution
  • Liberty's equity interest in Liberty Digital increased to approximately 95% through the TCI Music acquisition
  • Liberty acquired a 10% stake in MTV Networks Online music ventures for a consideration of SonicNet and THE BOX
  • Liberty's first long-term debt placement of $1.25 billion with a rating of investment grade from Moody's and Standard & Poors
  • The new licensing deal between EMG and Buena Vista Television covering over 40 pictures per year from January 1, 2003, through December 31, 2006, with incentives to extend through December 31, 2012
  • Liberty sold CSG warrants to AT&T for approximately $75 million
  • LMI received $69 million in initial proceeds from the sale of its Polish cable and telephony assets to Elektrim S.A.

Sources:

  • AGI Acquisition: "Liberty Media Corporation and AT&T Announce Definitive Agreement to Acquire American Group Inc. in Tax-Free All-Stock Transaction Valued at $3 Billion Including Assumption of $187 Million in Debt" [1]
  • TCI Music and Liberty Digital Transaction: "Liberty Media to Contribute Major Assets to TCI Music, to be Renamed Liberty Digital, in Exchange for All of TCI Music's Shares" [2]
  • MTV Networks and Liberty Digital Transaction: "Liberty Digital Acquires 10% Stake in MTV Networks Online Music Ventures" [3]
  • Liberty's First Long-Term Debt Placement: "Liberty Media Corporation Completes First Long-Term Debt Placement" [4]
  • EMG and Buena Vista Television Licensing Deal: "EMG and Buena Vista Television Sign New Licensing Deal" [5]
  • CSG Warrant Sale: "AT&T Purchases CSG Warrants from Liberty Media Corporation" [6]
  • LMI's Polish Cable and Telephony Assets Sale: "LMI's Polish Cable and Telephony Assets Sold to Elektrim S.A." [7]