Liberty Media close to buying 25 % in Charter Communications for $2.5 bn: report

Liberty Media Corp, run by billionaire John Malone, is close to buying a 25-per cent stake in US cable operator Charter Communications for about $2.5 billion, The Wall Street Journal yesterday reported, citing people familiar with the situation.

The interest in Charter Communications comes a month after Liberty Media's European arm Liberty Global agreed to buy UK cable operator Virgin Media Inc in a $15.75-billion cash and stock deal. (See: Liberty Global strikes Virgin Media deal for $15.75 bn). Including debt, the deal is valued more than $23 billion. 

Liberty Media will buy the stake from Charter's largest shareholders, Apollo Global Management and Oaktree Capital Management.

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

Saddled with debt of around $22 billion, Connecticut-based Charter had filed for Chapter 11 bankruptcy protection in March 2009, emerged from it in November 2009.

With a market cap of $9.9 billion, Nasdaq-listed Charter provides advanced video, high-speed internet, and telephone services to about 5.2 million residential and business customers in 25 US states.

Last month it agreed to acquire Cablevision System Corp's western cable asset Optimum West for $1.63 billion.

Colorado-based Liberty Media owns interests in a broad range of media, communications and entertainment businesses. Its subsidiaries include premium home entertainment provider Starz, Atlanta National League Baseball Club, and location service provider True Positon.

The company also has stakes in satellite radio service provider SiriusXM Radio Inc, concert firm Live Nation Entertainment Inc, book retailer Barnes & Noble Inc as well as minority interests in media and entertainment giants Time Warner Inc and Viacom.

Over the last few years, Malone, who made his fortune by selling the company he founded Tele-Communications to AT&T for $48 billion in 1998, has restructured his media empire into several smaller businesses, to improve efficiency and obtain tax benefits.

In November 2011, Liberty Media spun off its video and online commerce businesses, including QVC, Backcountry.com and Bodybuilding.com, to form Liberty Interactive and last year spun off its premium cable business Starz LLC to a separately traded company.

The Starz spin-off left Liberty Media with about $1.8 billion in cash and debt free, giving it a free hand to make large acquisitions.