Moving back somewhat to its roots, Liberty Media will acquire a significant stake in the big cable operator Charter Communications.
Liberty Media, led by its chairman John Malone, will buy a 27.3% stake in the Stamford, Conn. cable operator with a value of $2.62 billion or $95.50 a share.
On Monday, Charter Communications' stake soared 10% on the news of a probable Liberty investment. It ended up 4%, settling at $98.04. Midday Tuesday trading witnessed a 1% rise to $99.22.
Charter, with about 4 million cable TV subscribers at the end of 2012, is the fourth-largest U.S. cable operator.
Liberty Media chairman John Malone stated: "We are pleased with Charter’s market position and growth opportunities and believe that the company’s investments in its high-capacity digital network which provides digital HD and on demand television, high-speed data and voice, will benefit its customers and shareholders alike."
Liberty, based in Englewood, Colo., expects to fund the purchase of the stake in Charter with a combination of cash and new loans. It will continue to be led by Charter CEO Tom Rutledge, a former COO of Cablevision Systems.
While Liberty has own stakes or majority positions in cable networks and various other media and entertainment companies in recent years -- including shopping channel QVC and entertainment pay channels under the Starz group -- it has avoided cable operators.
A decade and a half ago, in 1999, John Malone, then chief executive of the biggest cable operator, Tele-Communications Inc., directed the sale of the company to AT&T.