News Corp. swaps DirecTV for Liberty’s stake

Rupert Murdoch's News Corp. said Friday that it has agreed to swap its controlling stake in the satellite TV broadcaster DirecTV Group Inc., other assets and cash for Liberty Media's $11 billion stake in News Corp.

This exchange as a swap of assets instead of a purchase, will avoid enormous tax bills for both sides.

A long dispute between Murdoch, News Corp.'s chairman and CEO, and Liberty's Chairman John Malone was brought to an end with the deal. Two years ago Malone had quietly snapped up a large stake in News Corp. taking Murdoch by surprise.

Under the deal, News Corp., the parent company of Times Online and owner of the 20th Century Fox movie studios and MySpace would give its 38.4 percent stake in DirecTV, three regional sports cable networks and $550 million in cash to Liberty, which in return will give its entire stake in News Corp., which is 16.3 percent of the company's value.

Mr. Malone said in a statement: "We are extremely pleased with the successful, tax-efficient conversion of our News Corp holding. Our investment in DirecTV will create financial, operating and strategic flexibility."

Excluding the Murdoch family and Liberty, other holders of News Corp.'s Class B voting shares must also agree to the deal which is subject to various regulatory approvals. The deal is expected to close next year, in its second half.

The buyback of Malone's shares by Murdoch will eliminate the second-largest shareholder of News Corp., raising the Murdoch family's voting stake in the group from about 30 per cent to 36 per cent.

Following the announcement of the agreement, Liberty Media Capital shares climbed $4.22, or 4.5 percent, to $97.86 on NASDAQ while class A shares of News Corp went up 8 cents, or 0.4 percent, to $21.66 on the New York Stock Exchange in early trading.