Malone is swapping Liberty's 21 percent stake in Gemstar-TV Guide for stock in News Corp. and its Sky Global satellite communications unit. In the transaction, Murdoch doubles News Corp.'s Gemstar-TV Guide holdings to 43 percent, valued at $12 billion. The Gemstar-TV Guide holdings will be folded into the Sky Global subsidiary, News Corp. said.
Liberty gets a 5 percent stake in Sky Global and will invest $500 million in cash in the company at the time of the IPO. Liberty's total News Corp. stake grows to about 18 percent, second largest to the Murdoch family's stake.
News Corp. will become Gemstar's largest owner and Murdoch will have a controlling position in the company, which holds most of the world's patents on electronic program navigation guides, including those used in many DirecTV receivers.
Some financial analysts believe News Corp. will use the Gemstar stake to increase the value of Sky Global Networks prior to filing an IPO for the unit later in the year. Murdoch, who estimated Sky Global's value at $40 billion after the IPO, would have greater financial maneuverability to make a bid for DirecTV.
Murdoch has long coveted a major U.S. direct-broadcast satellite company to add to his constellation of global satellites. Sky Global Network currently operates direct-to-home satellite TV systems in the U. K. and Asia.
Speculation about Murdoch's interest in DirecTV began after General Motors announced it is considering selling all or part of its Hughes Electronics unit, which includes DirecTV.
To win DirecTV, News Corp. may have to compete with Disney, EchoStar, GE/NBC, Microsoft, Sony, Viacom, Sony and Vivendi -- all of which have discussed strategic interest in the company.