"With his last-minute bailout of Sirius XM Radio, John Malone proved he is still a savvy deal maker. But can he pull off a similarly lucrative deal with DirecTV Group?
That question is becoming more pressing. By May or June, Liberty Media expects to complete the spinoff of Liberty Entertainment. Most of the latter's value will be in its 54% stake in DirecTV, valued at about $12 billion. That almost guarantees it will eventually get acquired by someone wanting control of DirecTV or by the satellite firm itself.
The betting now is that DirecTV and Liberty will work out a deal, possibly soon. The biggest uncertainty is the terms, including how to compensate Mr. Malone for the supervoting stock he would get in Liberty Entertainment.
DirecTV shouldn't feel under pressure to do a deal. Part of the argument for buying out Liberty, from its point of view, would be to remove any discount applied to the stock because of Liberty's controlling stake. But given that DirecTV now trades at 14 times 2009 estimated earnings -- far above the 5.3 multiple at which its poorly performing rival Dish Network is trading -- it is unclear if there is any discount at all.
The best argument for a transaction is to simplify DirecTV's ownership. Mr. Malone will have a 32.6% vote in Liberty Entertainment, enough to give him effective control of DirecTV. That would likely inhibit potential acquirers like AT&T.
DirecTV should consider paying a premium if Liberty is willing to give up its two classes of stock. Its shareholders would benefit if the company later gets sold to a phone giant."