Malone exits after DirecTV completes recapitalisation transaction

Satellite broadcaster DirecTV has completed its recapitalisation transaction, under which the high-vote stock held by majority shareholder John Malone and his family has been eliminated.
Under the terms of the agreement, the Malones exchanged all the…

Satellite broadcaster DirecTV has completed its recapitalisation transaction, under which the high-vote stock held by majority shareholder John Malone and his family has been eliminated.

Under the terms of the agreement, the Malones exchanged all the outstanding shares of Class B common stock, approximately 21.8 million shares, for just over 26.5 million shares of Class A common stock. All of the Class B shares have subsequently been cancelled.

With each Class B share entitling the owner to 15 votes per share, as compared to one vote per share for class A stockholders, the resulting recapitalisation has reduced the Malones’ voting interest in DirecTV from 24.3% to approximately 3%.

As part of the transaction, John Malone resigned as chairman while fellow Liberty executives Paul Gould and Gregory Maffei have resigned as members of the board of directors. In their place, DirecTV president and CEO Michael White has been named as the new chairman, while Samuel DiPiazza, the former global CEO of PwC , has joined the board.

Executive search firm Heidrick & Struggles International has been retained by the board to identify potential candidates to fill the remaining vacancies.

The reason for the stock swap is in order to satisfy a condition imposed by the Federal Communications Commission in connection with Liberty Media’s acquisition of News Corp’s 38.4% controlling stake in DirecTV in February 2008. At that time, the FCC expressed concerns over the potential overlap of DirecTV’s satellite business in Puerto Rico, DirecTV Puerto Rico, and Liberty Global’s Puerto Rican cable business, Liberty Cablevision Puerto Rico. The main bone of contention was John Malone’s position as chairman of both DirecTV and Liberty Global as well his significant holdings in both companies.

The FCC has now confirmed that on completion of the recapitalisation transaction, DirecTV has now satisfied a condition relating to its Puerto Rican subsidiary.