Andrew Bary
John Malone has moved to rapidly simplify his media empire in recent months, capped by transactions announced Wednesday involving Liberty Broadband and Liberty Live Group.
There could be several more deals in the coming years involving Atlanta Braves Holdings, Liberty Live, and Liberty Formula One, and they could prove profitable for investors.
What could happen? Atlanta Braves Holdings, the owner of the baseball team, could be sold for cash to a billionaire in the same vein as the 2020 sale of the New York Mets to Steve Cohen. That deal could come in the next year.
Liberty Live, whose chief asset is a roughly 30% stake in Live Nation Entertainment, could be bought by Live Nation in a deal similar to the one Wednesday in which Charter Communications agreed to buy Liberty Broadband in an all-stock deal. That transaction may not come for at least a year.
The final transaction could involve a sale of Formula One, which controls the Formula One racing business. It will be the only business within Malone's Liberty Media once the split-off of Liberty Live, which will turn Liberty Live into a separate company from a Liberty Media tracking stock.
A potential buyer of Formula One is the Saudi Public Investment Fund, which owns the LIV professional golf tour.
"There is still some work to do," says Chris Marangi, a portfolio manager at Gamco. He ticked off a possible Liberty Live/Live Nation combination "in the next couple years" and a potential sale of the Braves.
Liberty Media CEO Greg Maffei, who will be stepping down after the end of this year, and Malone, Liberty's chairman and controlling shareholder, might have more to say about these issues at Liberty's annual investor day Thursday in New York.
The Atlanta Braves non-voting shares (ticker: BATRK), which are down 0.5% Wednesday to $40.39, could fetch in the mid- to high 50s in a deal, Marangi said. The current market value is around $2.5 billion.
Forbes has put the value of the team at $2.8 billion, but that could be low given the team's large reach in the Southeast and its reputation as one of the best-run franchises in professional sports. The Braves also control an attractive real estate business called the Battery around the vicinity of their ballpark, Truist Park, that could be worth more than $500 million net of debt.
Liberty Live stock, which is down 2% Wednesday to $65.88, now trades at a roughly 27% discount to its net asset value of about $90 a share, Barron's estimates. Its main asset is a roughly 30% stake in Live Nation, the leading concert and ticketing company.
The discount has narrowed from more than 40% earlier this year and could tighten further. Barron's wrote favorably about Liberty Live as a "cheap play on Live Nation" in August 2023, when it emerged as a tracking stock that traded separately from Liberty; at the time it traded in the mid-30s. Any deal for Liberty Live could come at a discount of under 20%.
"Going forward, it appears that, just like with Liberty Broadband and CHTR, Liberty Live will be merged with and into Live Nation," says New York tax expert Robert Willens.
Liberty Media performed a deft financial and tax maneuver in turning Liberty Live into a company separate from a tracking stock. It shifted a business, Quint, from Formula One to Liberty Live. This could enable the conversion to be tax-free based on complex tax laws involving what constitutes an "actively traded business."
Liberty Formula One, now valued at $20 billion, is richly valued at about 50 times projected 2025 earnings, but live sports are hot with investors and Formula One has been gaining popularity around the world, helped by the hit Netflix series Drive to Survive.
Investors who like the story might want to play the less-liquid Liberty Formula One voting shares $(FWONA)$, now around $78, rather than the non-voting stock $(FWONK)$, now at $84. The Saudi investment fund is keen on sports and Formula One would be a big prize. Formula One racing is popular is the Mideast.
"We're in the final innings of what has been a long and generally fruitful simplification process," Marangi said of the Malone empire.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 13, 2024 15:53 ET (20:53 GMT)
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