DirecTV to merge with Liberty Entertainment

DirecTV is the nation's largest satellite TV provider and the company credits its continued success despite the poor economy on the fact that it targets more affluent subscribers who are less likely to cancel service.

DirecTV Group Inc. announced today that it would merge with majority shareholder Liberty Entertainment after Liberty Entertainment is spun off from its parent company Liberty Media Corporation (LMC). The spinoff is an attempt by LMC to simplify its capital structure reports The Wall Street Journal. DirecTV shares are reportedly up 2.8% in premarket trading to $25.26 on word of the merger.

Liberty Entertainment already holds 54% of DirecTV and post spinoff, the company will hold the DirecTV stake, three regional sports networks, and stakes in the Game Show Network and FUN Technologies. As part of the merger agreement shareholders in Liberty Entertainment will get a 0.9 share in Liberty Entertainment and retain 0.1 share of Liberty Starz stock.

The merged Liberty Entertainment and DirecTV business will continue to operate under the DirecTV brand. DirecTV shareholders will get one share of DirecTV Class A common stock for each share they currently own. Liberty Entertainment shareholders will reportedly get 1.11 shares for each Liberty Entertainment share they hold. DirecTV will continue to operate with the same CEO and board after the merger. The WSJ reports that the spin-off and merger is expected to be complete by the end of 2009.

DirecTV stepped in and saved Sirius XM from certain doom in February for a large portion of the company.

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