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Liberty in $3B wireless deal
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June 1, 1999: 2:52 p.m. ET
Cable provider acquiring Associated Group for stock, assumed debt
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NEW YORK (CNNfn) - Cable television provider Liberty Media Group said Tuesday it will buy wireless communications supplier the Associated Group Inc. for about $3 billion.
The deal gives Liberty a stake in wireless local phone company Teligent Inc. and marks yet another alliance in the rapidly consolidating cable and telecommunications industry.
"It's a great investment -- they're buying at a discount to market," said Jessica Reif Cohen, a Merrill Lynch analyst. The Teligent stake makes sense because it fits with Liberty's emphasis on content, she said.
Liberty (LMG.A) is a wholly owned subsidiary of AT&T. It focuses on creating content for TV and the Internet, providing programming such as Court TV and the Discovery Channel. Its stock is a tracking stock of AT&T (T).
It used to be a subsidiary of Tele-Communications Inc. AT&T split it out when Ma Bell bought TCI and turned it into hardware-oriented subsidiary AT&T Broadband & Internet Services Inc.
The Associated Group transaction, which includes assuming $187 million in Associated (AGRPA) debt, is slated to close by early 2000.
Pittsburgh-based Associated owns a digital wireless network in the Los Angeles area and provides local and long-distance and Internet access in several other U.S. markets. It owns True Position, a 911 cellular service.
Associated also owns 41 percent of Vienna, Va.-based Teligent, a competitive local exchange carrier that provides wireless telecommunications services. Fast-growing Teligent operates in 27 states, competing with local phone companies for small- and medium-size business customers.
There is speculation AT&T could reshuffle the Teligent stake under the parent rather than within Liberty.
But Liberty is making moves to expand from TV into Internet content, Cohen said, so owning Teligent's wireless Internet capabilities makes sense. Liberty is paying around $770 million for the Teligent stake.
Poised for growth
Liberty is now poised for growth in communications in general, Cohen said, not just TV. "This transaction reinforces Liberty's position as 'platform agnostic' and should be a major beneficiary of the growth in video and data over the Internet," she wrote.
In the deal, Associated shareholders will get 0.6206 share of Class A Liberty Media common stock and 0.4727 share of AT&T common stock for each share of Associated class A and class B common stock.
The transaction "allows us to obtain an attractive investment in the very exciting and rapidly growing business of Teligent," said Robert Bennett, president and CEO of Englewood, Colo.-based Liberty.
Shares of Teligent (TGNT) rose rapidly on the news, up 7-1/4 to 56-3/8 Tuesday afternoon, partly on speculation of a closer link with AT&T for Teligent's wireless technology. Nothing of that nature was announced.
The deal comes less than one week after long-distance carrier MCI WorldCom Inc. (WCOM) and wireless messaging firm SkyTel Communications Inc. agreed to merge in a stock transaction valued at $1.2 billion, plus $800 million in debt.
Charter Communications, meanwhile, set plans to buy cable providers Fanch Communications and Falcon Cable last month.
And AT&T is acquiring cable company MediaOne Group Inc (UMG), making it the biggest cable provider in the nation.
Liberty Media shares dropped 3/16 in afternoon trading Tuesday, to 66-1/4. The Associated Group stock dropped 2-7/8 to 62-1/8.
-- from staff and wire reports
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