Malone’s Liberty Media Snaps Up Charter Stake

Cable pioneer formerly known as “Darth Vader” locks in $2.6 billion deal

The cable pioneer who Al Gore once referred to as “Darth Vader” has fired up the tractor beam, as John Malone’s Liberty Media has snared a significant stake in Charter Communications.

Liberty on Tuesday announced it would purchase 27 percent of Charter for $2.62 billion, or around $95.50 a share. Malone’s company is buying the Charter stock from the three private-equity firms that hold the strings at the MSO: Apollo Management, Oaktree Capital Management and Crestview Partners.

The deal is expected to close early in the second quarter of 2013.

Per terms of the deal, Liberty will nominate four executives to the Charter board of directors. The roster of obvious candidates includes Malone and Liberty president and CEO Gregory Maffei.

Charter provides video service to some 4.2 million subscribers, according to the National Cable & Telecommunications Association. Internet and telephony subs give Charter an overall customer count of 5.2 million homes and businesses across 25 states.

The Charter deal marks Malone’s first major stateside MSO deal since he sold his TCI to AT&T in 1999, giving rise to the short-lived AT&T Broadband. In a $52 billion deal, Comcast in 2002 assumed AT&T Broadband’s assets.

More recently, Malone has cast his net in the U.K. market, writing a $16 billion deal to buy Virgin Media in February. The Liberty Global acquisition renews Malone’s on-again, off-again battle with Rupert Murdoch for dominance in the European cable marketplace.

In January, the Federal Communications Commission approved Malone’s bid to take majority ownership of Sirius XM Radio. Liberty Media currently owns stakes in Live Nation, Barnes & Noble, Sprint Nextel, Time Warner and Major League Baseball’s the Atlanta Braves. The company also owns an interest in Discovery Communications, which was spun off from Liberty Media in 2005.

A consummate dealmaker, Malone has made a few gambles that didn’t pay off. After pumping some $500 million into ICG Communications, the local exchange carrier filed for bankruptcy in November 2000. For the most part, however, Malone is famous for his ability to stitch together incredibly elaborate deals that allow Liberty to sidestep regulatory setbacks and taxes. Such Jedi Mind Tricks earned Malone the sobriquet “Darth Vader” from then-U.S. Vice President Al Gore.

Speaking to Fortune magazine in 1993, Malone fired back at Gore with both barrels. “He called me Darth Vader and the leader of the cable Cosa Nostra,” Malone told Forbes’ Andrew Kupfer. “You can’t win a pissing contest with a skunk, so there’s no point in getting involved in that kind of rhetoric.”