Family Channel

"TCI had a new worry: we’d be held hostage to ever-increasing fees from networks that attracted the biggest audiences. This changed the economic model in my mind, and in an instant I saw our big distribution company differently. We would have to become owners of content. Quality programming was critical for the industry, and I understood most content providers were price constrained, which is why we stepped up for Ted Turner and why we invested in BET, Discovery, and the Family Channel."

"We could not simply spin Liberty off into its own company—it did not meet the spin-off rules at the time, which required majority ownership of the entity for five years. So with the help of a smart accounting advisor, we came up with the idea of a “simultaneous incorporation,” in which a newly spun-out entity is legally incorporated at the time it receives the assets and stock of a qualifying business from the parent—and is tax-free under IRS rules. Liberty Media would hold the stakes in programming networks, including 50 percent of American Movie Classics, 16 percent of the Family Channel, and 30 percent of QVC, and interests in fourteen regional sports networks, as well as fourteen cable systems. TCI shareholders would get the “right” to buy one Liberty share for every two hundred shares of TCI they owned. And each right allowed an investor the option to swap in sixteen shares of TCI stock for a single share of Liberty Media. Liberty was expected to own 10 percent of TCI’s outstanding shares on a fully diluted basis."