Malone Resigns DirecTV

April 7th, 2010 - Posted by Admin

John Malone is the Chairman of the Board of Directors at DirecTV. He’s lowering his stake in the company and resigning as chairman because of regulatory issues. The issue is very contrived, but is based on the idea that Malone may have something approaching a monopoly on television in Puerto Rico.

Reducing his votes will help Malone, who is also chairman of Liberty Media LLC, respond to concerns that he has too much power in Puerto Rico, where both Liberty and DirecTV operate TV businesses. The U.S. Federal Communications Commission had called on Malone to sever the Puerto Rico connections after Liberty bought an interest in DirecTV from News Corp. in 2008.

“This is more of a ‘dot the i’s and cross the t’s’ sort of transaction,” said Todd Mitchell, an analyst with Kaufman Bros. LP in New York. “Malone owned controlling votes in both DirecTV and Liberty, and that created an antitrust issue in Puerto Rico. I don’t think it’s that material from an investor standpoint.”

It does seem a tad unfair, though, doesn’t it? That a successful businessman like Malone has to step down from chairing an international company like DirecTV because of an anti-trust issue on a tiny island like Puerto Rico?