The $627 million deal will allow Mr. Malone, TCI's chairman-CEO, to increase his 18% stake in TCI to 24% voting control by buying back Kearns-Tribune's 7% voting stake.
'NOT ABOUT NEWSPAPERS'
"This is not about newspapers; it's about John Malone's control of the company," said Tom Wolzien, analyst for Sanford Bernstein.
Mr. Malone is hedging his bets against the open-market sale of at least $500 million in shares owned by the late Bob Magness, former TCI chairman, to pay off that much in estate taxes by August.
Mr. Malone has a first right to acquire any shares that belonged to Mr. Magness. If those voting shares fell into unfriendly hands, Mr. Malone's control of TCI could be challenged.
"The company sees no immediate threat of uncertainty within its ownership structure. We also want to make sure that no such uncertainty develops," said Bob Thomson, TCI senior VP.
Mr. Malone is vulnerable now as TCI has been struggling to adopt new strategies, improve its cash flow and bolster its sagging stock price. TCI plans an April 30 investors conference, followed by a news conference, to improve the company's standing.
TCI is expected to announce better-than-expected first-quarter earnings this week, capping six months of turmoil that has seen the regional reorganization of its cable systems and the departure of four top executives.
AGGRESSIVE MOVE TO DIGITAL
Mr. Malone and his newly appointed president, Leo Hindery, are expected to unveil a more aggressive timetable for digital services, including TCI's new ALL TV, and for accelerating its PrimeStar satellite interests.
TCI will probably sell the four newspapers acquired in the Kearns-Tribune transaction. TCI is required to retain the Salt Lake Tribune, the largest paper in the deal, for five years.
TCI operates cable systems in Utah, including 180,000 subscribers in the Salt Lake City region, according to information in the agreement.