Liberty Media Pays $10M To Settle Shareholder Suit

Chancellor Strine of the Delaware Court of Chancery recently approved a $10 million all-cash settlement on behalf of Montgomery McCracken client Blackthorn Partners, L.P. (“Blackthorn”) and a shareholder class.  The underlying case concerned a series of transactions consummated in November 2009 (the “Transactions”) through which certain assets of Liberty Media Corporation (“Liberty Media”) were acquired by a successor of The DIRECTV Group, Inc. (“DTV” and its successor, “New DTV”).  The fiduciary duty claims asserted by Montgomery McCracken on behalf of the class hinged on the contention that the public owners of high-vote Series B Liberty Entertainment stock (“LMDIB”) (Liberty Entertainment being one of Liberty Media’s three business units, each with two classes of tracking stock) in the Transactions were treated differently than affiliated owners of that same stock.   Specifically, Montgomery McCracken challenged the allocation of consideration within the Series B stock class in  which Liberty Media Chairman John Malone (“Malone,” who, also the Chairman of DTV, stood on both sides of the Transactions) ultimately received high-vote stock in New DTV while LMDIB holders other than Malone received the same low vote shares of New DTV as holders of low-vote shares of Liberty Entertainment Series A stock.  The Series B public shareholders, of which Blackthorn was the largest, argued that there was no legitimate justification for the disparate allocation of consideration within the Series B stock class, and that the Transactions were both procedurally and substantively unfair to the public shareholders.  After extensive discovery, the matter was mediated before former Chancellor William B. Chandler III.  The $10 million settlement reached as a result of that mediation falls within the maximum range of loss alleged in the Amended Complaint, representing a significant victory for Blackthorn and the other public LMDIB shareholders.