By Jeffrey Goldfarb
NEW YORK, March 24 (Reuters) - John Malone sees plenty of bargains to add to his vast media and entertainment empire, but DirecTV could be beyond his reach if more ardent suitors pursue the largest satellite TV provider.
In a wide-ranging interview with Reuters late on Monday, Malone, the chairman of Liberty Media Corp. , surveyed the ailing media landscape and said he had raised $1.5 billion last week to help him go shopping.
"It gives us a lot of financial flexibility and a lot of cash -- to increase our cash position to somewhere around $4 billion -- just to give us more instant firepower to buy things that we think are getting cheap," Malone said.
The most immediate item up for bid is Hughes Electronics Corp. , the provider of DirecTV owned by General Motors Corp. Malone said he expects to make an offer on his own through Liberty, but he has still not ruled out teaming up with Rupert Murdoch's News Corp. .
Either way, Malone said he doesn't think he has a chance if SBC Communications Inc. decides it wants to own DirecTV because the local telephone provider has such a large war chest.
SBC, which declined to comment, could go after Hughes to try to compete with cable providers and to accelerate growth for its high-speed Internet service, known as digital subscriber line (DSL), using the satellite.
"If SBC is in the game and really wants to buy it, then they're going to win," Malone said. "They have a bigger balance sheet and they'd be a better buyer in a lot of ways than Rupert.
"For Rupert, it's a nice extension of his satellite empire, but there is no huge business he can drive. I'm skeptical that DSL can be driven by DirecTV, but if SBC believes it can be, then they can come up with whatever level of projected synergy to justify whatever they have to pay."
Murdoch lost a battle for Hughes to rival satellite provider EchoStar Communications Corp. in 2001. Regulators, however, moved to block the deal last year, leaving GM and Hughes free to run another auction.
Malone said that if GM aims to sell all the Hughes assets -- not just its 20 percent control -- in what would be a more complex deal, then Murdoch likely would emerge the victor, but only if SBC decides not to bid.
"If they just want to sell their 20 percent in a painless transaction with minimum regulatory issues, then they'll probably sell it to us," Malone said. "That's if SBC doesn't want it."
Malone added that while Murdoch probably would buy DirecTV for the long-term, Liberty only would want it as a short-term investment before selling it again.
Malone, one of the pioneers in the cable industry, owns stakes in cable networks Discovery Channel, E! and QVC, as well as in News Corp. and AOL Time Warner , through Liberty.
NOT SELLING AOL
Last week, investors worried that Malone, by selling bonds that can be converted into AOL stock, might be souring on the world's biggest media company, which has yet to realize the promise of combining media and Internet properties and is trying to pare its $27 billion of debt.
Malone emphasized that he is not selling his AOL Time Warner stake -- just borrowing against it very cheaply. If AOL stock improves, bond buyers would just hold their investment and if the shares fall, Malone said he could pay them off in future years with the AOL shares, cash or even Liberty shares.
"I think (AOL Time Warner Chief Executive Richard Parsons) is a good guy and the principal guys running the businesses are excellent managers," Malone said, adding that the company still needs to figure out what to do with its music business and its AOL Internet unit.
In further wheeling and dealing, Malone earlier in the month triggered a provision with partner Comcast Corp. on QVC that forces one to buy out the other or to put the home shopping channel up for sale. He wouldn't say whether he'd rather own QVC or not.
"Obviously, there's a price at which we would be a happy buyer, and above that we'd be a happy seller, and so we're trying to work that out with Comcast," he said.
The two sides are trying to negotiate a mutually agreed price on QVC's value. If they cannot, the decision will be sent out for an independent valuation.
VIVENDI STRATEGY
Because he has his hand in so many pots, Malone also sees himself offering a way to help ailing media conglomerate Vivendi because of its complicated financial relationship with Barry Diller, the chairman and chief executive of USA Interactive , who resigned last week as head of Vivendi's entertainment unit.
For Vivendi to sell any of its entertainment assets, it would need to get Diller's approval because he and his company own stakes in them. Instead, Vivendi probably will have to negotiate a settlement with Diller and possibly work a deal with Malone to provide the debt-laden Franco-American company with some much-needed cash.
"They don't have to make some kind of deal with us," Malone said without specifying what he what might want in return. "But on the other hand, we're in a position to free up their stock in USA and no one else is."
Malone said Vivendi owns shares of USA Interactive that cannot immediately be sold. Instead, he suggested that he could swap his USAI shares for Vivendi's to simplify the situation.
"From their point of view, we can provide them with a couple billion of liquidity that nobody else can and Barry can help free them from their obligations to him," Malone said.
"So, there's $3-$4 billion of swing there that would be ... free money, if you want to call it that, with Barry involved in the solution, which would not be there if Barry were not part of the solution."
Malone said he thinks Vivendi should sell its studio and cable networks together so someone could build them, but he conceded that there might be more value splitting them up because different suitors have varied interests.
"Given the history of those assets, I'd guess (Viacom CEO Sumner Redstone) would pay more than anybody on earth for just the cable networks, but they can't just sell the cable networks efficiently," Malone said. "If they do, they've got to pay off Barry, they've got to pay a lot of taxes. It's ugly."