Liberty Media Corp. put its On Command hotel-video unit up for sale Thursday and may raise as much as $500 million, people familiar with the company’s plans said.
On Command sells pay-per-view movies and video games in more than 1 million rooms in hotels managed by such chains as Starwood Hotels & Resorts Worldwide Inc. and Four Seasons Hotels Inc.
Liberty, based in Douglas County, acquired a majority stake in On Command when it purchased Ascent Entertainment Group in 2000.
The business may appeal to private-equity firms, which prefer companies with predictable earnings that can be used to finance the debt in a leveraged buyout, said Matthew Harrigan, an analyst at Greenwood Village-based Janco Partners Inc.
“That’s kind of a manageable private-equity-sized business,” said Harrigan, who rates Liberty shares “buy” and doesn’t own them personally. Liberty “can refocus the capital proceeds on buying businesses that have a better growth profile.”
He values On Command at $480 million.
John Orr, a spokesman for Liberty, didn’t return calls seeking comment.
Chairman John Malone hired Lehman Brothers Holdings Inc. to find a buyer, said the people familiar with the proceedings, who declined to be named because Liberty hasn’t said On Command is for sale. Lehman spokeswoman Tasha Pelio declined to comment.
On Command has long-term contracts with hotel-chain customers in the U.S., Canada, Mexico and Spain, as well as on cruise ships. It distributes movies, from releases still in theaters to adult titles, games and other services mainly through set-top boxes connected to hotel-room televisions.
Shares of Liberty rose 2 cents to $8.09 in New York Stock Exchange composite trading.
