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Liberty: Going Cheap
Liberty Media (L ), cable mogul John Malone's investment outfit, is the "most attractive way to play the media and entertainment industries." So says Martin Sass, CEO of M.D. Sass Group, which manages $7 billion and has been buying shares. Liberty trades at a nearly 50% discount to the value of its assets, figures Sass. Liberty's stock is at 9, and he estimates its assets are worth 18.75 a share. Douglas Mitchelson of Deutsche Bank Securities agrees, urging investors to "take advantage of this widening value gap." Deutsche Bank has done banking for Liberty this year and owns 1% of the stock.

Sass sees the stock at 15 in a year, based on assets alone. He says 80% of Liberty's value is wrapped up in six companies, three public and three private: Liberty owns 21% of USA Interactive, 18% of News Corp., and 3.7% of AOL--plus 100% of Starz Encore Group, 49% of Discovery Communications, and 42% of QVC.

Chairman Malone, according to Sass, is out to widen the scope of his global holdings. Latest quarry: Vivendi Universal's American assets, including the Universal film studio. Malone and USA Interactive CEO Barry Diller, who also heads Vivendi's U.S. businesses, are in talks, says Sass. Given Vivendi's woes, including a Securities & Exchange Commission probe into its financial disclosures, it might sell its assets or merge them with Liberty, he adds. Liberty CEO Robert Bennett has told analysts that Liberty also wants to team up with NewsCorp. to buy Hughes Electronics' DirecTV unit and some AOL assets. Liberty didn't return calls. Vivendi declined comment