Liberty Media chairman and cable legend John Malone sold about 2.2 million shares of Discovery Communications stock earlier this month for about $106 million, but Sanford Bernstein media analyst Todd Juenger wrote that investors shouldn't read anything sinister into the deal.
According to Juenger, Malone filed a form 144 with the Securities and Exchange Commission Wednesday, stating that he sold 2.2 million shares of Discovery Class C shares on June 18. Given Discovery's closing price of $48.19 per share on June 18 and Malone likely received around $106 million for the shares.
The sale represents more than half of Malone's Series C holdings -- according to Discovery's proxy statement, Malone controlled 3.9 million Series C shares, 6.1 million Series B shares and 590,956 Series A shares of Discovery as of March 2, 2012.
In a research report, Juenger said that Malone's decision to sell the shares is a good one for Discovery because it is possible that the programmer bought the shares itself, likely with some of the proceeds from its May $1 billion debt offering.
"Open market purchases of size in [Discovery Series C shares] are often difficult given liquidity constraints, so a purchase from Malone directly would make sense," Juenger wrote. "If that is true, we view this not as a negative insider-selling signal, but more of a confirmation that Discovery's will use the majority of its $1 billion to repurchase stock."