Liberty Media Corp. has entered into a definitive agreement to exchange its 16.3 percent stake in News Corp. for News Corp.’s 38.5 percent stake in DirecTV Group Inc., the companies announced Dec. 22.

Liberty will transfer 188 million NWS shares and 324.6 million NWS.A shares to News Corp., which will swap the stock of a subsidiary holding 470.4 million shares of DirecTV common stock, along with $550 million in cash and control of regional sports networks in Denver, Pittsburgh, and Seattle.

"We are happy to become the largest shareholder in the world’s largest satellite television provider. Chase Carey and the DirecTV team have done a fantastic job, and we look forward to the strategic benefits of them joining the Liberty family,”Liberty President and CEO Greg Maffei said in a statement.

"During 2006 we converted many passive investments into strategic operating businesses, but this transaction is the largest and most important. DirecTV and the regional sports networks represent a critical step in our efforts to transform Liberty Media into a well-positioned, focused operating company.”

DirecTV President and CEO Chase Carey is expected to remain with the company, and Liberty will appoint directors to replace board seats now held by News Corp. representatives.

"We are very excited about welcoming Liberty to DirecTV,” Carey said. “They bring a wealth of expertise in media and technology that will be invaluable. I have known both [Liberty Chairman] John Malone and Greg Maffei for over 10 years, which gives me great confidence this transition will be smooth, and we will move forward without missing a beat.”

The deal already has been approved by the boards of both News Corp. and Liberty but is subject to regulatory and News Corp. shareholder approvals plus receipt of a private letter ruling from the Internal Revenue Service. If everything goes smoothly, the transaction is expected to close in mid-2007.