Liberty Media gets IRS approval for split-off

John Malone's Liberty Media Corp said on Tuesday it has received approval from the Internal Revenue Service for a tax-free split-off of its Liberty Entertainment unit ahead of a merger with DirecTV. Malone is the controlling shareholder of DirecTV, the largest U.S. satellite TV operator, and is seeking approval from shareholders on November 19 to combine it with Liberty Entertainment assets, such as regional sports networks and gaming company FUN Technologies. Liberty said it received a private letter ruling from the IRS which approves the split-off as a tax-free transaction. No gain or loss would be recognized by Liberty Media on distribution or exchange of the Liberty Entertainment shares. The IRS approval was a key condition for the split-off process. Liberty has been eager to reduce the gap between the value of Liberty Entertainment's assets and its market value.