John Malone is known for orchestrating companies and transactions that are highly complex financially. On Monday, the Liberty Media (NSDQ: LINTA) chairman was it again. Liberty Media announced it would spin off its entertainment unit (Liberty Entertainment) and merge it with DirecTV (NYSE: DTV) in a stock transaction. (DirecTV will also assume about $2 billion in Liberty debt). Liberty Media actually announced back in December plans to spin off Liberty Entertainment, a holding company that would control about half of DirecTV, as well as the Game Show Network, FUN Technologies and Liberty Sports Holdings. But at the time, it made no mention of merging the company with DirecTV.

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The deal rids Liberty of $2 billion of debt and should simplify the equity structures of both Liberty Media and DirecTV, making both stocks more attractive to investors. The transaction is expected to close in the fourth quarter of this year.