Liberty Media (NSDQ: LINTA) CEO Greg Maffei said a proposed split-off of DirecTV and other assets should be completed by May, pending regulatory approval in a discussion with Deutsche Bank’s Doug Mitchelson.

SEE ALSO: Liberty Media To Split Off Majority Of Liberty Entertainment; Assets Include DirecTV, Sports Nets

As we said on Friday, the board approved a split-off that will give holders of the new Liberty Entertainment group tracking stock shares in a new subsidiary that will hold the majority of the group’s businesses, assets and liabilities in exchange for some of their tracking stock shares. The new Liberty Entertainment will be a publicly traded company—not a tracking stock—called Liberty Entertainment, Inc. It will hold about 52 percent of The DirecTV Group, Inc., 50 percent of GSN, LLC, 100 percent of FUN Technologies and 100 percent of Liberty Sports Holdings, LLC (the three regional sports nets). Liberty Entertainment also will be responsible for $2 billion in debt incurred when Liberty acquired its majority interest in DirecTV last spring.

—The thought process: The concept of the split-off has evolved a great deal since it was first proposed last summer. The credit market and equity market meltdown has caused some changes in the timing. The plan approved by the board was a “modification” to the original intention, Maffei said. It will leave behind other assets that still generate cash flow, most notably, the Starz cable network. That cash will provide additional credit support to shareholders of LINTA and LCAPA. “This was an attempt to achieve our original goal of getting clear and fair value for the bulk of our LMDIA assets, as well as opening up a bunch of strategic alternatives, while still, in light of the changed economic climate and changed financial climate, providing a higher degree of security to both the creditors and the equity holders of LINTA and LCAPA.”

—No changes at the top: John Malone, Liberty’s founder, will remain chairman of both entities and Maffei will be CEO of both as well. “It will be business as usual going forward,” Maffei insisted.

—Worst case scenario: Since the new entity won’t have much cash flow, Maffei was asked how will it cover the interest expense against the $2 billion debt. “We have some cash that will help settle this out. Ultimately, we’re going to have work on another method to reduce the debt that is against the put side by raising debt against the assets. Or, potentially, in some combination with DirecTV (NYSE: DTV). In the worst case, it would involve selling DirecTV shares. What’s been happening is that DirecTV has been buying back stock at an aggressive rate, which we absolutely applaud. That’s taken our interest in DirecTV from—when we struck the deal—41 percent to somewhere in the range of 54- to 55 percent. Our preference would be to maintain as much as possible, but if we were required to sell some shares to provide liquidity, we have substantially increased our ownership. I don’t think that’s going to happen. I think we will service the debt and refinance it using other means, but that’s the worst case scenario.”