Moves by Liberty Media to eliminate its tracking stock has prompted a raft of speculation that the media giant is eyeing a full takeover of satellite radio provider SiriusXM.
On 17 November, Liberty announced that its board had voted to remove its…
Moves by Liberty Media to eliminate its tracking stock has prompted a raft of speculation that the media giant is eyeing a full takeover of satellite radio provider SiriusXM.
On 17 November, Liberty announced that its board had voted to remove its tracking stock structure by converting each share of its Liberty Starz common stock into 0.88129 of a share of the corresponding series of Liberty Capital common stock.
At present, Liberty Starz hold’s the media group’s 100% interest in US premium subscription channels Starz, while Liberty Capital comprises the company’s wholly-owned subsidiaries Atlanta National League Baseball Club and location determination specialist True Position, its 40% stake in SiriusXM as well as significant holdings in Barnes & Noble (17%) and Live Nation (21%), and a series of single digit stakes in companies including Time Warner, Century Link, Motorola and Viacom.
Explaining the move, Greg Maffei, Liberty President and CEO, said: “We are pleased to announce the combination of Liberty Starz and Liberty Capital into an asset-backed security. The board of directors determined this was the right move to increase the value for both Liberty Capital and Liberty Starz shareholders by eliminating the ‘tracker discount’, increasing liquidity in the stock and creating a stronger acquisition currency.”
It is this final reference to ‘acquisition currency’ that has led to the rumours regarding SiriusXM. The New York Post went as far as to claim that talks between Liberty and SiriusXM over the former increasing its stake were already underway.
Over the past year, Liberty has also been increasing its board influence in SiriusXM. Alongside it 40% stake, Liberty holds 2.587 billion shares of convertible perpetual preferred Series B-1 stock. Back in April 2011, the media group use the entitlement that the convertible stock gives it to appoint two additional members to the SiriusXM board.
Adding more grist to the rumour mill has been the performance of SiriusXM’s share price. Despite the satellite radio provider recently reporting strong third quarter results, with record revenues of US$763m, up 6% year-on-year, and adjusted EBITDA up 16% to US$197m, the company’s share price continues to stagnate. One analyst told SatelliteFinance that this was in part due to SiriusXM’s historic performance and in part because uncertainty over Liberty’s plans over its significant holding were acting as a share overhang.
