Monday, January 6, 2014

Liberty's SiriusXM Plans Could Lead To TWC

Liberty Media Corp. unveiled a proposal Friday to make satellite-radio provider Sirius XM Holdings Inc. a wholly owned subsidiary, a move that would give the media-investment company access to a new source of capital as it pursues a big cable merger, according to Marketwatch.

Liberty currently owns about 52% of Sirius. Taking 100% ownership of the company would "eliminate ambiguity in the long-term relationship between Sirius and Liberty," Greg Maffei, Liberty Media's president and chief executive said during a conference call with analysts Friday. The deal would allow Sirius shareholders to convert from a noncontrolling stake in a subsidiary into a direct equity position in Liberty, he said.

Liberty, which is controlled by cable pioneer John Malone, bought a 27% stake in cable operator Charter Communications Inc. last year and has been pushing for industry consolidation. Charter has made buyout offers to Time Warner Cable Inc., one of the largest cable competitors in the U.S., but has been unable to reach a deal.

John Tinker, an analyst at Maxim Group, said the Sirius transaction would help the merger push by Charter and Liberty. "They want to buy Time Warner Cable and they need the money," he said. "If you want to step up, you need Sirius's balance sheet."

Sirius has improved its performance and boosted earnings in recent years. The company reported net additions of 513,000 subscribers for the third quarter, bringing its total to 25.6 million. But Sirius is facing increasing competition from Pandora Media Inc. and new in-car services being developed by Google Inc. and Apple Inc.

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