Stop Chewing on Sirius XM (BKS, SIRI, STRZA)

Stop Chewing on Sirius XM

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Liberty Media (Nasdaq: LMCA ) is apparently going to nickel-and-dime its way to a majority stake in Sirius XM Radio (Nasdaq: SIRI ) .

A day after revealing that Liberty Media has entered into a forward purchase contract to acquire 302 million shares of Sirius XM at a price of $2.15 a share, John Malone's eclectic holding company has apparently secured another 60.35 million shares of the satellite radio giant.

Combine the two transactions with the 40% preferred share stake that Liberty Media has owned since 2009, and the company will effectively have a 46.2% stake in Sirius XM.

What's Liberty Media up to? Well, last month's petition for the right to take de facto control of Sirius XM was rebuffed as incomplete, but that was when Malone only had the 40% chunk that it received when it stepped up as Sirius XM's loan shark three years ago. Whether Liberty Media will be required to build its stake up to 50.1% or its petition will be reconsidered given the recent developments, it's really simply a matter of time now before the company does have control of the premium radio service.

Given Malone's history of spinoffs, one school of thought is that Liberty Media will simply spin off its stake in Sirius XM once it achieves majority control.

Then again, there's nothing stopping Malone from keeping his empire intact. Sure, Liberty Media is a hodgepodge of consumer-facing properties. It owns the Atlanta Braves. Last year it took a sizable piece of Barnes & Noble (NYSE: BKS ) . A strong media presence with a pro sports kicker? Isn't that Madison Square Garden (NYSE: MSG ) ? Despite the Knicks getting bumped out of the playoffs last night, Madison Square Garden isn't a bad model to emulate.

Then again, this is Malone we're talking about. A spinoff once Liberty Media receives de facto control or actually buys its way in is the most likely endgame here.

Sirius XM speculators who may have been buying in hoping for an outright buyout at a hefty premium may be out of luck, but the way that the satellite radio is growing, the bigger payday awaits patient investors at this point.

Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.

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The Motley Fool owns shares of Madison Square Garden. Motley Fool newsletter services have recommended writing puts on Barnes & Noble. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Liberty Media. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Comments from our Foolish Readers

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Report this Comment On May 10, 2012, at 1:37 PM, stockmjb wrote:

Liberty also disclosed in its SEC filing that Liberty Radio, LLC, a wholly-owned subsidiary, entered into this forward purchase contract with an unaffiliated counterparty covering up to a maximum of 315,000,000 notional shares of the issuer’s common stock way back on December 30th, 2011, which was prior to the expiration in March of restrictions in its 2009 investment agreement with Sirius XM. Liberty Media also failed to disclose the identity of the “unaffiliated counterparty” in their SEC filings.
Report this Comment On May 10, 2012, at 1:59 PM, southernbeachguy wrote:

Looks like Liberty couldn't find any additional Idiot Institutions to sell at the rediculously low PPS of 2.15. Whomever, sold those shares at that price needs to be fired or their Shareholders should Sue them. Of course, Liberty had to have had quite the leverage over them to to that.
Eventually, these occurrences will have a Movie made about it. It is to be seem what shenanigans have gone on.
Report this Comment On May 10, 2012, at 3:01 PM, stockmjb wrote:

How do you figure? Dec 30th closing price was $1.82 and they entered into an agreement for $2.15.... .33 cent bump, we are the ones that got screwed by not being told this in a filing!!
Report this Comment On May 10, 2012, at 6:14 PM, marcepoo1 wrote:

The big payday was from .05 cents to $2.15 anyone who was expecting $3-$4-$5-$6 a share buyout was thinking clearly. IMHO part of the writing on the wall was all the insiders selling like crazy the past few months THEY KNEW WHAT WAS GOING ON. But,in typical Sirius fashion they thought only of themselves. Not to mention there is nothing they can do to stop it. Just like past Sirius investors they wished for "Pie in the sky" outcomes. It happened when the NFL signed up with Sirius, it happened when Howard Stern joined Sirius,It happened when Nascar came to Sirius, and the list goes on and on. Many thought Sirius was going back to the shareprices they enjoyed back when the stock was over $40 a share. What kind of "shenanigans" are you talking about? Libertystarting buying shares of Sirius to take control of it....I think people are pi$$ed because for some reason they expected an all out buyout for a premium from Liberty (which wouldn"t make any sense at all) when all they have to do and ARE doing is increasing their holdings and they have Sirius by the neck. If people want to be upset they should be upset at themselves for playing a game they dont fully understand and instead "Wish" for things to happen.....just my thoughts.
Report this Comment On May 10, 2012, at 6:33 PM, marcepoo1 wrote:

Correction: I should not have included the $3 share price as I think this will be the top for Sirius to run to. Not bad money to be made from $2.15 to $3 but not much over $3

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	DOW	15,303.10	8.60	0.06%
	S&P 500	1,649.60	-0.91	-0.06%
	NASD	3,459.14	-0.28	-0.01%

STRZA	$22.76		+0.12	+0.53%
Starz		CAPS Rating:

SIRI	$3.58		+0.04	+0.99%
Sirius XM Radio		CAPS Rating:

BKS	$22.16		-0.31	-1.38%
Barnes & Noble, In…		CAPS Rating:

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Comments from our Foolish Readers

Report this Comment On May 10, 2012, at 1:37 PM, stockmjb wrote:

Report this Comment On May 10, 2012, at 1:59 PM, southernbeachguy wrote:

Report this Comment On May 10, 2012, at 3:01 PM, stockmjb wrote:

Report this Comment On May 10, 2012, at 6:14 PM, marcepoo1 wrote:

Report this Comment On May 10, 2012, at 6:33 PM, marcepoo1 wrote:

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