Liberty Media May Be Ready to Move on

Liberty Media (Nasdaq: LMCA  ) may be ready to trade out of an asset, and it's not Sirius XM Radio (Nasdaq: SIRI  ) .

Speaking at this week's Bank of America Merrill Lynch Media Conference, Liberty Media CEO Greg Maffei suggested that Starz -- the premium cable channel that the company plans to spin off later this year -- may be better off with someone else.

Maffei argues that Starz and its 20.7 million subscribers could be a better fit for a media company that operates other premium cable channels. It seems to be a thinly veiled dinner invitation for Time Warner's (NYSE: TWX  ) HBO or CBS' (NYSE: CBS  ) Showtime to "come and get it" if they want it.

For all we know, Liberty Media may even be setting a place at the table for Netflix (Nasdaq: NFLX  ) .

Netflix had a lucrative streaming deal in place with Starz, providing its streaming service with recent releases from three major studios. That deal ended in February, and Starz decided to embarrass Netflix by breaking things off last summer when Netflix shares were getting slammed.

It seems highly unlikely that Netflix would bid on Starz. It represents the old school of stodgy premium movie channels that charge too much on top of already prohibitive cable and satellite television bills. However, now that HBO is rolling out its channel as a stand-alone service in Scandinavia, the line is starting to blur between a premium cable channel and Netflix's digital smorgasbord.

Liberty Media argues that there are synergies to be realized with a Starz rival, and that's definitely true. However, if the cord cutting trend continues -- and the number of homes with cable or satellite television has been inching lower lately -- consolidation among the premium movie channels may be just a matter of survival.

The plan is already in place for the Liberty Media spinoff at a time when the company itself in moving in different directions. It bumped its effective stake in Sirius XM to 49.7% earlier this week, and it's only a matter of time before the satellite radio provider becomes the company's next spinoff candidate.

For now, Liberty Media is no different than a street peddler in Beverly Hills. It's just hoping to sell a map to Starz' home.

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.

I also just put out a premium report on Sirius XM Radio, detailing the challenges and opportunities that await investors that are both long and short the dynamic media giant. A year of updates is also included with the report -- at no extra cost to you! Don't delay; subscribe today.

The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Netflix. Motley Fool newsletter services have also recommended creating a bear put ladder position in Netflix. 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 and Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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  • Report this Comment On September 13, 2012, at 4:02 PM, dsandman999 wrote:

    Does Netflix even need STARZ now? A buddy re-upped for Netflix after a 3 month hiatus and suddenly there are new movies. Where did those come from?

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