Sirius XM and Liberty Media Play Nice

There will be an interesting speaker at Liberty Media's (Nasdaq: LMCA  ) annual investor meeting next week.

Mel Karmazin -- Sirius XM Radio's (Nasdaq: SIRI  ) opinionated CEO -- will be a presenter at the Oct. 10 powwow.

The move makes sense at first. Liberty Media is nearing majority control of the satellite radio provider. It's simply a matter of time before John Malone's eclectic media conglomerate bumps its stake in the satellite radio provider above 50%, a move that will likely result in a shareholder spinoff. If Liberty Media wants to get its investors excited about the appendage, having Karmazin sell them on Sirius XM's potential is smart. If Karmazin doesn't want to see Sirius XM's stock take a hit after the spinoff, it's in his best interest to encourage Liberty Media investors to hold on to their eventual shares.

Karmazin speaking at the meeting makes sense for both sides. However, weren't the two factions in a war of words just last month?

Karmazin started things up recently.

"My instincts today are that Liberty does not need me at the company," he said at an investor conference three weeks ago, pointing out that he has historically been expensive to keep.

Karmazin's current deal as Sirius XM's CEO ends this year, and there has been no public chatter as to where things stand in terms of negotiating an extension.

"It's very clear to me that if I were Liberty, I would sit there and say, 'I'm not sure we need Mel.'"

Liberty Media CEO Greg Maffei seemed to agree a week later.

"The business will not fail without Mel," Maffei said at a different investor conference. "Graves are full of replaceable people."

Obviously they didn't mean to agree. Karmazin was merely either negotiating in public or setting the stage to leave the company on his terms. Maffei was simply calling his bluff.

However, Karmazin wouldn't be speaking before Liberty Media shareholders next Wednesday if things were still volatile. Karmazin isn't a loose cannon, but he is a colorful media guy. He doesn't mince words. Even if it's in the best interests of both companies for Karmazin to play nice -- sustaining the recent gains made in Sirius XM's stock -- a deal seems to be on the horizon.

Liberty Media wouldn't be showing off Karmazin as the face of Sirius XM to its investors just three months before replacing him. A contract extension is probably in the works, and that's good news for both parties.

Running of the bulls
I recently 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. Click here to check it out now.

Rick Aristotle Munarriz owns shares of Liberty Media. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2040341, ~/Articles/ArticleHandler.aspx, 4/19/2014 9:04:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement