Industry juggernaut Liberty Media (NASDAQ: LMCA ) is a busy, busy organization -- acquiring and spinning off companies at an impressive clip. While it has recently taken the reins over satellite-radio company Sirius XM (NASDAQ: SIRI ) , it has also spun out the largest premium cable company available, Starz (NASDAQ: STRZA ) . Liberty gives investors plenty of options (no pun intended) to evaluate with its myriad of subsidiaries, not to mention the parent company itself. And still, the company has a sizable cash hoard and the ability to tap capital markets for another substantial acquisition. Though at this point it is mere speculation, where could Liberty be heading next?
Liberty Media spent much of 2012 getting ready to take control of Sirius XM. While the company is now officially under the Liberty umbrella (Liberty CEO Greg Maffei is chairman of Sirius' board), there has plenty other action in the new year.
Most recently, the company took a 27.3% stake in cable operator Charter Communications (NASDAQ: CHTR ) . The deal cost Liberty $2.62 billion in cash with proceeds from the Starz spinoff. Charter is the eighth biggest pay-TV provider in the United States. After a period of struggle, Charter is quickly approaching profitability -- an effect of a very capable management team that Maffei strongly supports. Liberty's motive was probably the seemingly endless demand for broadband services in the country.
The deal came on the heels of another, much larger deal with European pay-TV operator Virgin Media. Liberty acquired all of Virgin Media for $16 billion, putting it in direct competition with News Corp. as one of the top cable companies on the continent.
So what's next for the media giant, famous for its insatiable appetite for acquisitions and investments?
According to Maffei, Liberty still has around $1 billion in non-core assets that it could sell, in addition to tapping capital markets for cheap financing. The company may have exhausted most of its appealing prospects in the U.S., but there remains an enormous opportunity beyond our borders. Possible interests lie in South America, Europe, and the Middle East.
Recently, Time Warner (NYSE: TWX ) bid $1 billion for Turkey's largest cable operator, ATV. For cable, at least, the U.S. is a saturated market. Now, Liberty is by no means confined to cable businesses -- it holds stakes in businesses ranging from bookstores to ticket sellers. But with valuations high, especially in the U.S., investors should keep an eye on potential acquisitions abroad. Liberty could benefit from greater exposure in Brazil or the aforementioned Turkey.
As for now, investors in Liberty Media or its subsidiaries (namely Sirius) should look for further shareholder value in the form of share buybacks and dividends. While it has made some missteps in the past, Liberty Media continues to be one of the dominant forces in the industry, and investors should consider it a stable, long-term holding.
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