2 Stories to Watch With Liberty Media

Liberty Media (NASDAQ: LMCA  ) is widely known as a deal-making engine. The company operates as a financial vehicle for a wide-reaching strategy of media consolidation involving cable, broadband, radio, event promotion, and even professional sports. The great thing about Liberty Media is that it is a long-term-oriented, shareholder-pleasing business with first-class management. Lately, the company has made waves across its various businesses, with a spinoff of the cable and broadband assets in the works, as well as some beefing up of its holdings. Here are two stories to watch.

Sirius debate
When Liberty made its polarizing decision to acquire a majority stake in Sirius XM Radio (NASDAQ: SIRI  ) , most people assumed that Chairman John Malone wanted to bring the satellite radio business fully into Liberty's empire. In January, that assumption was proven correct when Liberty made an all-stock offer valuing Sirius at $3.68 per share -- an offer that was ultimately rejected by Sirius' management and shareholders.

Many believe it's only a matter of time before Liberty comes back with a more compelling offer for the business, or just seizes it outright. The acquisition makes plenty of sense for Liberty. Wholly owning Sirius would give the company a tremendous market cap and range of assets to access billions more in capital -- and that's exactly what Malone and CEO Greg Maffei want in order to expand the business and conduct more megadeals.

All of that said, Maffei made it clear this week that Liberty will not chase down Sirius to bring it in. By playing the long game, Maffei is ensuring that existing shareholders are not overpaying for Sirius. It would be very easy for the company to up its bid, especially considering the additional cash flow that Sirius would provide (in heaps), but Liberty's managers are committed to making deals on their terms. Going forward, it will be interesting to see how Liberty courts the portion of the business it does not already own.

Play it live
Liberty made additional headlines this week upon announcing that it is acquiring millions more shares of Live Nation Entertainment (NYSE: LYV  ) via convertible notes. Liberty already owns 26% of the world's biggest event promoter, and the additional 3.7 million shares could bring that number closer to 28%.

The bet is an interesting one, considering that Live Nation, while a growing giant, is currently unprofitable. In the music industry, concerts are the profit drivers as sales of recorded music continue to decline. Liberty clearly sees event promotion as the future of the industry, and the additional cash flow of ticket broker TicketMaster helps fund Live Nation's operations.

The big question here is whether Liberty is interested in owning Live Nation outright. If so, how would it fit in with the rest of the company's operations? As Liberty readies to spin off its cable and broadband assets into a new entity (Liberty Broadband Group), the core company will be left with the 53% Sirius stake, the interest in the Atlanta Braves, Live Nation, and a few other minor investments.

One thing is for sure: Liberty continues to set up for a long-term future of cash flow-heavy assets and big-picture concepts of the future of media.

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 


Read/Post Comments (0) | Recommend This Article (4)

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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2967402, ~/Articles/ArticleHandler.aspx, 10/23/2014 6:29:01 AM

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...


Advertisement