Shares of Sirius XM Radio
Liberty's 40% stake in Sirius XM isn't part of Liberty Entertainment. It's actually part of the Liberty Capital
Speculators may be bidding up Sirius XM today, under the assumption that it's the next media consolidation target.
Really? I don't see it happening, at least not now. Malone is in no hurry to broker a deal for Sirius XM. Liberty Capital is collecting juicy 15% interest on most of the money he lent to the satellite radio provider. The 40% stake in Sirius XM has multiplied in value in just a couple of months.
Sirius XM's poison pill provision exempts Liberty's significant stake in the company, but it doesn't mean that it's going to shoo DirecTV and Sirius XM into a room and look the other way. For starters, keep in mind that DirecTV is crushing its nearest rival DISH Network
There are plenty of no-brainer deals that can be brokered. DirecTV can bundle its service with a satellite radio or Sirius XM Web radio subscription. DirecTV can provide video content for Sirius XM's fledgling Backseat TV offering.
DirecTV and Sirius XM -- as premium satellite-based entertainment subscription services -- fit together like chocolate and peanut butter. However, now that Sirius XM is starting to generate positive operating cash flow it seems unlikely to punch out for pocket change. Malone already has a free lottery ticket with his 40% stake. A combination doesn't make a whole lot of sense right now, but it may if Sirius XM's cash flow isn't enough to cover its debt obligations next year.
Until then, the wedding bells are probably bogus.
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