Liberty Media (NASDAQ:FWONA) is set to make a number of big-money moves in 2014. John Malone's investment vehicle recently made a bid to acquire full ownership of Sirius XM (NASDAQ:SIRI), and he has publicly stated his intention to go after cable assets as well. Liberty Media's asset portfolio is largely undervalued by the market and deserves a much higher valuation.

Acquiring Sirius at a bargain                                                                                                      Liberty has control over Sirius with 52% ownership. Now Liberty's management wants to acquire the remaining 48% of the rapidly growing Sirius. Based on Liberty's preliminary offer, each share of Sirius is being valued at $3.68 and Sirius minority shareholders would receive Liberty's Class C shares in the deal.

The market initially believed that the offer was too low and that Liberty would have to raise the offer to more than $3.85 to buy out the minority shareholders of Sirius. Now Sirius shares trade near the price that Liberty Media offered. Even if Liberty makes a more generous offer for Sirius of roughly $4 per share, Liberty will still gobble up Sirius at a sizable discount to its intrinsic value and future growth prospects. 

Sirius has more than 25.6 million subscribers. The company hopes to add another 1.25 million subscribers in this year and laid out a revenue estimate of $4 billion.  Both the Liberty and Sirius XM share repurchase plans will be blended. Currently, Liberty has $327 million in share repurchase authorization available, and Sirius XM had roughly $2.4 billion. Liberty Media's CEO stated in the conference call that the Sirius share repurchase plan will blend into Liberty's share authorization plan.

With stellar subscriber growth and a very strong financial position, Sirius XM has a very good footing. The average one-year price target for Sirius among the sell-side analysts is $4.52, and the highest price target for the company stands at $5.80 per share. This seems to indicate Liberty Media would get a fantastic bargain at the aforementioned price.

Consolidation among cable operators                                                                                     Liberty wants to own the rest of Sirius because it plans to consolidate the cable industry. Liberty has significant influence over Charter Communications (NASDAQ:CHTR) with a 27% stake. Liberty also plans to leverage Sirius's strong balance sheet and take on more debt.   

This added debt will enable the consolidated company to make a higher bid for Time Warner Cable (UNKNOWN:TWC.DL) using Charter as a vehicle. Charter recently offered $132.50 a share for Time Warner, which was unanimously rejected by Time Warner's board. The market believes that a higher offer will be on the table and sent the stock price of Time Warner above $137.

Time Warner Cable has long been an acquisition target for other cable players including Charter and Comcast. Cable companies do not compete with each other because they operate in different geographies, and thus real synergies will emerge from consolidation. Enhanced collaboration will lead to efficiency gains and solid cost savings for the combined entity that includes Time Warner Cable and Charter. John Malone's Liberty Media will enjoy strong returns from its investment in the combined entity due to this acquisition.

Numerous value drivers                                                                                                            In addition to buying Sirius at an inexpensive price, there are a number of assets in the Liberty Media portfolio which have big upside. Liberty Media owns a 26% stake in Live Nation, as well as small interests in a number of high-quality media and entertainment titans that include Time WarnerViacom, etc. 

The company's portfolio is being undervalued by the market. A sizable stake in the combined Time Warner Cable and Charter Communications would drive big earnings potential for shareholders. The company's CEO Greg Maffei has been a vocal proponent of share repurchases and he will use them to create value for shareholders.

Big stakes in high-quality companies, consolidation in the cable space, the acquisition of Sirius at a discount, and share repurchases could all play meaningful roles in driving tremendous upside for Liberty Media stock in the long run.