By Steve Garcia

Greg Maffei said Thursday that Sirius XM may eventually be spun off. This has led to much speculation. One needs only to look at Liberty’s history and recent events regarding Liberty and Direct TV (DTV) in which Direct TV was joined with the broadcasting and programming assets of Liberty Media’s Liberty Entertainment unit and spun off. The move combines the home satellite TV provider with Liberty’s programming units, including Liberty Sports, the Game Show Network and Fun Technologies. Through the spin off, the new entity will assume $2 billion of Liberty’s debt and $30 million in cash. DirecTV will also make $650 million in Liberty loan payments.

“This transaction clarifies DirecTV’s capital structure, reduces its shares outstanding, eliminates stock overhang and arbitrage issues, and provides DirecTV with strategic content businesses,” said Greg Maffei, Liberty president and CEO. “And this transaction offers value to Liberty’s shareholders by eliminating the discount in our tracking stock structure and allowing them to continue to participate directly in the strong performance of DirecTV.”

Analysts have said the consolidation of Liberty’s TV broadcasting and programming units could help clear the way for Liberty Media’s eventual control of Sirius XM. In February, Liberty Media rescued Sirius from near bankruptcy by giving it a $530 million loan, which in turn gave John Malone and Liberty a 40 percent stake in the satellite-radio company.

Several recent comments may hold a clue to Liberty’s true intentions. What Maffei was speaking to was exactly the same way they parlayed their stake in DTV in my opinion. Any talk of Liberty selling off their Sirius XM assets to any other company, including Sirius XM seems to be jumping the gun a bit; it would make no sense and would be against their responsibility to their Liberty shareholders which is and always has been to increase stock value and make money. Best case in that regard is to use those assets to Liberty and their shareholders advantage. You don’t sell off a winner, especially when you have not scratched the surface of the potential you see. Let’s not forget that Greg Maffei just called Sirius XM the anchor of LCAPA at the investor meeting a couple of weeks ago. Let’s also not forget that he said he would love to increase the Liberty stake in Sirius XM…but there are restrictions for at least the next 2 1/2 years along with that valuable NOL at the Liberty conference call only days ago.

What makes the most sense here is pretty straightforward. Let’s take a look at the facts.

Liberty has a 40% stake in Sirius XM, and has made a huge return on that investment to date. Liberty also has a myriad of companies which they own outright or have percentages of. The probable course of action will be making their stake in Sirius XM the centerpiece of a new tracker…or perhaps a known one like LMDIA, which will now be absent its Direct TV stake. There are many other possibilities out there, some of which I have discussed in past articles like this one: http://www.kingofalltrades.com/2009/10/26/149.html . But one thing is certain, the future of Sirius XM satellite radio has never looked so bright.

Disclosure: Long SIRI