Liberty Media Seeks Bigger Stake in Live Nation

By Steve Garcia -

With the announced purchase of a larger percentage of Live Nation Entertainment (NYSE: LYV) by Liberty (NASDAQ: LCAPA, NASDAQ:LINTA) as well as comments from Liberty CEO Greg Maffei regarding the combination of Sirius XM (NASDAQ: SIRI) and Live Nation , it appears that Liberty and Sirius XM are indeed going to enjoy a long and profitable relationship. Maffei did not speak to any known specifics of the future and the relationship, but he did show enthusiasm when speaking to it on CNBC.

Liberty has been very active recently with acquisitions as many of us already know. They should be closing imminently on the purchase of Worldspace (OTCBB: WRSPQ) assets through bankruptcy. The assets are apparently being acquired with some of Liberty’s stake in Sirius XM, more specifically, a percentage of their stake in XM holdings, through their Liberty Satellite LLC holding company.

Liberty Global another of John Malone’s companies (NSDQ: LBTYA, LBTYB) has also been busy getting its acquisition of Unitymedia (from Apollo and BC partners), a German Media and cable conglomerate, finalized, and also shedding its 37.8% position in Japanese cable company Jupiter Telecommunications (J:COM), for $4bn.

There can be no doubt that Liberty is indeed concentrating on Europe, the Caribbean and South America as areas of expansion outside the United States. The addition of Live Nation only enhances the situation. Live Nation has core business in producing, marketing and selling live concerts for artists with a global concert pipe. Live Nation is the largest producer of live concerts in the world, annually producing over 16,000 concerts for 1,500 artists in 57 countries. The company sells over 45 million concert tickets a year. Live Nation is transforming the concert business by expanding its concert platform into ticketing and building the industry’s first artist-to-fan vertically integrated concert platform. Headquartered in Los Angeles, California, additional information about the company can be found at http://www.livenation.com/investors.

With Sirius XM already having Effanel studios since 2005, even more synergies can be gained for all concerned parties between Liberty, Sirius XM and Live Nation. Of course, that is a future story that is yet to even begin. In fact it is only in its early infancy with the Liberty acquisition of a larger percentage of Live Nation not even 24 hours old. Still some healthy speculation based on known information is never a bad thing. Clearly, there is going to be much more value added to all three entities, Liberty, Sirius XM and Live Nation. Those who have the foresight to continue digging for information along that path may end up reaping very ripe and healthy fruit for their labor. The situation bears watching for sure, and I personally will be doing just that. As always, do your own due diligence and best of luck.

Disclosure: Long SIRI

By Steve Garcia

Sirius XM (NSDQ: SIRI) continues to improve their standing as a viable company. The release of the Blackberry application PR from the company is just another tell tale sign that the company is marching forward and looking to the future in many directions: http://investor.sirius.com/releasedetail.cfm?ReleaseID=443007  The stock has seen a recent increase in daily volume and value despite some recent fear and bearishness from people worrying about a possible reverse split due to listing requirements for NASDAQ. To that end, CEO Mel Karmazin appears to be executing a plan to ensure the company stays listed on the NASDAQ Global Market. Some have even theorized that the company should r/s now to mitigate manipulation due to such a large share count. This would be a bad move in my humble opinion and I believe it is not the intent of Sirius XM or Mel Karmazin to let that happen now. Too many positives have been and continue to be achieved.

As several of us here at King of All Trades have stated of Sirius XM over the last few months, the combined company is presenting and executing a different business model than in previous years as separate companies. They have grown revenue and increased cash flow in one of the most challenging economies of our lifetimes, as well as stemmed the flow of subscriber losses with many consumers having much less discretionary income. The company has also stayed on point with improving costs through merger synergies and with continued improvements quarter over quarter in operating expenses. The fundamentals continue to move forward in positive fashion. Early press for the upcoming conference call is positive….so…try to think about why you invested in this company in the first place. The short term price swings are not important in the big picture; they are merely scenes in a play. You are not supposed to get in on opportunities like this, many try to shake your confidence in hope of getting your shares…and forcing you to buy higher…taking your hard earned profits, so know the risks, formulate a plan if you do not have one already and stick to it. The rest will sort itself out.

Sirius XM has yet to report on Used Car program numbers and their impact to the bottom line subscriber numbers, or the full impact of the new Skydock to retail subscriber numbers. The company continues to assert itself as a force to be reckoned with in Media and Content distribution. Liberty Medias (NSDQ: LCAPA) investment in Sirius XM last February has reaped a lot of fruit to date, and according to Greg Maffei of Liberty, Sirius is on track to continue to improve so much, that it will use up its NOLS far sooner than anticipated. As a side note, LCAPA stock just received an upgrade recently, as did Sirius XMs debt. Companies get debt upgrades when their balance sheets look more favorable.

Disclosure: Long SIRI

By Relmor Demitrius -

Reading news lately on Sirius XM (NASDAQ:SIRI) has been an adventure to say the least.  The amount of misinformation, outright lies, made up opinions, and simply terrible logic is staggering.  As I am only a fact based writer, let’s use facts to dispute some of these attempts by the media.  Let’s see if we can’t clear up some of this chatter.

Satellite Radio Technology is outdated.

This is actually the furthest thing from the truth possible.  Satellite delivery is the cutting edge of technology.  More and more satellites go into orbit every year, for more and more applications.  Fact.  There is no debating this.  TV’s are going to satellite delivery, as cable companies have trouble expanding with costly start up costs, and the need to dig up dirt, or run wires from house to house.  This is archaic technology, and is not the future.  Cable TV might never go away, but reports are coming in fast now with Comcast buying NBC that broadcast over airwaves TV might be dead very soon.  Which makes sense.  We see the “old technology” delivery of radio, terrestrial radio, is losing market share and money.  Citadel Radio just declared bankruptcy, and Clear Channel went private.   They can’t even trade as a stock anymore, that’s how bad it is.  You couldn’t even FOMENT that stock up if you tried. 

Satellite technology is so outdated, that Sirius XM’s business partner, Liberty Media (NASDAQ:LCAPA), is going to expand this “failed business model” to reach Europe, and hopefully one day Asia/China as well.  Worldspace (OTC:WRSPQ) assets are being bought out by Liberty Media, and they intend to allow Sirius XM to work their domestic magic on a global scale.  Satellite radio delivery is the most reliable distribution method available, and works coast to coast with no gaps of service.  No other technology can boast this claim.  So outdated?   Only if you think broadcast TV is better than Satellite TV.  If you do, then you probably also think terrestrial radio is better than satellite radio.  And you probably also think vanilla is better than rocky road, and 10 dollars are better than 15 dollars.  So if this is you, you are in the VAST MINORITY.  Companies don’t go into business for the vast minority.  Sirius XM has almost 19 million subscribers who pay every month for the service.  And growing.  Failed technology?  Only if you think the IPod was a failed technology, or the automobile.  So if you think this, then you are not the person Sirius XM is for.  They are for the MAJORITY of the people who think satellite delivery is better than airwaves, choppy wifi, and cupping your ear to hear the birds chirp.

Sirius XM cannot make money.

Actually they made money last quarter.  They had more revenue than costs.  In the worst recession in 80 years.  Fact.  Let’s stick to facts.  Once again, if you are in the majority that likes their companies to be profitable, then maybe Sirius XM is the company for you.  The company isn’t going to go out of business generating profits.

Sirius XM can’t afford to pay Howard Stern again. 

Yes they can.  They can actually afford it more now than ever.  Another fact is Howard Stern is a positive to the bottom line of the company, even at his old salary.

Internet radio will kill satellite radio.

Sirius XM radio is on the internet.  So this one makes no sense.  The delivery system is available.  I don’t comment on free services, as they can NEVER OBTAIN THE CONTENT SIRIUS XM HAS.  So Pandora/ Slacker/ whatever… All the internet stations in the world don’t compete with Sirius XM radio.  Last time I checked, you can’t get internet everywhere, it can fail, it doesn’t offer NFL, NASCAR, NBA, NHL, Howard Stern, Rosie O donnel, Martha Stewart, Oprah Winfrey, Opie and Anthony, Chris Russo, Jamie Foxx, Eminem, Snoop Dog, CNBC, Bloomberg Radio, and countless other unique content contributions.  This doesn’t include the hundreds of yearly events, concerts, and specials only aired on satellite radio.

Satellite Radio is not good for new music discovery.

Furthest thing from the truth.   Actually Sirius XM is NUMBER 1 for new music discovery.  Artists will release to satellite radio first, before their new release even comes out.  Not only can you discover new music on satellite radio, you will hear songs BEFORE ANYONE ELSE IN THE WORLD CAN HEAR THEM.  I type in bold to emphasis the perceived lie and the valid fact to dispute it.  Performers LOVE SATELLITE RADIO.  Terrestrial radio still thinks performers don’t deserve to get paid for why they have a station to begin with.  Sirius XM disagrees with this, and pays the performers.  Artists love Sirius XM.

Satellite Radio is too expensive.  I would never pay for radio.

I used to hear similar comments CONSTANTLY about free TV.  So is the old adage true here?  Try living without it, once you have it.  Try going back to free TV once you had satellite TV.  Not usually going to happen.  The fact is that 45% of everyone exposed to the product through the OEM channel CHOOSES to continue it and PAY for it.  If it were free, who would turn it off?  Anyone ever said, wow, Sirius XM is so bad, I wouldn’t listen to it for free!!  I haven’t either.  In fact, I have never heard the argument yet, even from people negative the business model, almost no one is negative the product.  It becomes a personal economic decision at that point.  Sure, its great, but can I afford it?  Who doesn’t find it as a free service better than terrestrial radio or internet radio?  Probably only people who think broadcast TV is better than satellite TV.  That’s the minority again, and we have established earlier than Sirius XM is in business for the majority, not the minority.

So is it affordable?  It’s only 43 cents a day.  Less than one donut.  I would pay $1 a day to never hear a radio commercial again.  Some people would probably pay much more than that if they had too.  Nothing is more depressing than constant commercials.  FACT.   The majority of the population in the United States does not like commercials.  The terrestrial radio business model is a huge failure, and that old technology is done.  They are losing money, losing market share, or just plain going bankrupt.  There seems to be a solid factual trend here.  Sirius XM…. Rising revenue, increasing subs…..   Seems to be a fact this model is thriving.  Once again this is all in the worst recession in 80 years.  What happens when the economy recovers? Fact.  Businesses generally do better out of a recession than in a recession.

These are the facts.  You can argue facts all you want.  I prefer not to.  So you can believe the misinformation, or you can listen to facts.  The choice, as always, is yours.

King of All Trades Staff -

Sirius XM Radio(NASDAQ:SIRI) has received two S & P corporate credit ratings upgrades this year. In April S & P took their corporate credit rating  from CCC to CCC+, and another one in August to a B- rating.  Perception of a company’s debt load and its ability to repay that debt is vital to a company’s ability to obtain new money for refinancing existing debt for better terms, or to obtain new debt altogether.

Now this month JP Morgan (NYSE:JPM) has initiated coverage of  Sirius XM’s credit.  They have begun coverage with an over-weight rating.  Sirius XM Radio has confirmed this coverage.

This rating typically indicates the company’s debt is a reliable long term investment at this point in time.  As equities are bought and sold, so are a company’s bond issues.  It appears now that JP Morgan will cover both Sirius XM’s equity, which they have given a Neutral Rating, and now their debt as well.  JP Morgan re-initiated coverage of Sirius XM’s equity in May of 2009.

Being bullish on a company’s debt is encouraging, as the company may seek to further refinance existing debt, especially the 550 million in bonds sold in July of 2008, to facilitate the merger of the two companies, Sirius Satellite Radio, and XM Satellite Radio.  These bonds were considered “ugly financing” by investors due to the company giving lent shares along with the bonds so they could be properly hedged.  If this debt were to be refinanced with new money, the rate might come down (7%), and the lent shares (202 million against the current float) would be returned and destroyed by the company.  These shares have never counted when calculating earnings per share, but are still involved in the float.  In the Q3 quarterly report Sirius XM reported 60 million of these lent shares were returned and destroyed by the company.

Another bond issue Sirius XM might target is the other bond issue needed to facilitate the merger in July of 2008.  These 13% 770 million notes due in 2013 carry a higher interest rate, and are due sooner.  Either way, both have reasons to be targeted first, depending on managements corporate strategy.

Sirius XM was able to refinance most of its 2009 outstanding debt due to Liberty Media’s loan in February of this year.  Sirius XM’s 40% equity stake awarded to Liberty for this assistance is trading in Liberty Media’s holding company, Liberty Media Corporation Capital (NASDAQ:LCAPA).  Other tracking companies of Liberty Media include Liberty Media Corporation – Interactive (NASDAQ:LINTA), (NASDAQ:LINTB), Liberty Media Corporation – Starz, (NASDAQ:LSTZA), (NASDAQ:LSTZB), and Liberty Media Corporation Capital (NASDAQ:LCAPA), (NASDAQ:LCAPB).  Liberty also owns the controlling interest in Worldspace, Inc. (OTC:WRSPQ).

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