LSTZB Archive

15

The Dawn of a New Media Era as Defined by Liberty’s John Malone and Sirius XM’s Mel Karmazin

By
Rick King
– April 8, 2010
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By Rick King -a_sunrise_over_earth

Every few generations our culture finds new ways to define itself. Usually there is no stronger indicator of culture’s shifting winds than the music a generation listens to. The method in which a generation listens to its music defines it as well. Is it possible we are in the midst of exactly that? Another media revolution of transformation in the winds, from terrestrial radio and television broadcasters to satellite media?

The current population wants access to information everywhere and on demand.  Generation “Unlimited” has no concept of limitation.  They live in a world where information of every type is available at the speed of an electron in more forms than they can count.  Information and how it is channeled to a user permeates every aspect of business.  AM and FM Radio don’t work everywhere geographically so it’s fading.  Same thing for television, initially change came in the form of cable and now with continuing dominance by satellite media.

How many people still remember the world of no television?  Black and White television broadcast?  The days when AM radio was the mainstay of the American living room?  In every single instance of such change, critics denied the very possibility it could happen.  Emotions have always  run especially deep in American society when it comes to our music and how we listen to it.

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17

Liberty Media (NASDAQ: LCAPA, LINTA) and Sirius XM (NASDAQ: SIRI); Partnership or Content Agreement?

By
Andrew Montero
– March 15, 2010
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With the filed petition through the International Bureau of the FCC by Liberty Satellite Radio to take possession of Worldspace’s Afristar 1 and 2 satellites, it appears the end to the bankruptcy proceedings regarding Worldspace will be upon us fairly soon. Liberty Satellite Radio is the actual filer with agreement from Worldspace of the petition. As discussed previously in earlier articles, Liberty Satellite Radio is a holding company for Liberty Media.

The next big question is will Sirius XM be a partner or a content provider to Liberty? If it were all about fair and equal, one would expect Sirius XM to become a 40% partner in any new venture from Liberty, since they received 40% of Sirius XM for essentially a short term bridge loan. That loan was paid back to Liberty in very short order, and had many shareholders up in arms, for some pretty fair reasons. However that is ancient history, and we know that business can sometimes be ruthless in its conduct.

It is more than reasonable to speculate that Liberty is planning on starting up a satellite radio service with global implications and exclusive content. Part of that content will be native language programming for any countries that grant permission for Liberty to broadcast. Undoubtedly another large part of the situation will involve music, which certainly Sirius XM could provide. But Sirius XM can provide much more, like OEM relationships, and other exclusive content. Additionally, there is the technology and licensing on the XM side, which was granted by Worldspace several years ago to XM, and whatever improvements have been made upon it. Looking at it from the outside as an investor, I would hope that Liberty would enter into a partnership with Sirius XM. This would enable both companies to realize even greater leverage and cost reductions across their respective infrastructures with regard to satellite radio.

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2

With Credit Ratings Improving, Sirius XM May Target Merger Note Refi

By
admin
– December 22, 2009
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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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