Liberty Increases Sirius XM Stake
Liberty Media is increasing its holdings of Sirius XM stock, bringing it closer to owning a controlling stake in the satellite broadcaster, despite vocal opposition from CEO
On Tuesday, Liberty disclosed that it purchased a total of 31.17 million additional shares of Sirius XM over the last week, increasing its stake in the satcaster from 49.2% to 49.7%. At this rate, one more round of stock purchases would give Liberty control of the company, meaning a takeover could be imminent.
In August, Liberty filed documents with the FCC saying that it intends to buy a controlling interest in the satcaster, provided that federal regulators sign off on the move. A previous application to take control was rejected by the FCC in May, at the satcaster’s urging, because it didn’t outline a plan that would give it control in sufficient detail.
In the second, more detailed filing, Liberty said it plans to buy enough stock to increase its stake to over 50% within 60 days of receiving permission from the FCC. Liberty also disclosed that it is planning to spin off its premium cable Starz TV business to raise cash to buy a controlling stake in Sirius XM.
Although Liberty still hasn’t received FCC approval for the takeover, the purchase of more shares suggests the company is confident it will receive this approval in the near future. The FCC typically renders decisions within 90 days of the petition.
These moves follow several years of public sparring between Liberty Media CEO John Malone and Sirius XM boss Mel Karmazin over the fate of the satcaster. Karmazin, who created the company by merging Sirius with then-rival XM in 2007, has fended off several bids for control by Malone, who has repeatedly criticized Karmazin’s management.
In February 2009, Liberty acquired considerable leverage over Sirius XM when it extended a $530 million loan to the satcaster, then in financial distress, in return for a 40% stake in the company. Liberty’s total stake in Sirius XM is now worth some $5 billion.