Daily Archives: June 1, 2012

Mike Farrell -- Multichannel News, 5/31/2012 6:19:50 PM

Sirius XM Radio continued to try to stave off Liberty Media chairman John Malone's advances, stating in Securities and Exchange Commission filings that it is in discussions with the media giant to work out a deal that would be mutually beneficial to all shareholders. Liberty has been trying to gain control of Sirius since March, when it filed a petition with the Federal Communications Commission to gain de facto control of its satellite assets. While those efforts were rejected by the FCC on May 4, Liberty vowed to refile its petition. Liberty made good on that promise Thursday, outlining a path to control of Sirius that would include converting half of the preferred stock it owns in Sirius to common stock, giving it 32% of Sirius' outstanding shares. The media giant said in an SEC filing Thursday that it would move quickly to gain control of Sirius' board of directors by nominating a majority of its directors. Liberty, which owns preferred stock convertible into about 46% of Sirius' outstanding shares, currently can nominate five of its 13-member board. Sirius countered in its own SEC filing that such nominations could require a special meeting of shareholders, which can only be called by two or more directors or the company CEO. To date no such request has been made to Sirius. Sirius said in SEC documents that it is in discussions with Liberty "to explore possible transactions with respect to its ownership interest in Sirius, although we have not reached agreement with respect to a specific transaction that would be mutually beneficial to both our common and preferred stockholders." Sirius stressed there is no guarantee that such an agreement could be reached and added that any developments from those discussions were not expected to be disclosed. The most recent moves are a culmination in what has been a contentious battle between Liberty and Sirius CEO Mel Karmazin, who told shareholders at Sirius' annual meeting last week that he could not stop Liberty from buying shares on the open market, but hoped that they would pay a premium for control. Liberty may not have to, according to one analyst. In a research note Thursday, Canaccord Genuity media analyst Tom Eagan said he expected Liberty to buy Sirius shares on the open market. "Contrary to what many on the Street expect, we do not believe that Liberty needs FCC approval to take control of Sirius," Eagan wrote. "We believe they need to merely inform the FCC if they intend, for example, to increase their stake to above 51% (from 46.2% as of the last filing). Or Liberty could negotiate with the board to take control with, say 49.9%."

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Liberty Moving Toward Sirius Control

5/31/2012 10:57 PM ET (RTTNews) - Liberty Media Corp. (LMCA: News , LMCB) said Thursday that it intends to assert control of satellite radio company Sirius XM Radio Inc. (SIRI: News ), upon receiving approval from the Federal Communications Commission or FCC.

In a filing with the Securities and Exchange Commission, Englewood, Colorado-based Liberty Media said it has asked the FCC to reconsider the agency's previous dismissal of its application for permission take control of Sirius. In early May, the FCC rejected Liberty Media's application for approval to take de facto control of Sirius, saying that the application was "defective". The rejection represented a major setback to Liberty Media and its chairman John Malone.

John Malone's Liberty Media, Sirius's largest shareholder, made its application in March to take over the company's operating licenses. Earlier in May, Liberty Media boosted its stake in Sirius to 46.2 percent from 40 percent.

Liberty Media said in the SEC filing that it plans to convert almost one-half of the preferred stock it owns in Sirius, giving it a stake of 32 percent of the total outstanding shares of common stock.

Liberty Media also said that "as soon as practicable", it intends to nominate for elections persons to serve on Sirius' board, such that persons nominated by the company will constitute a majority of the board of directors.

Liberty Media added that it will vote all of its shares of common stock in favor of such nominees. The company already holds 5 of the 13 board seats in Sirius.

In response, New York-based Sirius said in a SEC filing on Thursday that it has been in talks with Liberty to explore possible transaction with respect to Liberty's stake in Sirius.

However, Sirius added that it has not reached an agreement with respect to a specific transaction that would be mutually beneficial to its common and preferred stockholders. There is no assurance that these discussions will result in any specific action or transaction, Sirius noted.

Sirius, led by CEO Mel Karmazin, said it has not been informed of any actions by Liberty Media to take control of its board. The company noted that new directors could not be added to its board without a special meeting that can only be called by two members of the current board of directors or the company's chief executive.

Sirius also said in its filing that any action to remove and replace its entire board of directors would require the consent of a majority of its outstanding common stock.

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Liberty Media Steps Up Efforts To Take Control Of Sirius XM Radio

By Rick Aristotle Munarriz | More Articles May 31, 2012 |

Liberty Media (Nasdaq: LMCA) has sunk its fangs into Sirius XM Radio (Nasdaq: SIRI) , and it's really just a matter of time before the digestion process begins.

As expected, Liberty Media is once again trying to take de facto control of the satellite radio operator. A fresh 13D SEC filing petitions regulators to once again consider the proposal.

What has changed since being rebuffed on May 4 for Liberty Media? Well, through a few transactions the company has beefed up its stake from a simply 40% preferred share position to an effective 46.2% stake. Liberty Media now has effective control of nearly 3 billion of Sirius XM's 6.5 billion shares outstanding. Is the FCC really going to make it jump through the final few hoops? There's a big difference between simply having the 40% preferred share stake that is has held for more than three years and making active moves to own more shares.

The filing details that Sirius XM plans to convert nearly half of its preferred stake into common stock and move to take a majority of the company's board seats.

It's at that point where investors and analysts alike can speculate on what Liberty Media will do with FCC-sanctioned control of the satellite radio giant, though a popular suggestion is that it will follow in the 2009 footsteps of what it did with DIRECTV (Nasdaq: DTV) . Through a Reverse Morris Trust transaction, Liberty Media would be able to spin out the business in a tax-advantaged manner.

This is obviously not the kind of news that Sirius XM investors were hoping to hear when they thought that Liberty Media would have to pay a juicy premium to take control of Sirius XM. However, there are no indications that Liberty Media wants to replace the company's leadership or disrupt the media heavyweight's trajectory. As Sirius XM's largest investor -- by far -- its best interests are aligned with shareholders.

Sirius XM was never about scoring a near-term pop, no matter what you hear on Channel 2 (the pop music-driven Sirius XM Hits 1 channel).

Running of the bullsI remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.

XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report reveals all.

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Sirius XM Can't Shake Free of Liberty

By Todd Shields and Alex Sherman - 2012-06-01T04:01:00Z

John Malones Liberty Media Corp. (LMCA), the holder of interests in businesses ranging from cable programmer Starz LLC to the Atlanta Braves baseball team, told U.S. regulators it wants to take over Sirius XM Radio Inc.

Liberty plans to assert control of the largest U.S. satellite radio provider after receiving approval from the Federal Communications Commission, the Englewood, Colorado-based company said in a filing yesterday. Liberty has asked the FCC to reconsider the agencys May 4 dismissal of its application for permission to take control, according to a filing with the Securities and Exchange Commission.

Libertys move has fueled speculation Malone wants to spin off his stake in New York-based Sirius, led by Chief Executive Officer Mel Karmazin. Liberty will probably execute a so-called Reverse Morris Trust, which involves splitting off its Sirius (SIRI) stake as a separate entity and giving its stockholders the option to hold or sell their Sirius shares, according to James Ratcliffe, an analyst at Barclays Capital Inc. in New York.

To execute the spinoff, Liberty must have Siriuss board approval. Sirius is in talks with Liberty about the companys ownership interest, according to a separate filing by Sirius. It said Sirius doesnt expect to disclose developments in the discussions.

Courtnee Ulrich, a Liberty spokeswoman, didnt respond to a telephone call and e-mail. Patrick Reilly, a Sirius spokesman, declined to comment.

Malone, Libertys chairman, saved Sirius from bankruptcy in 2009 with a $530 million loan. Liberty boosted its stake in Sirius to 46.2 percent from 40 percent last month.

Libertys interest in a Reverse Morris Trust is to save on capital gains taxes, said analyst Brett Harriss, a Gabelli & Co. analyst in Rye, New York. Distributing Sirius shares to Liberty stockholders through a spinoff instead of selling them on the open market lets the company avoid paying taxes on the sale, he said.

Liberty would also have the right to change management at the company if it gains control of the board. Malone may not want to remove Karmazin, who helped turn around the company since taking over in 2008, said Harriss, who has a hold rating on Sirius shares.

All the comments that Liberty has made toward Mel have been positive, and Mels done a good job increasing the companys profitability, Harriss said in an interview. That being said, I could see a situation where there could be conflicting personalities. These are two high-powered guys in Mel and John.

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Liberty Tells U.S. It Wants to Take Control of Sirius XM Radio

Liberty Media (LMCA) is stepping up its efforts to gain control of satellite radio broadcaster Sirius XM Radio (SIRI), according to regulatory papers filed Thursday.

In filings with the Securities and Exchange Commission, the two companies continued a cat and mouse game as Liberty Media has fought recently for control of Sirius.

In May, the Federal Communications Commission rejected a bid by Liberty Media to take control of Sirius. Liberty Media, Sirius' largest shareholder, now wants the FCC to reconsider that decision and has taken action to support their position that they should control the smaller company.

Liberty Media said in its filing that it intends to convert half of the preferred stock it owns in Sirius into common shares, which would give Liberty a total of 32% of the common stock. Liberty Media also said it will move as soon as practicable to take control of the satellite-radio broadcaster's board.

Sirius countered with its own filing Thursday afternoon, stating that it had been engaged in discussions with Liberty Media to explore possible transactions with respect to its ownership interest in Sirius.

But Sirius stressed that no agreement has been reached with respect to a specific transaction that would be mutually beneficial to both our common and preferred stockholders.

In addition, Sirius stated: There is no assurance that these discussions will result in any specific action or transaction. We do not expect to disclose developments with respect to these discussions.

Liberty Medias shares rose $1.28, or 1.53%, to $84.98. Sirius shares rose 1 cent, or 0.53% to $1.90.

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Liberty Media Steps Up Effort for Sirius XM Control

John Malone is no stranger to battles with media giants.

Liberty Media's John Malone and Sirius XM Radio's Mel Karmazin are using the regulatory system to go to war over control of the satellite-radio company.

Liberty, which already holds five of 13 Sirius XM board seats, said in a regulatory filing Thursday morning that it wants to take over a majority of Sirius' board a disclosure Malone made without informing Karmazin.

Sirius XM shot back in its own regulatory filing Thursday afternoon that it has been in discussions with Liberty about transactions related to Liberty's stake in the company but had not reached an agreement or been informed of Liberty's plans to shake up the board.

Sirius XM's filing further noted that new directors could not be added to its board without a special meeting that can only be called by two current directors or the chief executive. A proposal can also be made at the annual meeting, but that is at least a year away. Meanwhile, replacing the entire board would "require the consent of a majority of our outstanding common stock," Sirius XM said.

Both companies did not respond to requests for comment Thursday.

Liberty's new plan is "very likely to succeed," Lazard Capital Markets analyst Barton Crockett said in a research note. With control of the board, "Liberty may retain its stake long enough to transition to a new CEO," Crockett said.

Malone, a cable-industry pioneer whom Al Gore famously derided as "Darth Vader," is no stranger to battles with media titans. The reclusive billionaire has faced off with News Corp.'s Rupert Murdoch numerous times and, in 2008, nearly brought a two-decade-long friendship with Barry Diller to an end with an unsuccessful bid to gain control of Diller's IAC.

Douglas County-based Liberty in its filing Thursday also asked the Federal Communications Commission to reconsider a May 4 refusal of Liberty's previous application to take control of Sirius. Liberty said it plans to convert half of its preferred shares to common stock and hold about 32 percent of outstanding shares.

Earlier this month, Liberty raised its stake in Sirius to 46.2 percent from 40 percent as it bought another 60.35 million shares but did not announce its plan to convert to common stock until Thursday.

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Liberty Media chief John Malone launches bid to take over Sirius XM