Satellite Radio Playground

by Dennis “Cos” Costa

Greg Maffei

Liberty Media Corporation (NASDAQ: LCAPA, LCAPB, LINTA, LINTB, LSTZA, LSTZB) today announced its plans to split-off Liberty Capital and Liberty Starz from its Liberty Interactive tracking stock group. Liberty Interactive will become and asset-backed stock as a result of these actions. In a statement from the company:

“We are pleased to announce our plan to make Liberty Interactive an asset-backed stock by splitting-off Liberty Capital and Liberty Starz. An asset-backed Liberty Interactive will provide better transparency on Liberty’s operating businesses, enable more efficient capital raising, and permit us to better pursue our strategic objectives, including acquisitions using stock. We also believe the split-off will be positive for the long-term credit outlook at Liberty Interactive.”

— Greg Maffei, President and CEO of Liberty

Liberty Media is hosting a conference call to discuss this announcement on Monday, June 21st at 11:00am ET.  Listeners can call Premier Conferencing at (888) 481-2877 or (719) 457-2704, at least 10 minutes prior to the call.

Liberty Capital Group (LCAPA, LCAPB) is the tracking stock where Liberty Media Corporation’s investment in Sirius XM Radio (NASDAQ: SIRI), represented by 12.5M Preferred Shares, is held. These Preferred B-1 shares can be converted to common shares equaling 40% ownership of Sirius XM. After giving effect to certain stand-still provisions, Liberty can purchase up to 49.9% of Sirius XM shares, and after a period of time as outlined in the agreement purchase substantially more.

For Sirius XM investors, a reorganization of Liberty Media Corporation will fan the flames of speculation regarding the intent of this action, and what it will mean for their investment in SIRI for the future.  A statement as highlighted in Mr. Maffei’s above will provide all the necessary fuel for that speculation.

Position:  Long SIRI

Contact the Author: denniscosta@satelliteradioplayground.com