Sirius Investors Should Get to Know the Company's Savior

Over the past several weeks, I had written two separate articles describing potential ways that Sirius XM (SIRI) could reverse its deal with Liberty Media (LCAPA) in the future. My critics, who accuse me of jumping to conclusions on occasion, jumped to their own conclusion that the idea was laughable.

Through my own due diligence of suffering through SEC filings of Sirius XM's deal with Liberty Media, I outlined a scenario in which Sirius XM could reverse the deal by the end of the year. Still another article outlined more specifically that the deal, as presented, offers an opportunity for Sirius XM to one day take back control of the company simply through the repurchase of Liberty's stake, at a premium, and at a more opportunistic time.

John Malone had made very similar deal with DirecTV (DTV) several years ago. Monday it was announced that Mr. Malone would be giving up his majority interest for a nominal 5% premium as reported here by CNBC's David Faber:

The deal with DirecTV Monday gives control of DTV back to the company. The same 5% condition applies to the Sirius/ Liberty deal. At no time has Mr. Malone sought to take DirecTV "private." At no time has he sought to take control of the company from shareholders. Long term investors should (again) get to know the man that has saved Sirius XM. Perhaps now with an open mind, the realistic possibility that the same future may be in store for Sirius XM Radio can begin.

Position: Long SIRI

Comments

[taterleg:]

Brandon
Tyler says the shares cant be bought back at a 5% premium. Is your thinking the same? Are you talking about the loan portion being bought out or the shares. Just looking for a little clarity.Thanks for the update.

May 05 06:50 AM

[holmesnmanny:]

I believe he's talking about just the loan portion of the agreement. He's said this on numerous occasions 'though I know the confusion is simply over the fact that he used the word "reversible" in his original article which his critics took to mean that he meant the shares could be bought out, which doesn't appear to be the case.

May 05 07:48 AM

[sleiii:]

Your due diligence is neither "diligent" nor what is "due" to a publicly addressed audience.

May 05 07:49 AM

[taterleg:]

Thanks Holmes, makes sense

May 05 07:50 AM

[holmesnmanny:]

You know, the timing of this transaction just before Sirius' results as well as their own makes me wonder if they're gonna be making a bid for Sirius soon thereafter results are announced for both companies. I think directv's results are gonna be just as good as Sirius is poised to be, what with their agreement to sell through their partnership with ATT.

May 05 08:06 AM