I have seen a lot of discussion, received a lot of emails, and burned up phone lines since Liberty Media (NASDAQ:LMCA) made its offer to bring Sirius XM (NASDAQ:SIRI) into the fold of the Liberty empire. I get quite a bit of investors that are very vocal in expressing a disdain for the deal. For the most part, I have found that many of the most vocal also happen to be ill informed when it comes to Liberty Media. I also get a lot of communications from investors that are on the correct path of trying to assess this deal and plan accordingly. The latter group is not as vocal, but they are substantial.
Liberty Media has subsidiaries in Sirius XM, The Atlanta Braves, True Position, Charter Communications (NASDAQ:CHTR), Live Nation (NYSE:LYV), Barnes & Noble (NYSE:BKS), and minority positions in Time Warner Cable (NYSE:TWC) and Viacom (NASDAQ:VIA). Liberty also has other components.
These are the companies that Sirius XM investors need to garner a better understanding of. In addition, Sirius XM is a company that investors in these other companies may want to understand better.
Sirius XM represents the bulk of the value of Liberty Media. That being said, some of the other Liberty positions do pretty well themselves. I understand that Sirius XM would no longer be a pure play. However, as an investor, it is important to consider not only what you already have, but what you may potentially have.
Liberty Media has a 27% stake in Charter. It is the fourth largest cable operator and serves 5.2 million people. Over the past year Charter has performed quite well in the market. Over the past year Charter is up about 73% compared to Sirius XM being up about 19% and Liberty up 25%.
Live Nation is the largest live entertainment company in the world. Liberty Media has a 26% stake in the company. Over the past year Live Nation has seen impressive growth. It has grown about 116% vs. Sirius XM's 19% and Liberty up about 25%.
Barnes & Noble
Barnes & Noble is one of the largest book stores, and transitioned from a brick and mortar platform to an almost exclusively on-line platform. Liberty has a 17% stake in the company. Over the past year Barnes & Noble has performed on par with Sirius XM at about a 19% gain and Liberty a 25% gain.
Liberty owns 100% of this iconic Major League Baseball Team.
Century Link (NYSE:CTL) is a provider of voice, broadband, and video services. Liberty holds a less than 1% stake in the company. Century link has had a bad year and is down about 22%.
Crown Media Holdings
Crown Media Holdings (NASDAQ:CRWN) owns and operates television channels in the U.S. Liberty Media has a 3% stake in the company. Crown is up about 55% in the past year vs. 19% for Sirius XM and 25% for Liberty.
IdeasNet is an incubator of sorts. The company develops projects and acquires stakes in media, technology and telecommunications companies. Liberty has a 5% stake in IdeasNet.
Kroenke Arena (Pepsi Center)
The Pepsi Center is an arena in Denver Colorado. The arena hosts sporting and live events. Liberty has a 7% stake in this arena.
Liberty Associated Partners
Liberty Associated Partners is an investment firm specializing in private equity investments. Liberty holds a 29% stake in this company.
MacNeil Lehrer Productions
Producer of the famed "News Hour" television show on PBS. Also makes other documentaries. Liberty has a 67% stake in this company.
MobileStreams is a global mobile content retailer. The company sells music downloads, ring-tones, videos, etc. Liberty has a 16% stake.
Time Warner Cable
Time Warner Cable is the number 2 cable provider in the country with over 11 million consumers. Liberty holds a 1% stake in the company. Liberty is active in trying to merge Charter Communications and Time Warner. Time Warner is up about 38% in the past year vs. about 19% for Sirius XM and 25% for Liberty.
Time Warner Inc.
Time Warner Inc (NYSE:TWX) is a media entertainment company that produces television, film, and interactive services. Liberty Media holds a less than 1% stake in the company. Time Warner Inc. is up 32% in the past year vs. about 19% for Sirius XM and 25% for Liberty.
True Position is the global leader in location determination and intelligence solutions. Liberty owns 100% of True Position.
Viacom is a global media company. The company has brands such as MTV, Nickelodeon, VH1, BET, Paramount Pictures, TV Land, Comedy Central, CMT, and Spike TV. Liberty holds a 1% stake in Viacom. Viacom is up about 42% in the past year vs. about 19% for Sirius XM and 25% for Liberty.
The bottom line is that while a pure play in satellite radio may become a thing of the past, the proposed steward of Sirius XM (Liberty) has a pretty good track record in creating value or identifying acquisitions which create value. Certainly the attractiveness of a satellite radio pure play in the years ahead is what brought many investors to Sirius XM, but much of this will still be able to play out.
I am not saying I am for the deal or against it. Frankly, I think that these two companies find a way to get this deal done. With that in mind, I am now becoming a student of Liberty much more-so than I already was as an investor.
Most of the major positions Liberty has are actually very attractive in my opinion. Additionally, I cannot deny that there was a lot of shareholder value created at Liberty in the past year.
Liberty Media's 53% stake in Sirius XM represents the bulk of Liberty's value. We can see, that outside Sirius XM, most Liberty stakes are up substantially. That does not mean these companies are better. It simply means that they have, in the past year, developed better returns. The idea of seeing Sirius XM under one umbrella has its appeal in many ways. There is enough appeal here to give the issues some serious thought, rather than dismiss them in a rush and rash decision.
In the end, I think Liberty has to sweeten the deal a bit and demonstrate that the growth potential will still exist in the new entity in order to woo those that are on the fence. Stay Tuned!