Thursday, upon returning home from work I had received a flurry of comments and messages in my inbox with links to FCC filings relating to Liberty Media (LMCA) and Sirius XM (SIRI). I believe this information may be of paramount importance to Sirius XM investors, and I'd like to touch upon the filings and Sirius XM's response, as well as offer a hypothesis as to what may be going on.
The following are the three filings by Liberty Media:
The text from each one is as follows :
- Description: Liberty Media Corporation seeks to file the attached Form 312 application seeking consent to the transfer of de facto control of Sirius XM Radio Inc.'s earth station licenses
- Description: Liberty Media Corporation seeks to file the attached Form 312 application seeking consent to the transfer of control of Sirius XM Radio Inc.'s SDARS terrestrial repeater authorization
- Description: Liberty Media Corporation seeks to file the attached Form 312 application seeking consent to the transfer of de facto control of XM Radio LLC's earth station licenses
Also please reference "Attachment 1" within this link.
These filings appear to request control of Sirius XM be transferred to Liberty Media Corporation.
The following is Sirius XM's response :
This certainly does not suggest that Sirius XM is in agreement with the forms for transfer of control filed by Liberty Media. What does this mean for investors?
To me this appears to be a hostile action (as opposed to amicable) by Liberty Media. I say "appears" because the above details are not enough to get a full and accurate picture of what is transpiring behind the scenes. It appears to me as if Liberty Media has moved on some provision or wording within the 2009 Investment Agreement or on precedents set by past transfers of de facto control under 50% ownership, and used this to attempt to take control of Sirius XM without having to obtain over 50% of the company.
This has the potential to take the center stage very quickly, if it has not already by the time this article is published. What do you make of these bits of information we as investors have at our disposal so far? This should offer quite a bit of healthy conversation and speculation, and I especially look forward to the comments from readers. If Liberty is able to obtain de facto control, do they use Sirius XM's cash position to repurchase shares and increase their stake? I think this is a very real possibility, and I am not surprised at this move by Liberty. If you were in their shoes, would you do any different?
Disclosure: I am long SIRI.
Additional disclosure: I am long SIR and I am long SIRI April and June $2 calls.