Liberty Media CorpNASDAQ
Liberty Media Is Trading At A Meaningful Double-Digit Discount To Its NAV
Siddharth Arora • 27 Comments
Siddharth Arora • 27 Comments
Tue, Sep. 13, 2:07 PM
- Liberty Media's (LMCA +16.6%) deal to acquire and become Formula One is "transformative" to the company, Citigroup says in upgrading the stock to Buy.
- The firm lifted its target price to $32 from $22, implying more than 14% upside from today's elevated price.
- "A few years ago, press reports suggested an F1 IPO would value the firm at $12 billion EV," write analysts Jason Bazinet and Michael Cohen. "At $12 billion EV, we previously described Formula One as a ‘trophy asset.' But Liberty acquired the asset for just ~$8 billion EV. We suspect lower valuation based on erosion in F1's financial performance due to more F1 revenues flowing to the racing teams (versus F1 equity holders). But, the lower price tag reflects these new economics."
- Pivotal Research also launched coverage on Liberty Media, initiating with a Buy rating and $35 price target, implying about 25% upside from today's higher price.
Thu, Sep. 8, 5:46 PM
- With a deal sealed to take over Formula One, U.S.-based Liberty Media (NASDAQ:LMCA) says it doesn't have big alterations in mind to change the decidedly continental appeal of the sport.
- "Realistically it's a global sport. We're not trying to Americanize the sport," said new Formula One Chairman Chase Carey. "We have great respect for the European foundations of it. Europe is critically important to us."
- That doesn't mean there isn't room for growth in America. Only one round of the 21-race championship takes place in the U.S.: at the Circuit of the Americas in Austin, Texas. And races in the sport's historical locations have struggled to profit.
- "America is an opportunity; I think we can do a lot more in America; it's probably more long-term than short-term," Carey says.
- As for collaborating on leadership with the sport's longtime impresario, Bernie Ecclestone (still CEO): "The best businesses are partnerships where people work together as a team. We'll work closely and as partners and we'll figure it out."
- Liberty Media Group will become the Formula One Group when the transaction completes, and its symbols will change from LMCA, LMCB, and LMCK to FWONA, FWONB, and FWONK.
- Previously: Formula One faces major shake-up (Sep. 08 2016)
Wed, Sep. 7, 5:51 PM
- Liberty Media (NASDAQ:LMCA) has confirmed its transaction to take control of Formula One.
- Liberty will acquire Formula One through transactions that give the racing group an enterprise value of $8B, and an equity value of $4.4B.
- It will use cash and newly issued shares of its Liberty Media Group (NASDAQ:LMCK) tracking stock along with a debt instrument exchangeable into LMCK as part of a set of transactions where it will take 100% of the shares of Delta Topco, the parent company of Formula One.
- It's bought an 18.7% minority stake in Formula One for $746M in cash; when it takes full control, CVC Funds won't be the controlling shareholder, and Liberty will rename its Liberty Media Group the Formula One Group. (Liberty Media symbols will change from LMCA, LMCB, and LMCK to FWONA, FWONB, and FWONK.)
- The selling consortium including CVC will own about 65% of that group's equity, and a CVC representative will join the Liberty Media board.
- Selling stockholders will get a mix of consideration, including $1.1B in cash, 138M new shares of LMCK, and a $351M exchangeable debt instrument.
Wed, Sep. 7, 4:10 PM
- Liberty Media (NASDAQ:LMCA) will initially take a bigger initial stake in Formula One than planned, progressing toward an eventual full purchase of the racing group.
- The company will buy 18.7% of F1 for $4.4B. It had reportedly been looking at a stake of 10-15% at first.
- As expected, Fox executive VP Chase Carey will become chairman of F1 while Bernie Ecclestone will hold the CEO spot.
Mon, Sep. 5, 1:51 AM
- Liberty Media (NASDAQ:LMCA) is nearing a deal to acquire a 10-15% stake in Formula One for between £1B-£2B, with an agreement to take full control of the business further down the line, FT reports.
- The transaction will likely keep F1 chief Bernie Eccelstone in the driving seat of the sport. He currently owns over 5% of the business with P-E firm CVC Partners the biggest shareholder with over 35%.
- Chase Carey, the executive vice chairman of 21st Century Fox (NASDAQ:FOX), would become the chairman of F1, replacing Peter Brabeck-Letmanthe.
Mon, Mar. 7, 6:11 PM
- Liberty Media (NASDAQ:LMCA) may not be among the bidders lining up to take a substantial interest in Paramount Pictures (VIA, VIAB), if CEO Greg Maffei is taken at his word.
- Answering a question at a Deutsche Bank conference about whether Liberty would have hypothetical interest in a stake at Sony Pictures, Maffei said "It’s tough to buy a minority interest in a private company."
- “We’re not really in the content play today. We’re not really in that game," he added. "I think being a minority partner would be tough for any one of (the major studios)."
- Maffei said he was speaking on behalf of Liberty, but couldn't speak to the content appetites of John Malone's other businesses, including Discovery Communications (NASDAQ:DISCA) or Lions Gate (NYSE:LGF).
- Viacom said this month that it was pursuing discussions with select potential investors for a minority stake in the venerable Hollywood studio.
- Today, Macquarie raised its price target on LMCA shares to $45, implying 18% upside from today's close of $38.01. The firm has an Outperform rating on the stock.
- Previously: Katzenberg 'fantasizes' about DreamWorks Animation-Paramount merger (Mar. 01 2016)
- Previously: Paramount's likely suitors: Foreign firms, domestic tech (Feb. 24 2016)
Nov. 9, 2015, 8:05 PM
- With the review of Charter Communications' (NASDAQ:CHTR) buyout of Time Warner Cable (NYSE:TWC) proceeding apace at the FCC, the agency is sending requests tied to cable mogul John Malone's holdings not only in Charter but in content companies like Discovery (NASDAQ:DISCA) and Starz (NASDAQ:STRZA), which supply Charter rivals.
- The agency has sent letters to the companies that list Malone as their chairman -- Liberty Media (NASDAQ:LMCA), Liberty Interactive (NASDAQ:QVCA) and Liberty Broadband (NASDAQ:LBRDA), which holds 26% of Charter -- and asked about Malone's influence over those entities as well as the content creators and DirecTV.
- It's a "pretty meaningful request," says BTIG's Rich Greenfield, while Craig Moffett points at the Comcast deal for NBCUniversal in saying that Malone's tangled ownership is "probably not a big issue."
- Malone has a 46.6% voting interest in Liberty Broadband, which would be entitled to vote no more than 25.01% of shares in the new combination, Charter has said. His interests in Discovery and Starz are "minority interests" where he wouldn't control day-to-day decisions.
- The American Cable Association (representing smaller providers) argues that Malone's interests aren't insubstantial and that consumers can expect higher rates unless the FCC imposes conditions on the deal.
- Previously: BTIG: Are TWC, Charter too strong separately to sell merger case? (Nov. 02 2015)
- Previously: Charter call: Talking wireless ambitions, slamming password sharing (Oct. 29 2015)
Jul. 9, 2015, 5:29 PM
- There's been little news coming out of secretive Sun Valley -- where media moguls gather at the Allen & Co. conference for "summer camp" and sometimes rearrange billions of dollars with game-changing M&A -- but John Malone today dropped more hints about content consolidation.
- While media distribution companies have more obvious benefits from consolidation, Malone -- who has hands in Liberty Global (NASDAQ:LBTYA), Liberty Media (NASDAQ:LMCA), Liberty Interactive (NASDAQ:QVCA), Charter (NASDAQ:CHTR) and Starz (NASDAQ:STRZA) -- said economies can apply to content too.
- "It's all about global scale," he told CNBC. "If you want to be a meaningful player in most of any of these media communication businesses, you have to think about it."
- And while speculation boils about a tie-up between Malone's Starz (STRZA) and Lions Gate (NYSE:LGF) after the two swapped stock, Malone focused on the educational side: "I'm an engineer; what the hell do I know about content? Trying to understand where these ideas come from, how they get created and produced. The development of stories is really going to be important in this random-access world that Reed Hastings (NASDAQ:NFLX) is driving us into."
- Malone said Netflix changed the game, and that his companies "missed the boat a little bit" on over-the-top offerings.
- Today: NFLX +2.4%; LGF +0.9%; QVCA +0.3%; CHTR +0.2%.
Jun. 2, 2015, 6:46 PM
- Mogul John Malone floated an interesting idea today: Forget Sprint and T-Mobile -- the wireless industry could get its third major alternative to Verizon and AT&T (NYSE:T) with the merger of Charter Communications (CHTR -1.6%) and Time Warner Cable (TWC -0.9%).
- Malone was speaking at his various Liberty companies' annual meetings and noted that in 2012, the cable consortium SpectrumCo got an option to participate in a wireless MVNO service with Verizon (NYSE:VZ) after the wireless firm bought $3.9B in frequencies.
- Charter wasn't in SpectrumCo then, but merger partners TWC and Bright House are. “The concept that Comcast, a greatly enlarged Charter and Cox could together offer a WiFi-optimized connectivity service with a default to a Verizon MVNO is an interesting concept," Malone said.
- He thinks "there's very little dirty underwear" left to be found in a regulatory review of Charter-TWC after the past year's scrutiny.
- Also of interest regarding Charter capex and the dividend: “Everybody's going to say, ‘Oh he’s spending too much capital,’ but I think the end result with be worth it ... To a large degree we’re betting on Tom Rutledge and his team to wake up a sleepy cable company that was treading water in all honesty for a while and trying to satisfy shareholder pressures with buybacks and dividends as opposed to putting the money into having a competitive service offering.”
- Malone company shares today: LMCA -0.1%; LMCB flat; LMCK flat; LTRPA -0.9%; LTRPB +2.2%; QVCA +0.8%; LBRDA +0.1%; OTCQB:LBRDB flat; LBRDK -0.1%.
May 8, 2015, 4:34 PM
- On a Q1 earnings call today, Liberty Media's (NASDAQ:LMCA) CEO Greg Maffei said any deal that Charter Communications (CHTR; partly owned by Liberty) would make for Time Warner Cable (NYSE:TWC) would be "friendly," in contrast to Charter's early-2014 hostile attempt -- and that many partners are ready to step in if Charter needs more capital.
- "There's a wide range of things we could do there, starting with obviously the $700M of cash on the balance sheet," he said, before mentioning raising equity capital through rights offerings or the partners who would like to invest in such a deal.
- Asked about the dispute over management in the previous bid, Maffei said: "I believe any transaction that goes forward ... would be a friendly transaction, looking for the best of breed in both management teams, and trying to drive an improved experience both for consumers and shareholders."
- Whatever happens, Maffei says Liberty wants to keep its 25% ownership of Charter.
- More at the WSJ
Apr. 9, 2015, 9:08 PM
- Don't let recent merger challenges and failures fool you, Michael Wolff argues: "M&A mania" is coming to a media conglomerate near you amid pressure for a new wave of consolidation.
- "Perhaps never before has consolidation been so much the flavor of the month, nor has it seemed so difficult to get a taste," he writes. "The table is set, but nobody's sitting down to eat."
- If Comcast (NASDAQ:CMCSA) fails in its bid for Time Warner Cable (NYSE:TWC), he notes, it just means other cablers will step up to match Comcast's ambition, and Comcast will still look for a way to stay dominant.
- He points to a number of mergers he thinks are easily imaginable: Viacom (NASDAQ:VIA) and FOX? Disney (NYSE:DIS) and Time Warner (NYSE:TWX)? TWC and Charter (NASDAQ:CHTR)? Discovery (NASDAQ:DISCA) and, well, most anyone (Disney, Fox, CBS)?
- Factors encouraging the wave: Media's all about video now, and the pure-play aspect makes merger logic cleaner; distribution and content are separate and now even antagonistic businesses; the growth of over-the-top means not unbundling but re-bundling; and everyone needs scale for negotiation strength in content and ad deals.
- Other key players: John Malone (LMCA, LBTYA, STRZA); Verizon (NYSE:VZ); Lions Gate (NYSE:LGF); Scripps Networks (NYSE:SNI); Netflix (NASDAQ:NFLX); DirecTV (NASDAQ:DTV) and AT&T (NYSE:T); Dish Network (NASDAQ:DISH).
Mar. 11, 2015, 10:56 PM
- "Using Live Nation (NYSE:LYV) to differentiate Sirius (NASDAQ:SIRI) and using Sirius to promote Live Nation is very logical," says Liberty Media (NASDAQ:LMCA) CEO Greg Maffei of the two entertainment companies in which his firm is a major shareholder: 57% of SIRI, 27% of LYV. "But I remain somewhat disappointed that more things haven't happened there." Maffei was speaking to the Deutsche Bank conference.
- Macquarie's Amy Yong agrees: It's not that the satellite radio and concert promotion companies need a merger (which would be complicated by the ownership), but: "If both worked more closely, they can help each other cross promote or market their products/services," she says.
- There may be opportunities for Sirius to broadcast LYV concerts, and for LYV to promote Sirius among its heavy people traffic, but as for tie-ups: "We are the consolidators," says Live Nation's chief Michael Rapino, preferring to focus on his acquisitions. "Geographically, if there was a ticketing company in the right market that we thought could accel our operation versus building, we'd look."
Mar. 9, 2015, 8:04 PM
- Don't be surprised if there's more to John Malone's tie-up with Lions Gate (NYSE:LGF), says Liberty Media (NASDAQ:LMCA) CEO Greg Maffei -- but don't count on it either.
- Speaking to Deutsche Bank's Media, Internet & Telecom conference, Maffei hinted that Liberty Chairman Malone joining the Lions Gate board as part of a Starz (NASDAQ:STRZA) stock swap would help both parties get to know each other.
- “You need to have partnerships, you need to do more,” Maffei said. “Whether that ultimately leads to acquisitions ... you need to be able to do more with bigger people.”
- Maffei says HBO's rollout of its streaming service bodes well for Starz, demonstrating how to distribute product in more ways, though "I think we can do it in a way that is in conjunction with our cable, telco, and satellite partners. which is attractive."
- Previously: Starz, Lions Gate deal may presage closer relationship (Feb. 11 2015)
- Previously: Lions Gate adds Liberty's Malone to board in Starz stock-swap deal (Feb. 11 2015)
Mar. 13, 2014, 6:22 PM
- Liberty Media (LMCA) is creating two new tracking stocks: One will be known as Liberty Media, and the other Liberty Broadband. Investors will receive one share of the former tracking stock, and four shares of the latter, for each Liberty share they currently own.
- Shareholders will also get "a subscription right to acquire one additional series A or series B share of Liberty Broadband tracking stock for every five shares of series A or five shares of series B Liberty Broadband tracking stock they receive in the Distribution."
- The subscription rights will be priced at "a 20% discount to the 20-trading day volume weighted average trading price of Liberty Broadband tracking stock following the closing of the Distribution."
- The tracking stocks are expected to trade under the symbols LBRDA and LBRDB. The broadband tracking stock will cover Liberty's stakes in Charter and Time Warner Cable, and its TruePosition subsidiary.
- As a result of the change, Liberty says its previous offer for Sirius XM (SIRI) is "no longer applicable." The company adds it remains an "enthusiastic" owner of 53% of Sirius.
- SIRI -2.1% AH. LMCA +0.7%.
Feb. 19, 2014, 4:22 AM
- John Malone has given the rights of first refusal to the CEOs of Discovery Communications (DISCA) and Liberty Global (LBTYA) to buy his holdings in their respective companies.
- Discovery chief David Zaslav will be able to purchase Malone's 29% voting stake in the TV broadcaster; at Liberty, Michael Fries will be able to acquire Malone's 27% voting interest.
- However, Malone has no intention of reducing his involvement in the businesses just yet, nor has he laid out any similar plans for his holding in Liberty Media (LMCA). Rather, the rights given to Zaslav and Fries represent planning for the future.
Jan. 26, 2014, 1:39 AM
- Comcast (CMCSA) reportedly prefers joining up up with Charter Communications (CHTR) to bid for Time Warner Cable rather (TWC) than making an offer on its own.
- Comcast thinks TWC's asking price of $160 a share is too high, while the latter isn't interested in selling itself in a piecemeal fashion.
- Charter is willing to let Comcast have TWC's New York-area cable systems in exchange for Comcast backing Charter's bid. The New York network would fit in nicely with Comcast's operations in Connecticut and New Jersey.