Sirius XM Hits $3.10 As FCC Approves Liberty's Control

| About: Sirius XM (SIRI)

Sirius XM (NASDAQ:SIRI) has been on a tear lately, and by "lately" I mean the last six months. After dragging along with the overall market in the $1.80s through June, the equity jumped up in rapid fashion to new highs over $2.50 per share in July. Since then it has followed a steady progression, again topping out in the $2.90s in September, and now appreciating to $3.10 intraday on Jan. 3.

The performance has not been unexpected, at least by those who have followed my articles for the past year. From Liberty Media's (LMCA) forward contract, to the effects of Liberty's open market purchases, to the performance of the company and reaction (or lack thereof) of the subscriber base to the price increase, investors have been kept well informed here at Seeking Alpha.

Despite frequent negativity and repeated questioning of "what if?" the stock has continued to outperform. Despite comments of "dead money" and "this stock is going nowhere," the share price has flourished.

And it's not done. Not by a long shot.

Today the FCC approved Liberty Media's request for transfer of licenses after it moves to control of Sirius XM.

John Malone's Liberty Media Corp. won U.S. regulatory approval to assume broadcast licenses from Sirius XM Radio Inc., a step needed for Liberty to finish its takeover of the satellite radio provider.

The Federal Communications Commission, in a posting today on its website, said it approved the transfer of control of licenses to Liberty, which in March told the agency it was seeking control of New York-based Sirius.

It's simply another bell rung for Sirius XM as the New Year enters into full swing. Now that Liberty is approved, it can purchase the final shares it needs to go to control, and that should happen within the next 60 days.

I don't expect Liberty to wait, and I expect Liberty will purchase these shares in very short order.

What can investors expect once Liberty moves to control? Simple. Liberty will own over 50% of Sirius XM, and due to Sirius XM's market cap, it will make up the lion's share of Liberty's market cap. There's only one logical conclusion here. Liberty will do its very best to ensure that Sirius XM, at the very least, holds its value. While Liberty may participate in Sirius XM's initial $2 billion worth of buybacks on a 1 to 1 basis to get its "bait" back on the 10% it recently purchased to go to control, I feel that Liberty will be quite concerned with the share price of its remaining stake for maximum value in an eventual RMT spin.

And that stake appears to be in excellent shape. Auto sales for 2012 are coming in at the highest levels in years, and net subscribers for Sirius XM will likely be up by over 2 million when the number is released. On top of this, Sirius XM's price increase earlier in 2012 seemingly had no negative effect. 2013? Looks as if it will possibly be even better for auto sales, and that should translate into even better metrics for the coming year.

Will Sirius XM still have its ups and downs? Most definitely. Consider the general market seemingly about to enter a bull run, and a knockout Q4 report likely around the corner as well as buying pressure by Liberty Media along with Sirius XM's own buybacks. The stock is poised to continue appreciation in similar fashion to the last 6 months, and I stand strong on my end of year target of $4 to $4.25 for 2013.

But I must stress that this target is conservative.

Disclosure: I am long SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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