Talk is heating up on Wall Street that satellite radio purveyor SiriusXM might be on the verge of a sale. Most of the talk centers on Liberty Media, headed up by chairman and early player in cable television John Malone, which turns over media properties pretty regularly, and currently owns the QVC shopping network, Starz premium cable network and the Atlanta Braves, amongst other properties. Liberty has a 40% stake in SiriusXM, obtained as part of a $530 million loan deal that helped the satellite radio company stay out of bankruptcy.
The big question is whether Liberty will choose to divest itself of its SiriusXM holding, or instead take on a bigger piece. Liberty has the option to buy in for up to 49% of SiriusXM, and go for more than that after March 2012.
At an investor meeting before Thanksgiving, Liberty Media CEO Greg Maffei wouldn’t say which way the company was leaning. SiriusXM CEO Mel Karmazin told investors that his company’s prospects for 2012 look good, predicting revenue growth combined with lower interest expenses and capital expenditures.
But at the Reuters Global Media Summit on Tuesday Karmazin expressed doubt about a Liberty takeover of SiriusXM. He also said he doesn’t know what company is willing is willing to pony enough for a full buyout, and that he’s not sure he’d be happy working for someone else. Karmazin’s contract is up in 2012.
SiriusXM stock has bounced back from the first quarter of last year when it hovered just under a dollar a share, risking delisting from the NASDAQ. By comparison the stock closed Tuesday at $1.72, after more than 21 million shares traded, making it one of the ten most-active stocks on the NASDAQ. The interest is likely fueled by speculation of a Liberty Media buy.
If nothing else, the satellite radio service appears relatively stable, having kept star talent Howard Stern on board and riding the coattails of the auto industry’s slow comeback. However, just like terrestrial radio, SiriusXM faces still competition from the rise of internet radio and music services like Pandora and Spotify, as well as competition for customers’ attention from outside the radio world.
I honestly don’t know what Liberty Media would do with SiriusXM, or if there would be any kind of synergy with its other holdings. Liberty does have ownership stakes in Barnes & Noble and Live Nation, so there are interesting possibilities, even if I’m not thrilled with smell of consolidation all around it.
