Englewood, Colorado-based
Liberty Media Corporation
(
LMCA
) has won a legal petition, filed in 2003, against French
entertainment group Vivendi Universal S.A. According to the
verdict, the French media giant will have to pay $956 million in
damages to Liberty Media Corp. in a breach of contract case. We
believe that the receipt of the compensation payment will
significantly boost Liberty Media's already impressive liquidity
position.
Liberty Media Corp. claimed that the French media group had
deceived it while buying the American media conglomerate's stake in
Barry Diller's USA Networks for $10.3 billion. According to the
deal, Liberty Media received 32 million treasury shares of Vivendi
in addition to another 5.2 million shares for its stake in a
European cable joint venture with Vivendi. After the deal, Liberty
Media accused that despite going through a liquidity crisis Vivendi
have presented a well balanced picture of its financial condition
before the deal, which led to an increase in its share value, thus
making the share acquisition from the French company more
expensive.
Liberty Media, which has its own interest in a wide range of
media companies including Starz Media LLC, True Position Inc,
Sirius XM
(
SIRI
), also wants to claim prejudgment interest which could almost
double the reward for them. However, Vivendi has protested
vehemently against the verdict and denied any wrongdoing. It is
believed that the reward money won't be final until other pending
issues are settled.
These types of charges are not new for Vivendi; it had been
found guilty of misleading shareholders 57 times from 2000 to 2002
about its financial status. We believe that Liberty may pursue its
investment interest in
Barnes and Noble Inc.
(
BKS
).
Recommendation
:
We are maintaining our long-term Neutral recommendation on
Liberty Media Corporation. Currently Liberty Media Corporation has
a Zacks #3 Rank, implying a short-term Hold rating on the
stock.
BARNES & NOBLE (BKS): Free Stock Analysis
Report
LIBERTY MDA-LC (LMCA): Free Stock Analysis
Report
SIRIUS XM RADIO (SIRI): Free Stock Analysis
Report
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