We reiterate our long-term Neutral recommendation on
Liberty Media Corp.
) following its mixed third-quarter 2012 results. The stock price
soared neraly 54% in the last year and is currently trading at
significant high multiples compared with S&P 500 and its
peers with respect to several valuation metrics. We believe
Liberty Media is fairly valued.
The company's decision to spin-off Starz LLC segment will
enable it to raise its stake in
SIRIUS XM Radio Inc.
Barnes & Noble Inc.
Live Nation Entertainment Inc.
). We believe SIRIUS XM Radio will be the key player in the
company's growth story based on growing auto industry sales.
Liberty Media is targeting full control of SIRIUS XM Radio.
Moreover, management is pursuing a systematic share buy-back
program to boost shareholders' wealth. In November 2011, the
company invested in Barnes & Noble, which we believe will
benefit Liberty Media particularly under a volatile economic
Liberty Media has decided to spin-off its Starz Entertainment
segment as a separate entity by the end of 2012 or in early 2013.
According to management, this move will unlock the latter's value
by optimizing its capital structure and enabling Starz to find
several alternative ways and partnerships for both content
creation and distribution. At the end of the third quarter, total
subscribers base of Starz increased 9% to 20.8 million while its
sister TV channel Encore had 34.3 million subscribers, up 5% year
over year. The spin-off is envisioned to provide a cash dividend
of $1.8 billion to Liberty Media.
BARNES & NOBLE (BKS): Free Stock Analysis
LIBERTY MDA-LC (LMCA): Free Stock Analysis
LIVE NATION ENT (LYV): Free Stock Analysis
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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