Liberty Media Corp.
) recently filed a new application to the U.S. Federal
Communications Commission, stating its intention to acquire more
than 50% of
SIRIUS XM Radio Inc.
) so that it can take full control of the Board of SIRIUS XM.
Liberty Media withdrew its previous application with the FCC for
de facto control SIRIUS XM. Instead, the company is now willing to
get a full control.
SIRIUS XM Radio is the largest satellite radio operator in the
U.S. However, the company was facing a severe financial crunch in
2009, during the peak of the great recession. The significant
downturn in the auto industry jeopardized SIRIUS XM's revenue, as
the company is mostly dependent on the auto sector (automobiles
with inbuilt commercial radio network).
At that juncture, Liberty Media provided $530 million in loan to
SIRIUS XM to avoid bankruptcy. That loan was in lieu of 40% stake
of SIRIUS XM given to Liberty Media through preferred shares.
During the last couple of years, SIRIUS XM has successfully turned
around its fortune, with commendable subscriber growth and its
services rate hike.
Just five days ago, Liberty Media raised its stake in SIRIUS XM
to 48.1% through open market purchase of SIRIUS XM's shares.
However, the whole exercise will depend on the approval of the FCC
for Liberty Media to take control of SIRIUS XM. Acquisition of the
controlling stake of SIRIUS XM will be immensely beneficial for
The satellite radio operator declared robust financial results
for the second quarter of 2012 with record high revenue, EBITDA,
free cash flow, and net subscriber addition. As per management, its
growth momentum will further expand in the rest of 2012 and has
raised its financial outlook for the second half of 2012.
LIBERTY MDA-LC (LMCA): Free Stock Analysis
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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