We upgraded our recommendation on
Liberty Media Corp.
) to Outperform based on strong financial results for the second
quarter of 2013. Although total revenue was mostly in line with
the Zacks Consensus Estimate, earnings per share significantly
outpaced the same. Liberty Media currently has a Zacks Rank #1
Why the Upgrade?
Liberty Media is steadily restructuring its business model in
its aim to control several subscription-based companies. Strong
performance in the said quarter was primarily driven by the
contribution from the company's newly acquired controlling stake
SIRIUS XM Radio Inc.
). Management is pursuing a systematic share buyback program to
enhance shareholders' wealth. Moreover, the spin-off of the Starz
segment as a separate entity helped Liberty Media to improve its
Recently, Liberty Media entered into the cable TV market after
acquiring 27.3% stake of
Charter Communications Inc.
), the fourth largest pay-TV operator in the U.S. Liberty Media
is striving to enable Charter Communications' acquisition of a
major cable TV operator in the U.S. Earlier this year, Charter
Communications declared its plans to acquire
Cablevision Systems Corp.
) western U.S. cable systems, Optimum West, for around $1.6
billion in cash.
On Jun 25, 2012, the U.S. District Court in Manhattan awarded
nearly $1 billion to Liberty Media as it found the French
entertainment firm, Vivendi, guilty of not disclosing its true
financial position to Liberty Media in 2001 in an equity swap
deal. In 2001, Vivendi bought USA Network for over $10.3
As part of the deal, Vivendi gave Liberty Media 32 million
treasury shares and an additional 5.2 million shares for its
holding in a European cable joint venture with Vivendi. Vivendi
later appealed against the ruling. However, in Jan 2013, the
District Court in Manhattan once again gave the order in favor of
Liberty Media and rejected Vivendi's petition.
CHARTER COMM-A (CHTR): Free Stock Analysis
CABLEVISION SYS (CVC): Free Stock Analysis
LIBERTY MEDIA-A (LMCA): Free Stock Analysis
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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