Liberty Finally Takes Charge of Sirius XM
After months of deliberating with the Federal Communications Commission, Liberty Media Corp. (NASDAQ:LMCAD) has completed its bid for a majority stake in Sirius XM Radio (NASDAQ:SIRI). The media company, which recently spun off its TV and movie business Starz (NASDAQ:STRZA) into an independent entity, purchased 50 million shares of Sirius at $3.15 a piece, bringing its total stake to 50.7 percent.
Liberty’s chairman John Malone has been gunning for a majority interest in Sirius for a while. Liberty acquired a 40 percent stake in Sirius in 2009 after lending the radio company $530 million to avoid bankruptcy. Since then, shares have come up from a low of nearly $0.10 to above $3.00. The company has grown its revenues and earnings every year since, ending 2012 with 23.9 million subscribers and up to 70 percent of the market for in-car radios in the United States.
But Malone hasn’t been satisfied with the progress. He believes that former Sirius CEO Mel Karmazin, who left in December, wasn’t expanding aggressively or adapting to new technology quickly enough. In a market that has grown increasingly competitive over the past few years, this was apparently inexcusable.
Competitors like Pandora (NYSE:P) haven’t had tremendous success so far, in the long run, but the Internet-radio company’s growing relationships with car manufacturers like Honda (NYSE:HMC) have helped drive its stock price up relative to Sirius’s over the past few months.
But with just under 2 billion shares and a controlling stake, Liberty will be able to take control of Sirius’s board and install a new CEO if it chooses. James Meyer stepped in as interim chief after Karmazin left. For its part, Siri is currently trading right near its 52-week high of $3.19.
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