Sirius XM (SIRI) Battles Over Control With John Malone

Sirius XM (SIRI) Battles Over Control With John Malone
By Apple (Own work) [Public domain], via Wikimedia Commons

Sirius XM (SIRI) Battles Over Control With John Malone

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Sirius XM Radio Inc. (NADAQ:SIRI) is involved in a ferocious battle over control of the company with investor Jon Malone. Liberty Media, Malone’s company seeks to obtain permission from the FCC to increase its stake in the company. The move is speculated, with quite strong evidence behind it, to be the beginnings of an attempt to take control of a majority shareholding in the satellite radio company. Liberty Media needs to obtain another 11% of the the company to get it up the the 51% threshold. This appears to be in the works though Sirius itself is attempting to deny the action.

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Sirius is seekin to block the move though its motives are not clear. It is difficult to see whether the company is trying to block the move entirely or simply make it a little more difficult so a fair price is paid for the increased stake. The company is starting to make real headway posting revenue of $787 million last quarter and earning $0.01 per share. The company also carries significant tax benefits after its multiple losses in previous years. Because of the hidden value, Sirius may wish to see a higher price paid by Malone as he seeks full control of the company.

John Malone invested in Sirius in 2009 when the company was facing bleak prospects. He acquired a 40% share of the company at that time but had to waive the possibility of increasing his control for a further three years. The restrictions on his actions ended on March 6th. The company’s stock has increased by 1500% since the acquisition. Malone’s Liberty Media Corporation (NASDAQ:LSTZB) has holdings in companies all over the media sphere including Barnes an Noble and many Satellite television companies. His group is also involved in an attempt to acquire Barnes and Noble in another ongoing ownership battle involving Malone.

Sirius XM is the product of a merger between Sirius and XM in 2008. Since then the company has maintained an almost monopolistic control of the satellite radio market. The company faces competition from traditional radio as well as internet radio companies such as Pandora. The company is still rising in value and is seen as having completed a stark recovery since Malone was involved in rescuing the company from its depths in 2009. The company’s shares were up almost 3.5% at time of writing on the news of the battle over ownership of the company.

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