By Brandon Matthews
Liberty Media (NASDAQ: LMDIA) President and CEO Greg Maffei presented at the Citi 20th Annual Global Entertainment, Media, and Telecommunications Conference Wednesday, January 6 from the Palace Hotel in San Francisco, California. In 2009, Liberty Capital (NASDAQ: LCAPA) took a 40% stake in Sirius XM Radio (NASDAQ: SIRI).
Since the time of Liberty’s investment into Sirius XM, many have speculated that the target of Liberty’s acquisition were the $7 Billion in net operating losses (NOL’s) that Sirius XM had accrued. This has been a theme repeated by most analysts since the idea was first aired on CNBC nearly one year ago. This fueled speculation that an inevitable takeover of Sirius XM by Liberty would occur sometime following the three year standstill agreement.
Following discussion of Liberty Interactive (NASDAQ:LINTA), discussion turned to Liberty Capital and its stake in Sirius XM Radio. Audience members at the conference were left speechless when Maffei announced that Liberty sees little value in the NOL’s, stating that he expects Sirius XM will use and consume the bulk of those NOL’s on their own, based on earnings he expects Sirius XM will soon realize.
This statement left the audience in confusion, and forced a second analyst to later ask basically the same question. Maffei repeated that Sirius XM will likely use the bulk of the NOL’s and asserted himself by stating that “Sirius XM is going to be a very profitable company. “Maffei explained that Liberty could either take a larger position following the standstill agreement, or spin their stake off as they did with Direct TV (NASDAQ:DTV)).
Maffei also tackled the issue of content costs which seemed to be directed at Howard Stern’s contract in December. He dismissed the unfounded belief that Sirius XM has overpaid for content, by explaining content as a percent of revenue being a relatively fixed cost. He further explained that when you look at content as a percentage of revenue, it is very impressive.
He went into great detail in explaining the benefits of content and the position of strength that Sirius XM Radio finds itself. Maffei sees better potential cost savings with regard to more important and higher priced contractual agreements, such as exist with some automakers.
Position: Long SIRI
Nice synopsis Brandon!! Still in shock….Great times are on the horizon!!
Great article, Brandon. Superb reporting on your part, bringing a highly significant development to our immediate attention. Many thanks for all you do on our behalf. Anyone still standing in front of this steamroller is making a huge mistake.
Wow! Greg Maffei doesn’t beat around the bush. Very bravado and encouraging. Maybe this is the position evreyone associated w/ Sirius Xm should be publicly saying. What better way to put down the shorts, by pulling down their shorts. If that doesn’t strenghten your mindset and stamina on Sirius Xm as a stock holder I don’t know what will. Great Job Brandon! Even the picture you chose of Maffei oozes confidence.
Wouldn’t it make sense for Sirius Xm to release an official statement to the press on what Maffie has stated. Seems a very powerful way to offset the negative releases by outside sources?
These guys definitely know what they are doing. This is why they are where they are. They stand to make billions from their siri investments. With ad revenue thinning across all media outfits, affordable subscription business a la siri multiplied by phenomenal content and superb delivery turn into a real gold bonanza. If anyone wants to play catch up with siri, they will have to spend in this environment tens of billions and will need a decade that they do not have. Siri’s handicap reminds me of a 50K runner whom the lagging crowd missed from the start. My only concern is that siri will become in the next year or so an amazingly attractive target for acquisition for googles, microsofts and the like. Or, may be this should not be a concern if the company fair value is about $20B or more. M.K. will make money for all patient long inbestors and certainly for himself. He has always made money off anything he touched. It is great when interests align.
Oh By The Way! I think Rick M. from Motley Fool has seen the light and is much more upbeat on SIRI. He has recently been putting out articles that are showing his belief that this company is the real deal. I know he gets bashed around from us Sirius Xm followers, but read some of his recent articles and you’ll see a change in his thinking. This should come as welcome news to all of us. Sirius Xm is winning people over and thats what it is all about.
Brandon, just keep doing what you are doing with Satwaves and the radio show. We all appreciate your hard work.
and yet the stock falls 2%
how far back can a company write off net operating losses after they become profitable?
Thanks for having a clean site. I stopped reading the post on Yahoo because many of the comments were wicked and I was always disgusted after I left the site. Tonight I searched for a site that told the truth and found this one. Keep up the good work; and keep offering up the truth, good or bad. Be Blessed.
Excellent Summary!!!
My investment in Sirius XM is one of the most exciting I’ve ever made….
Thank you Brandon
Does anyone know exactly what date does the standstill agreement end?
This is good news for someone like me who owns 200,000 shares,do i hear beverly hills