On December 12, 2023, Liberty Media Corporation (NASDAQ
Recent Company Updates
Berkshire Hathaway
According to Form 4 filing of 1/17 (Wednesday) with the Securities and Exchange Commission, Berkshire Hathaway purchased 2.8 million shares of the Liberty SiriusXM (LSXM) tracking stock recently for about $85 million. This follows the purchase of 2.8 million LSXM tracking stock earlier in January. The most recent purchases came on 1/9, 1/10 and 1/12 (Friday) at a price of about $30 per share. Berkshire now holds about 69 million shares of the tracking stock, valued at $2.1 billion based on CMP of $30.59 on 1/17. Berkshire purchased both the voting and nonvoting tracking stock. It bought 1.2 million shares of Liberty SiriusXM Holdings class A voting stock (LSXMA) and now holds 22.5 million shares. It also purchased 1.6 million shares of the Liberty Sirius XM Holdings nonvoting class C stock (LSXMK) and now owns 46.5 million shares.
Liberty Media Corporation Completes Acquisition of Quint
On January 3, 2024, Liberty Media Corporation announced that it had completed the acquisition of QuintEvents, LLC, an industry-leading provider of premium experiences at the world’s most prominent sports and entertainment events. Quint is attributed to Liberty Media’s Formula One Group tracking stock. The transaction valued Quint at $313 million and was funded with Formula One Group cash. Formula 1 and Quint will continue to be operated as separate companies. Quint is the industryleading provider of Official Ticket and Hospitality packages to many of the world’s most prominent sports and entertainment events. Based in Charlotte, North Carolina, with offices in six countries, Quint’s innovative programs enable those properties to expand fan experiences and corporate client entertainment opportunities in a way that reflects the quality and prestige of those brands.
4Q and FY23 Results Announcement
On 1/19, Liberty Media Corporation announced that before the opening of market trading on Wednesday, February 28th, Liberty Media will issue a press release reporting its 4Q & FY23 results and will host a conference call to discuss results at 10:00 a.m. E.T
Quarterly Interest Payment and Excess Regular Additional Distribution on 2.75% Exchangeable Senior Debentures Due 2049
On December 1, 2023, the company announced a quarterly interest payment and an Excess Regular Additional Distribution to the holders as of November 15, 2023, of its 2.75% Exchangeable Senior Debentures due 2049. The quarterly interest payment is $6.8750 per $1,000 original principal amount of Debentures. The Excess Regular Additional Distribution amount of the quarterly interest payment is $6.8750 per $1,000 original principal amount of Debentures. The excess regular additional distribution amount is $1.2635 per $1,000 original principal amount of Debentures. As of December 1, 2023, the aggregate adjusted principal amount outstanding is approximately $586 million after giving effect to the quarterly interest payment on 12/1.
Earlier, on August 3, 2023, following the split-off of Atlanta Braves on July 18, 2023, Liberty Media did an internal reclassification of its existing tracking stocks and formed a new tracking stock of Liberty Live Group (LLYVA, LLYVB
Valuation and Recommendation
While valuing Liberty Sirius, we use SIRI’s share price ($5.44) and exchange ratio (8.4x), without applying the tracking stock discount. Pro forma for the transaction, and assuming the debt and financing-related adjustments, on June 30, 2024, there will be approximately 3,392 million basic shares outstanding of New SiriusXM, of which former LSXM stockholders will own approximately 81% of New SiriusXM, with the SiriusXM minority stockholders owning the remaining 19%. Looking at the valuation, if the Net Liabilities Share Adjustment and the adjusted fully diluted shares of LSXM were calculated as of June 30, 2024, the Exchange Ratio is estimated to be approximately 8.4 shares in New SiriusXM for each share of LSXM held. We assume SIRI’s Current Market Price ($5.44) in our valuation. We also subtract net debt of about $1.1 billion that new SiriusXM will absorb from Liberty Sirius.
We arrive at a target price of $43.00 per LSXM share, implying a 38.8% upside from the current price of $30.93.
We also provide a sensitivity analysis of LSXM’s target price with SiriusXM’s share price.
Company Description
Liberty Media Corporation (Parent)
Liberty Media Corporation operates and owns interests in a broad range of media, communications and entertainment businesses. Those businesses are attributed to three tracking stock groups: the Liberty SiriusXM Group, the Formula One Group and the Liberty Live Group. The businesses and assets attributed to the Liberty SiriusXM Group (NASDAQ: LSXMA, LSXMB, LSXMK) include Liberty’s interest in SiriusXM. The businesses and assets attributed to the Formula One Group (NASDAQ: FWONA, FWONK) include Liberty’s subsidiary Formula 1 and other minority investments. The businesses and assets attributed to the Liberty Live Group (NASDAQ: LLYVA, LLYVK) include Liberty’s interest in Live Nation and other minority investments. For FY22, Liberty Media’s consolidated revenue was $12.2 billion.
Liberty SiriusXM (Split-Off)
The businesses and assets attributed to the Liberty SiriusXM Group (NASDAQ: LSXMA, LSXMB, LSXMK) include Liberty’s interest in SiriusXM. Liberty Media Corporation holds an ~84% controlling stake in SiriusXM Holdings (SIRI). SiriusXM Holdings operates two complementary audio entertainment businesses, SiriusXM and Pandora and Off-platform. SiriusXM Holdings continues to expand the range of choices for its listeners regarding compelling content and the array of ways it can be consumed. There are approximately 152 million vehicles in operation with SiriusXM radios. The proliferation of smart speakers and other connected devices has increased consumers’ options for engaging with and consuming SiriusXM Holdings’ content. SiriusXM Holdings also focuses on rapidly growing content categories, such as its continued interest in podcasting. For FY22, Liberty SiriusXM reported revenues of $8.7 billion.