Sep 26, 2023 - Economy

Liberty Media proposes combination with SiriusXM

Liberty Media's John Malone. Photo: Getty Images

Liberty Media proposed splitting off the business that contains audio entertainment group SiriusXM and combining it with the rest of Sirius XM Holdings Inc., the company said Tuesday.

Why it matters: The deal is yet another move by Liberty's John Malone to reshuffle and squeeze value from his vast array of media and entertainment assets.

Details: Liberty owns 83% of Sirius XM, the satellite radio group that also includes music streaming service Pandora.

  • Liberty's Sirius XM shares are held in a tracking stock, which trades on the Nasdaq as LXSM.
  • According to terms of the deal, Liberty said it would separate Liberty SiriusXM through a so-called stock split-off and form a new, publicly traded entity it referred to as "New Sirius XM" in the press release.
  • SiriusXM's minority shareholders would own 16% of the new company while former shareholders of LSXM common stock would own about 84%, Liberty said.
  • Liberty said the deal would not affect its other tracking stock groups, Liberty Formula One and Liberty Live. These three groups were recently formed as part of Liberty splitting off the Atlanta Braves.
  • Sirius XM Holdings said a special board committee and its advisers Solomon Partners Securities, LLC and Debevoise & Plimpton LLP are evaluating the proposal.

What they're saying: "I think a simple structure makes more sense. I would think they agree," Sirius XM Holdings CEO Jennifer Witz said earlier this month at the Bank of America Media, Communications & Entertainment conference when asked about Liberty and her company's arrangement.

  • "We've seen these dynamics in terms of the technical impacts on our stock that are driven by sort of complicated corporate structure that we have," Witz added.
  • In Tuesday's press release, Liberty Media CEO Greg Maffei said, "We are excited about the prospects for New SiriusXM and look forward to remaining meaningfully invested in the business."
  • "This simplified structure will also allow management to better focus on its strategic priorities, drive the company's continued growth and simplify the investor relations story."

The big picture: SiriusXM's subscriber growth has stalled in recent months, putting pressure on the company to diversify its revenue streams.

  • The company has been building a new streaming app to attract more listeners outside the car. It's planning to release that product later this year.
  • Malone, meanwhile, is a consummate dealmaker who has orchestrated many transactions in his decades as a media mogul.
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