Liberty Media to Seek Review of FCC Dismissal of Application for De Facto Control over Sirius XM
Liberty Media plans to ask the FCC to reconsider a recent dismissal of an application the company filed that, if granted, would give it de facto control over Sirius XM, Liberty CEO Gregory Maffei said on an earnings call Tuesday. The International Bureau dismissed Liberty’s application Friday, saying it was procedurally defective (CD May 7 p12). Meanwhile, Liberty has taken steps to increase its financial stake in Sirius XM, the company said.
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Liberty agreed to buy 302 million more shares of Sirius XM in a forward purchase agreement with the price per share pegged at $2.15, the company said. It didn’t say who it will buy the shares from. Should Liberty exercise its right to convert its convertible preferred stock in Sirius XM, the new transaction would take its stake to 45.2 percent, it said.
That transaction may help its application for review at the FCC, Maffei said. Additionally, Liberty will consider other ways to amend its application, he said. “Among the options we'll consider is to be more explicit to the FCC about what options we intend to take,” should it be granted de facto control over Sirius XM, Maffei said. He said Liberty could decide to spin off its Sirius XM shares into a separate holding company or through a reverse Morris trust as it did with DirecTV, he said. “And lastly we also might go into control, and you could define that as either corporate level control of 51 percent or you could define it as the FCC levels of control,” Maffei said. “All those options remain on the table and I think are enhanced by this incremental forward transaction.” Sirius XM didn’t immediately respond to our query.
"There are a lot of things we could do, and one of the reasons we sought to go to the FCC was to get permission to exercise some of those rights,” Maffei said. Should Liberty increase its stake in Sirius XM beyond 50 percent, it may need further approval to take de jure control of the company, he said. But Liberty could acquire those shares before seeking FCC permission to exercise its de jure control rights, Maffei said.
At Starz, executives are focused on strengthening affiliation agreements with pay-TV distributors, but are also open to discussions with new entrants into the online video sector, said CEO Chris Albrecht. “We are open to discussions with any legitimate distributor coming in,” he said. “There are companies out there that seem poised to enter into an area where they might want to distribute Starz in a business model that would be acceptable to us.” So far that hasn’t happened, he said.
"We're not having active discussions with anyone outside of our core distributors,” Albrecht said. “I certainly think we'll see some entries into that space and I think we're prepared to have the appropriate conversations, taking into consideration what’s best for our business as a whole.” He said Starz hasn’t had any talks about distributing its shows or movies through Barnes & Noble, another Liberty Media investment.