Sirius Speculation
In December of 2008, Liberty Media, founded by John Malone, filed a “complicated business plan” with the SEC. The goal is to split off a majority of Liberty Entertainment including 52% of DirectTV by May 2009. The split off leads one to Sirius speculation.
On february 17, 2009, Liberty Media saved Sirius XM (NASDAQ:SIRI) from bankruptcy by investing $530 million in the form of “loans.” According to MarketWatch, “upon completion of the loans, Liberty Media will receive 12.5 million shares of preferred stock convertible to 40% of common stock of Sirius XM and seats on Sirius XM’s board.” In an interview with Fortune, Liberty Media CEO Greg Maffei makes it clear that Liberty’s investment in Sirius XM is more opportunistic than strategic.
What opportunities could they be talking about?
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Last week, AT&T (NYSE:T) proposed to approve an amendment to the Restated Certificate of Incorporation to increase the number of authorized shares of common stock, in the Annual Meeting of Stockholders to be held on April 24, 2009. As you probably know, AT&T has chosen DirectTV as its sole partnership for satellite television. It is bundling DirectTV for those customers where U-Verse is not available.
Why would AT&T increase the number of authorized shares of common stock?
In the past, AT&T (NYSE:T) has been buying smaller more rural wireless companies to help reach markets that it currently doesn’t have access too. However, could it be that AT&T maybe raising more capital to buy DirectTV? The timeline of events sure indicates a possibility wouldn’t you think?
What would happen if AT&T bought DirectTV?
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If the 40% of Sirius XM goes with DirectTV, does it mean that AT&T could be the new 40% partner with Sirius XM? What would AT&T be interested in at Sirius XM? Content? Wireless Spectrum? The CEO of AT&T, has been heard saying that if you’re not in wireless, you won’t make it.
Could Liberty Media be acting as a middle man while priming DirectTV for a merger with AT&T. Is Sirius XM (NASDAQ:SIRI) just along for the ride or has this been the plan the whole time?
You decide! 
Post your comments below!
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Comment by David G. pope on 25 March 2009:
That’s a very interesting take. Doesn’t DirectTV already provide content to Verizon and AT&T?
Also, if Liberty owns 52% of DirectTV, who owns the other 48%? I read at one point News Corp. owned it.
DirectTV and Sirius XM has something that everyone works so hard for and that’s subscriptions. The combined subscription total is like 38+ million.
That’s a nice market.
Comment by Chris J on 25 March 2009:
Doesn’t Sirius have a deal with DISH?
Comment by Newman on 25 March 2009:
Sorry to burst your bubble, but DirecTV does not have a stake in Sirius XM. Liberty Financial owns that stake.
Would sound like a good idea though. =)
Comment by Beach Gambler on 25 March 2009:
Nathan is that you?…. lol
Comment by Newman on 26 March 2009:
Sorry. I didn’t read the article correctly. I see what he is saying now.
Comment by L.N. on 26 March 2009:
If Sirius XM becomes 40% owned by AT&T, what affect does that have on the Sirius XM common stock value??
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