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Liberty Media moves towards majority stake in SiriusXM – what does it mean for subscribers?

Things are staying eventful for SiriusXM. Liberty Media this week continued its ongoing campaign to take control of the satellite radio provider by buying up 40 million additional shares of the company, bringing its total ownership to 48.8%, up from its 40% stake back in March. Liberty’s intent here is clear. In a a recent filing with the FCC, Liberty requested “de jure” control of SiriusXM based upon its plan to own at least 50% of the company’s shares.

Liberty owns or has stakes in a variety of media companies, including the Starz premium cable channel as well as the Atlanta Braves baseball team. Liberty execs have already stated that they plan to combine SiriusXM with another property in order to spin them off. That other company likely will be Starz, which Liberty has already indicated interest in spinning off.

The big question that is yet unanswered is what this could mean for SiriusXM subscribers. Unlike many media mergers and acquisitions in the last decades, this one doesn’t appear to be leveraged by debt. At first blush one would expect that the impact on operations would be minimal, with no apparent immediate need to shed employees and trim costs. Nevertheless, it’s the rare takeover that doesn’t result in some bleeding.

SiriusXM’s ability to come back from the brink is at least partly due to the continued quality and reliability of its programming, despite cost cutting brought on by its merger. One would hope that Liberty management would learn the lesson from commercial radio’s decline, that starving the funding for your principal product yields only short term gains.

While I would have preferred continued competition in the satellite radio market, I also think that our media landscape is better served by a healthy SiriusXM that continues to deliver decent programming to subscribers rather than the satellite version of Clear Channel.


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