* Liberty Media has forward contract to buy 302 mln Sirius
shares
* Contract prices Sirius at $2.15
* Sirius shares rise 1 pct to $2.18
By Yinka Adegoke
May 8 (Reuters) – John Malone’s Liberty Media said
on Tuesday it has entered into a contract that gives it the
option to increase its stake in satellite radio company Sirius
XM to 45.2 percent.
Liberty Media already has a 40 percent stake in Sirius and
has tried to take control of the business in recent weeks. Last
week the U.S. Federal Communications Commission dismissed
Liberty Media’s application to take control of Sirius’ operating
licenses.
The Englewood, Colorado company confirmed it has entered
into a forward purchase contract for 302 million shares of
Sirius XM, with a forward price of $2.15 per share or a total of
$650 million.
It said if the forward contract is physically settled, it
will increase Liberty’s stake to 45.2 percent.
Executives at Liberty have said the company could boost its
stake above 49.9 percent. It already holds five of Sirius XM’s
13 board seats.
Shares in Sirius XM rose by 1 percent in early trading to
$2.18.
Liberty became the largest shareholder in Sirius after it
loaned the satellite radio company $530 million to help it avoid
bankruptcy in 2009. The terms of the loan converted the loan to
a stake.
“It’s part of their plan to eventually get a stake large
enough to execute a Reverse Morris trust,” said Gabelli & Co
analyst Brett Harriss. Such a move could allow Liberty Media to
spin out its Sirius stake and combine it with the rest of the
company as a way to distribute Sirius shares to Liberty Media
shareholders in a tax-efficient manner.
Malone’s Liberty businesses own significant strategic stakes
in a variety of businesses including book retailer Barnes &
Noble and concert promoter Live Nation Entertainment
.
In a statement Chief Executive Greg Maffei welcomed a recent
move by Microsoft Corp to take a stake in Barnes &
Noble’s e-book reader business saying it validated Liberty’s
strategy.
Liberty Media on Tuesday also reported that its
first-quarter revenue fell 55 percent to $440 million and
adjusted operating income decreased 77 percent to $110 million.
It said the declines resulted from a significant recognition of
deferred revenue and costs in the year-earlier period at its
True Position unit.
Liberty Media’s operating businesses include pay-TV channel
Starz which increased its subscriptions at its eponymous channel
by 7 percent to an all-time high of 20.1 million subscribers and
2 percent at Encore to 33.6 million subscribers.
