LMCA - Liberty Media

[Liberty]

S-4 for the trackers is out. Interesting new optional conversion option that doesn't seem entirely explained yet (annex not yet out..?):

 

http://ir.libertymedia.com/secfiling.cfm?filingID=1047469-15-9375&CIK=1560385

[scorpioncapital]

also a nice interview with the CEO - https://cc.talkpoint.com/ubsx001/120715a_ae/?entity=49_7LTX5VJ

 

[jay21]

S-4 for the trackers is out. Interesting new optional conversion option that doesn't seem entirely explained yet (annex not yet out..?):

 

http://ir.libertymedia.com/secfiling.cfm?filingID=1047469-15-9375&CIK=1560385

 

Can you point me to the right place to look for this feature? The excerpt that Bluegrass posted was no different from other trackers I believe.

 

I think I was told there was another conversion feature that I missed.

[Liberty]

S-4 for the trackers is out. Interesting new optional conversion option that doesn't seem entirely explained yet (annex not yet out..?):

 

http://ir.libertymedia.com/secfiling.cfm?filingID=1047469-15-9375&CIK=1560385

 

Can you point me to the right place to look for this feature? The excerpt that Bluegrass posted was no different from other trackers I believe.

 

I think I was told there was another conversion feature that I missed.

 

Page 55-56 has the one I'm talking about. Mentions annex C, which isn't published yet.

[jay21]

This:

 

" The Optional Conversion Proposal.    Under this proposal, you are being asked to approve the adoption of an amendment and restatement of our certificate of incorporation that, in connection with the reclassification of our existing common stock into three new tracking stocks, would, among other things, provide our board of directors with discretion to convert shares of common stock intended to track the performance of any of the SiriusXM Group, the Braves Group or the Media Group into common stock intended to track the performance of one of such other groups. See paragraphs (b)(ii)-(vii) of Article IV, Section A.2. of Annex C ."

 

Its standard. Basically means they can re-attribute in the future. If you look at LILAs S4 you will see similar language thats a little more clear because its only one tracker.

[Liberty]

This:

 

" The Optional Conversion Proposal.    Under this proposal, you are being asked to approve the adoption of an amendment and restatement of our certificate of incorporation that, in connection with the reclassification of our existing common stock into three new tracking stocks, would, among other things, provide our board of directors with discretion to convert shares of common stock intended to track the performance of any of the SiriusXM Group, the Braves Group or the Media Group into common stock intended to track the performance of one of such other groups. See paragraphs (b)(ii)-(vii) of Article IV, Section A.2. of Annex C ."

 

Its standard. Basically means they can re-attribute in the future. If you look at LILAs S4 you will see similar language thats a little more clear because its only one tracker.

 

Good to know, thanks!

[scorpioncapital]

I'm just wondering how such a provision works from a fairness perspective. If a company can re-attribute assets between common shares and an investor invested in Tracker A, is it now going to be worth A - B where B is the assets moved to Tracker B or is there some compensation?

[jay21]

I'm just wondering how such a provision works from a fairness perspective. If a company can re-attribute assets between common shares and an investor invested in Tracker A, is it now going to be worth A - B where B is the assets moved to Tracker B or is there some compensation?

 

Look at what LVNTA / QVC did last year. Some thought it was unfair...and some bought LVNTA ;)

[ItsAValueTrap]

I'm just wondering how such a provision works from a fairness perspective. If a company can re-attribute assets between common shares and an investor invested in Tracker A, is it now going to be worth A - B where B is the assets moved to Tracker B or is there some compensation?

 

The directors are not supposed to do that.  They can't blatantly give assets away.  However, there are many situations where the value of a trade/swap is highly subjective.

 

The tracking stock structure creates conflicts of interests between the trackers.  I'm sure the lawyers enjoy all of the unnecessary legal fees that it generates.  The conflicts of interests were a problem when AT&T did tracking stocks while Malone was there.  It led to a lawsuit later on.  (more lawyer fees...)  IMO the tracking stock structure creates unnecessary value leakage so that Malone can trade against his own shareholders and other companies' shareholders (using overpriced stock to buy stuff, if the stock happens to be overpriced).

[Liberty]

SIRI just released some numbers for 2015 as well as 2016 guidance (seems a bit out of the blue):

 

http://investor.siriusxm.com/investor-overview/press-releases/press-release-details/2016/SiriusXM-Exceeds-2015-Subscriber-Guidance-Issues-2016-Guidance/default.aspx

 

SiriusXM today announced that it ended 2015 with 29.6 million subscribers, reporting approximately 2.3 million net subscriber additions in the year, exceeding the company's increased guidance of 2.0 million net subscriber additions. Self-pay net subscriber additions in 2015 were 1.77 million, exceeding the company's increased 2015 guidance of 1.6 million and resulting in self-pay subscriptions of over 24 million at year end. [...]

 

2016 guidance:

Net subscriber additions of approximately 1.4 million,

Revenue of approximately $4.9 billion,

Adjusted EBITDA of approximately $1.78 billion, and

Free cash flow of approximately $1.4 billion.

[folivera13]

They've done it last couple of years. 2016 EBITDA margin seems low to me. It's lower than the 2015 numbers.

[hardcorevalue]

Good results but the guidance is very confusing to me.

 

Why is ebitda/fcf guidance (+7.7%) growing below revenue (+8.2%)?

 

That really doesn't make any sense to me given the economics of SIRI and its historical financials.

 

Do you think it reflects higher content costs (Stern, NFL?) similar to what cable co's are facing now?

 

 

 

 

[Liberty]

Q4 is out:

 

http://ir.libertymedia.com/releasedetail.cfm?ReleaseID=957430

 

Settled with Vivendi. Lesser amount than expected, especially after taxes and fees, but I suppose that with the courts, you take what you can get.

[merkhet]

Q4 is out:

 

http://ir.libertymedia.com/releasedetail.cfm?ReleaseID=957430

 

Settled with Vivendi. Lesser amount than expected, especially after taxes and fees, but I suppose that with the courts, you take what you can get.

 

Well, it was an out-of-court settlement, I believe -- not a court-mandated one. Plus, on the conference call, Maffei strongly indicated that he wanted the money now because he sees attractive opportunities.

[Liberty]

Well, it was an out-of-court settlement, I believe -- not a court-mandated one. Plus, on the conference call, Maffei strongly indicated that he wanted the money now because he sees attractive opportunities.

 

Well, the out of court settlement is based on things are going in court (how long it takes, how much it costs, whether you feel you can win, how friendly you feel the judge/jury are, etc).

 

I'm still a bit surprised they couldn't find a more tax efficient way to do it, but maybe they see something very attractive that they have to move on quickly.

[merkhet]

Well, it was an out-of-court settlement, I believe -- not a court-mandated one. Plus, on the conference call, Maffei strongly indicated that he wanted the money now because he sees attractive opportunities.

 

Well, the out of court settlement is based on things are going in court (how long it takes, how much it costs, whether you feel you can win, etc).

 

I'm still a bit surprised they couldn't find a more tax efficient way to do it, but maybe they see something very attractive that they have to move on quickly.

 

That was the impression I got from listening to the conference call. Maffei was coy, though, on whether it was more of an existing asset or a new asset that he was eyeing.

[dwy000]

Well, it was an out-of-court settlement, I believe -- not a court-mandated one. Plus, on the conference call, Maffei strongly indicated that he wanted the money now because he sees attractive opportunities.

 

Well, the out of court settlement is based on things are going in court (how long it takes, how much it costs, whether you feel you can win, etc).

 

I'm still a bit surprised they couldn't find a more tax efficient way to do it, but maybe they see something very attractive that they have to move on quickly.

 

I haven't seen them detail it anywhere but I wonder how much was actually paid in taxes on the settlement.  Out of the $775M came contingency fees for the lawyers - which, since the case has been ongoing for 13 years would be massive - and then a portion of it was paid to Liberty Global.  If you assume the lawyers got 10-15% (which may even be low if they took it on contingency) and Liberty Global got $50-100M, the tax piece was meaningful but not ridiculous.

[giofranchi]

I am not sure if this article has already been posted somewhere else...

 

John Malone: ‘Cable Cowboy’ Faces the Test in Rounding Up the Right Mix of Assets

 

https://variety.com/2016/tv/features/john-malone-liberty-media-charter-communications-1201729414/

 

Cheers,

 

Gio

[dcollon]

Thanks for posting Gio

[giofranchi]

Thanks for posting Gio

 

My pleasure, David!

 

Cheers,

 

Gio

[scorpioncapital]

That article is a little bid scary. Highly leveraged, consolidating dying businesses to just tread water...If you look back at the shareholder letters of Media, it has and will have pretty wild swings +/- 50-70% to get the excess return.

[Guest JoelS]

I think the article fits the facts to a pre-selected narrative. Where is the evidence in the numbers that "cord cutting" has damaged cable operators? It gives cable negotiating power with programmers and makes the broadband product more valuable. The share prices have fluctuated wildly but the value has not. The volatility is more likely a product of the unusual structures - tracking stocks and the like -  and concerns over leverage. Just my 2c.

[benhacker]

I don't know where to put this discussion, but since cord cutting is coming up here, and it's a Malone thread, I will just highlight something of a personal anecdote.

 

I am a true cord-cutter - Never had a phone line (I'm 35), I had basic cable for 2 years when it was a deal to make my Internet cheaper (Comcast) but after I got out of that I basically have never paid for cable.

 

For maybe 8 years, I was doing OTA antenna + netflix for my entertainment.  The OTA setup was never quite right (I'm nerdy, so it worked, but... for regular folks like my wife, it was just kind of shitty)... I used Windows MCE + network tuner.  It was so close to great solution but MSFT kind of walked away from it and it went on life support for 4-5 years.

 

Anyway, I raise this as it recently became a high tension issue in my household with my wife.  I'd been monitoring my options (almost all nerdy - Codi, Plex, etc) for solving this OTA + DVR + Netflix + Pandora etc solution without using a "traditional computer".

 

So I started digging into the new Apple TV.  They doubled the price and added some stout processing power, and it's really a new product.  It has an app store now, and I think it's a real sleeper of a product.

 

I bought one for $185 (64G) from COST, and I will buy another.  My solution doesn't do DVR (yet, there is a way to do it easily) but it's really perfect.

 

Interestingly enough it also has a bunch of great apps already and no one in my world (tech) has really heard about it.  Global radio, I can watch (limited, but good) ESPN w/ a friends (legit) guest login, most networks have apps, Hulu (which I don't use).  Oh, and the remote is killer and has Siri (I also don't use).

 

So maybe this should be in the Apple thread, but I think this product line has been tried by everyone and their mother (TV / puck solution) including Apple, but I think the 4th gen solution is the real deal.  I think for a minimal fee + a tuner / DVR box being sold by 1 and soon to be more, I think for urban areas this is a true cord cutter solution.

 

As with all "disruption", nobody seems to really see it coming (I think it's kind of like people are worn out from predicting this for so long), and it's pretty obvious, because just like other disruption, The apple TV is *better* than alternative products from Cable cos, because it isn't trying to silo you (it's cheap enough I think many with Cable may buy one as well which will help accelerate adoption)... it works with whatever you have, you don't need a mac, or an iphone... although *of course* setup is easier, it works better, and has more features if you have Apple devices.

 

Honestly, I'm kind of not surprised, and a little disappointed that once again, Apple is the one to do something obvious and right... and MSFT had a solution 8-10 years ago that was just as good, and they walked away instead of pushing the cost and form factor to where it should have gone.

 

I may be wrong, I may totally misunderstand this market... but I got one for my mother and law recently (she didn't subscribe to cable) and she is like "OMG...".

 

Just one guys' anecdote... maybe I should move over to AAPL thread.

 

If this gets a 5-10mu install base and then an ESPN app (Full subscriber) & HBO app are available, I think it's game over for cable TV...

[jay21]

Cable doesnt really make any money from TV. It makes money from broadband. This is why CABO get rid of their video product and other small operators are dropping Viacom and other networks.

 

An esoteric 5G wireless broadband is probably a bigger threat.

[benhacker]

Thanks Jay.  I haven't done the work to determine the risk to big cable cos, but I would have guessed it would be a problem if the bundle gets pierced in a reasonable way.

 

Again, it was a general anecdote though, only.