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LMCA - Liberty Media


ItsAValueTrap

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Guest wellmont

this interview doesn't contain a lot of new info. rather it's a good overview of how malone and maffei do things. most of his answers are generic and broad. I would say it's not timely. However, it's a good resource for those getting up to speed on the company.

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  • 2 weeks later...

Any word on whether the spinoff will be delayed because the Comcast-TWC merger is being pushed back to Q2-2015?

 

If so, I am positive I will be the last one to know… ;D ;D

Though I hope that might not be the case, other members of the board surely are much better informed!

 

Gio

 

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I don't think the spinoff was to coincide with the TWC-Comcast merger.

 

The spinoff's intended purpose is to "reduce" the complexity discount attached to LMCA, and then have the broadband be a direct reflection of the Charter stake and possible use as an acquisition currency going forward.

 

I think there will be speculation as to whether Malone would spinoff the remainder of the assets in LMCA and merge the Sirius XM stake back into Sirius. A possible "acquisition" by Sirius, then subsequently spin off the remaining non-core assets. E.G. Atlanta Braves, Live Nation, and Private Equity + numerous other stakes.

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I don't think the spinoff was to coincide with the TWC-Comcast merger.

 

The spinoff's intended purpose is to "reduce" the complexity discount attached to LMCA, and then have the broadband be a direct reflection of the Charter stake and possible use as an acquisition currency going forward.

 

I think there will be speculation as to whether Malone would spinoff the remainder of the assets in LMCA and merge the Sirius XM stake back into Sirius. A possible "acquisition" by Sirius, then subsequently spin off the remaining non-core assets. E.G. Atlanta Braves, Live Nation, and Private Equity + numerous other stakes.

 

I think you are correct with respect to the Liberty Broadband comments, assuming that the CMCSA-TWC deal is going to close.  I believe that Malone et al. perceive this to be the high probability event.  I have no reason to believe otherwise. 

 

However, if a material change happens where the regulators skew towards blowing up the deal, I am not sure that the Broadband spin would be as desirable.  At that point, CHTR would presumably revert to the strategy of buying TWC.  Would Malone be able to maintain de facto control (i.e. ~26% ownership) of a full CHTR-TWC merger via the Liberty Broadband vehicle?  I am not sure about that.  In any event, I think that CHTR (and Liberty) win regardless of what the FTC/FCC decides on the CMCSA-TWC deal.  As an LMCA/K shareholder, I continue to be happy with the actions that Maffei et al. have taken through this situation.     

 

In terms of the rest of the Liberty Media holdings, it is really a shame that the SIRI merger wasn't able to happen.  In my view, the potential value creation from that particular deal would have been pretty great for both LMC and the minority SIRI shareholders.  They could have continued the buyback at the LMC level which would have been much more accretive given the fact that LMC trades at a discount.  Regardless, I expect that SIRI will be pulled into Liberty Media at some point after the Broadband spin.  The LMCK shares have traded well and the Broadband spin will simplify Liberty Media such that it will be difficult for the minority shareholders of SIRI to reject the LMCK paper.     

 

I could be spewing total nonsense here, but that is how I am viewing the current situation.  Happy to hear any thoughts.

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loganc, I agree with you.

 

If we see the FCC rule against the Comcast-TWC merger, it might be in their interest to set the spinoff aside and/or alter it in some way to assist with a Charter-TWC merger.

 

I believe Maffei has talked about the possibility of taking over the remainder of Sirius XM once there has been a spinoff. The idea of picking up Sirius XM as a method of getting increased exposure to an eventual folding in of Sirius XM into Liberty Media crosses my mind about once a day or so.

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From a pure financial standpoint, the Greatland spinco deal is A LOT more accretive than buying TWC. From a strategic standpoint, the Charter-TWC is A LOT more accretive.

 

If you want to make money on the stock, the easier path is the greatland spinco deal, not the TWC deal.

 

I don't think FCC is going to have any problems letting the Comcast deal go through. If it doesn't, it's a win-win.

 

Malone is most likely waiting for SIRIUS to buyback more of its shares back and then unleashing a tender offer for the remaining shares. From my model, LMCA's stake in SIRIUS should increase to 87% if Sirius can achieve a sub cagr of 6% for the next 5 years and using its fcf to buyback shares.

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Have a huge favor to ask the COBF community.

 

I was running some numbers on post-dividend, and i'm getting a holdco discount of 27%.

 

Reason: It's not a spinoff, it's a dividend. It's a stated amount being distributed.

 

4.808 billion.

 

So would it be fair to assume that the holdco value would be current market cap - 4.808 billion = new holdco value.

 

I've attached the excel spreadsheet, so please feel free to take a look and rip it into shreds to make sure my numbers aren't off.

 

Because if this is true, then it's a bargain post dividend.

 

Liberty_Media.xlsx

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Have a huge favor to ask the COBF community.

 

I was running some numbers on post-dividend, and i'm getting a holdco discount of 27%.

 

Reason: It's not a spinoff, it's a dividend. It's a stated amount being distributed.

 

4.808 billion.

 

So would it be fair to assume that the holdco value would be current market cap - 4.808 billion = new holdco value.

 

I've attached the excel spreadsheet, so please feel free to take a look and rip it into shreds to make sure my numbers aren't off.

 

Because if this is true, then it's a bargain post dividend.

 

Merkhet's spreadsheet is here:

https://docs.google.com/spreadsheets/d/1Zmgh8TzmPiItJL1gEjHHh_4b3Uv3QG53V3lL4YAsisM/pubhtml?gid=1043976554&single=true

 

It pulls real-time data from Google Finance.  EDIT:  Something's screwy with it, it isn't pulling data.

 

On the liabilities side, you forgot some of the debt.

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