SIRIUS XM Radio Inc. (NASDAQ: SIRI) has been at the center of a process that would have fallen under the ‘de facto control’ pursuit by Liberty Media Corporation (NASDAQ: LMCA). The WSJ has reported that the application of Liberty to take control has been dismissed. The WSJ notes that the FCC called Liberty’s application as defective and not warranted.
Liberty owns roughly 40% of the company if it were to convert its notes into shares and this dates back to the peak of the market selling panic. SIRIUS XM’s CEO Mel Karmazin has been fighting the loss of control and John Malone wanted control. This was also going to be an interesting case for precedent as Liberty was trying to take control without a majority of ownership.
The news should be good news for SIRIUS XM holders at least in theory. This will prevent the instant conversion of convertible notes into common shares which could have been distributed as a dividend or a spin-off by Liberty to its existing shareholders. Ultimately, that will keep millions and millions of shares from magically appearing on the market that might have been sold by many Liberty holders.
Keep in mind that this is a decision from the FCC. There may be other efforts taken by Liberty and John Malone to still take ‘de facto control’ of the company.
Today’s news had no real impact on the stock so we would call it perhaps not such a big event. SIRIUS XM shares closed down 2.2% at $2.16 for an unofficial closing bell price. There were some 87.8 million shares traded today against an average of almost 52 million shares.
JON C. OGG