On Mar 25, 2014, we issued an updated research report on Liberty Media Corp. (LMCA). Liberty Media is steadily restructuring its business model, targeting to control several subscription-based businesses. The company has started providing cable TV services and management is striving to consolidate its foothold in the pay-TV market.
Except for one quarter, Liberty Media has delivered positive earnings surprise in three quarters last year, with an average beat of 386.15%. The company reported mixed financial results for the fourth quarter of fiscal 2013 with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.
Currently, Liberty Media controls around 53% stake of SIRIUS XM Radio. With nearly 25.6 million subscribers in its kitty, SIRIUS XM, the largest satellite radio service provider, is expected to generate huge financial synergies to Liberty Media. Furthermore, the company also raised its stake to 27% in Live Nation Entertainment, the largest concert promoter and ticketing company in the U.S.
Liberty Media invested $204 million to purchase preferred stocks of Barnes & Noble – the world’s largets bookseller – which can be converted into approximately 12 million shares of the latter. Most importantly, Barnes & Noble has an extensive digital business through its powerful e-book reader called the “Nook”. We believe the decision to invest in Barnes & Noble will considerably bolster Liberty Media’s financials.
Liberty Media, which holds a 27.3% stake in Charter Communications Inc. (CHTR), was aggressively pursuing the idea of the company acquiring Time Warner Cable Inc. (TWC). However, Charter Communications has lost to Comcast Corp. (CMCSA) in its bid to acquire Time Warner Cable. It disrupted Liberty Media’s plans to gain significant traction in the U.S. cable industry.
Liberty Media currently carries a Zacks Rank #3 (Hold).