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Liberty Media in Buying Spree

Zacks Equity Research

Recently, The Wall Street Journal reported that Liberty Media Corp. (LMCA) is on the verge to acquire a 25% stake of Charter Communications Inc. (CHTR) for a total consideration of approximately $2.5 billion. Charter Communications is currently the eighth largest pay-TV operator in the U.S. with around 4.2 million video subscribers.

Englewood, Colorado-based Liberty Media owns interests in a broad range of businesses, including media, communications and entertainment. The company offers its services predominantly in the North American region. Liberty Media currently has a Zacks Rank #3 (Hold).

During the last six months, Liberty Media has been restructuring its business model. In Jan 2013, the company spun off its Starz Entertainment segment as a separate entity. Starz is famous for its premium movie channels.

In the same month, Liberty Media acquired more than 50% controlling stake of SIRIUS XM Radio Inc. (SIRI), the largest satellite radio broadcaster of the U.S. Recently, the company also raised its stake to 27% in Live Nation Entertainment Inc. (LYV), the largest concert promoter and ticketing company in the U.S.

In Nov 2011, Liberty Media invested $204 million to purchase preferred stocks of Barnes & Noble, the world’s largest bookseller, which can be converted into approximately 12 million shares of the latter. These preferred stocks will yeild an annual dividend of 7.75%.

Barnes & Noble has an extensive digital business through its powerful e-book reader called the “Nook.” Nook currently commands around 25% of the global e-book market share and is the second largest e-book reader after the “Kindle” of Amazon.com.

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