Updated at 1:50 p.m. 6/6/12 to correct the following: "Karmazin recently said he would do his best to prevent Liberty from gaining control of the company." Sirius XM CEO Mel Karmazin actually said if anyone were to gain control he would like them to pay a premium. TheStreet regrets the error.
NEW YORK (TheStreet) -- The future of Sirius XM (SIRI) and more specifically one that involves its recent dog-and-pony show with Liberty Media (LMCA) has become a widely popular topic among investors. However, disappointingly, the conversation is often discussed by those who do not yet have a clear understanding of the present-day situation.
The mistake that investors continue to make is comparing Liberty's motives to their own. Investors assume that since Liberty has been Sirius' largest shareholder, they share similar interests -- one that includes an importance of a growing stock price.The fact of the matter is, Liberty is far from having a retail mindset. Remember, this is the same company that was given 40% of Sirius by merely lending the company $530 million -- a loan that Sirius repaid one year later. Yet many continue to assume that Liberty is looking at Sirius from their lens -- as in being solely focused on the movement of the stock price. Simply put, that is not the case. Liberty's Chairman, John Malone is now laser focused on maximizing all of the value that remains in the company -- one that produces a decent amount of cash flow. While that is a great thing for all interested, it is now clear that Malone intends to take it all for himself and his shareholders. While that may seem like a pretty shrewd position, sadly there isn't anything Sirius can do to stop him. All of the drama that continues to be played through the courts and with the FCC as the battle for control continues is essentially postponing the inevitable. To Sirius' credit, the company is putting up a decent struggle, but astute investors already understand that it is really not a fair fight at all on many levels -- not the least of which includes intelligence, where clearly Sirius is out of its league. The question is, what are Sirius investors going to be left with? It doesn't seem as if there will be much once Liberty is done. What is clear to me is that Liberty does not value the stock as much as it values Sirius' current assets -- including its $8 billion in NOLs. As it stands, the value of the NOLs are worth more now than Sirius' entire market cap.
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