On Jun 27, 2014, we issued an updated research report on Liberty Media Corp. (LMCA). Liberty Media is steadily restructuring its business model for realigning several of its subscription-based businesses. The company has also started providing cable TV services and is striving to consolidate its foothold in the pay-TV market.
Liberty Media has delivered positive earnings surprises in two of the last four quarters last year, with an average beat of 32.2%. The company reported first-quarter 2014 financial results wherein both the top and the bottom line missed the Zacks Consensus Estimate.
Recently, Liberty Media announced its plans to increase its stake by an additional 3.7 million shares in Live Nation Entertainment, Inc. Liberty Media currently holds a 27% stake in Live Nation Entertainment, the largest concert promoter and ticketing company in the U.S. If successfully completed, the deal will help Liberty Media drive earnings and revenues as Live Nation Entertainment has performed reasonably well in the last one year. Moreover, Live Nation’s diversified music and entertainment collection will be distributed over SIRIUS XM's channels while SIRIUS XM’s live sports content will be available for Live Nation. This is certainly poised to drive subscriber growth and ad revenue going forward.
Currently, Liberty Media controls around a 53% stake of SIRIUS XM Radio. With nearly 25.6 million subscribers in its kitty, SIRIUS XM, the leading satellite radio service provider in the U.S., is expected to generate significant financial synergies for Liberty Media.
Notably, Liberty Media, which holds a 27.3% stake in Charter Communications Inc. (CHTR), was aggressively pursuing the idea of acquiring Time Warner Cable Inc. (TWC). However, Charter Communications has lost to Comcast Corp. (CMCSA) in its bid to acquire Time Warner Cable. This disrupted Liberty Media’s plans to gain significant traction in the U.S. cable industry. Moreover, stiff competition from pay-TV operators coupled with macroeconomic fluctuations in the U.S. may hurt the company’s growth in the housing sector.
Liberty Media currently carries a Zacks Rank #3 (Hold).
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