The Commission has called for public comment on Liberty Media’s application for de jure control of Sirius XM. It’s a sign the FCC is moving forward to evaluate the application.
In a public notice issued 10/2, the FCC said that parties wishing to comment on Liberty’s application need to submit by 11/1. Responses or oppositions to comments must be filed by 11/20. After that, the FCC is expected to take several weeks to make a decision.
In August, Liberty asked the FCC for approval to take outright control of Sirius, noting it plans to raise its ownership stake above 50%. In mid September, Liberty converted nearly half of its preferred shares in Sirius XM to common stock. Liberty now has a 32% stake in the company. Including its remaining preferred shares (which can be converted to common) it has an effective interest of 48%, the FCC said.
The FCC decided to evaluate the application even though Sirius had not signed certain forms related to it. Liberty had actually filed on this twice, sort of indicating it was getting impatient with the lack of response from the Commission.
It’s still unclear whether Sirius CEO Mel Karmazin will remain at the company after his contract expires at the end of the year, but read on…
From the FCC’s release:
Liberty Media proposes to acquire de jure control of Sirius. Liberty Media currently holds 12,500,000 Series B-1 Preferred Shares that if converted to common stock would represent approximately 40% of the total outstanding shares of Sirius (on an as-converted basis). Based on the preferred stock and other common stock shareholdings at the time of filing, Liberty Media states that it owns the equivalent of 47.3% of the total outstanding shares of Sirius stock on an as-converted basis. The application states that Liberty Media purchased 60,350,000 shares of common stock in May 2012; 89,970,000 shares of common stock in July 2012; and 89,970,000 shares of common stock in August 2012. Liberty Media states that it plans to acquire 41,087,753 shares under a forward purchase contract with a planned settlement date of October 14, 2012 at which time Liberty Media will own 48% of the total outstanding voting shares of Sirius (on an as converted basis). Liberty Media states that within 60 days of Commission consent to transfer of control it will have purchased sufficient additional shares of Sirius’ common stock and will convert its Preferred Shares so that it will own more than 50% of the outstanding shares of common stock of Sirius.
The Application consists of seven FCC Form 312 applications, two Form 603 applications and two Form 703 applications seeking consent for the transfer of the following:
Liberty Media requests, pursuant to Sections 1.3 and 1.925 of the Commission’s rules, a waiver of Sections 1.917, 5.57 and 25.112(a) of the Commission’s rules, which require transferor and/or licensee signatures on application forms. In an Exhibit attached to the application, Sirius stated that it intends “to cooperate fully with the FCC in its evaluation of Liberty Media’s applications. Sirius XM has not signed the licensee and transferor portions of the applications because it is not in possession of all the facts required to make the certifications.” In response to a September 24, 2012 letter from the Commission, Sirius confirmed the accuracy of the facts in the Liberty Media application which are uniquely in its ability to certify. Under the circumstances and given that a certification is given to the best of a licensee’s knowledge and belief, little additional probative value would be added by Sirius’s signature and we therefore grant Liberty’s request for waiver.
RBR-TVBR observation: Karmazin is expected to speak at Liberty Media’s 2012 Investor Meeting in NYC on 10/10. That, to us is another sign that he may be staying on with the company. There is no reason we can think of that he should leave and he is obviously not acting in a hostile manner toward Liberty. We think the agreement to have him stay on in some way, shape or form was struck weeks ago.
