The first major announcement this year by Liberty Media, where Malone serves as chairman, could position the company to take control of Time Warner Cable. Late Friday, Liberty Media told investors that it wants to buy the roughly 48% of Sirius XM Radio that it doesn’t own. WSJ says taking full control of the satcaster could help Malone finance a bid for TWC—a company that Charter Communications has been after for much of 2013. Since acquiring a 27% stake in Charter in early 2013, Liberty has pushed for Charter to acquire the MSO.
How, said WSJ?: “Liberty Media’s CEO Greg Maffei noted several times on a call with analysts Friday that Liberty Media’s ability to borrow would be greatly enhanced by gaining control of Sirius. ‘We believe it will enhance Liberty’s access to capital to support the pursuit of other potential attractive investment opportunities,’ Mr. Maffei said.”
As WSJ has reported, Charter already has about $14 billion of debt, more than five times its annual earnings before interest, taxes, depreciation and amortization and is looking to raise another $25 billion in debt to finance the acquisition. Time Warner Cable has about $24 billion of net debt.
“By taking full control of Sirius, Liberty Media would have the ability to borrow several billions dollars more than it could on its own. It could then use those billions to help finance a Time Warner Cable deal, said the WSJ story. “Liberty Media plus Sirius XM would have a market cap of $27 billion, up from $16 billion now. Adding Sirius’s balance sheet to Liberty Media’s would nearly double its annual earnings before interest, taxes, depreciation and amortization from $1.4 billion to $2.6 billion, while adding only about $3 billion in net debt to Liberty Media’s $3.8 billion.”