Summary
Liberty Media Corporation (FWONK) reported significant financial shifts in the nine months ending September 30, 2013, largely driven by the consolidation of SIRIUS XM Radio, Inc. (SIRIUS XM) in January 2013. This consolidation transformed SIRIUS XM from an equity affiliate to a majority-owned subsidiary, significantly impacting Liberty Media's revenue, operating income, and net earnings. The company also completed a substantial acquisition of Charter Communications shares and warrants. Despite these major operational changes and a large gain from the SIRIUS XM acquisition under purchase accounting, Liberty Media faced increased interest expenses and a higher effective tax rate in the current quarter, impacting its net earnings compared to the prior year's periods. Investors should note the substantial increase in consolidated revenue and Adjusted OIBDA, primarily attributable to the full inclusion of SIRIUS XM's financial results. However, the report also highlights significant stock-based compensation expenses related to both Liberty Media and SIRIUS XM equity awards, which will continue to be recognized over the next few years. The company's liquidity remains strong, supported by cash reserves and operating cash flows from its subsidiaries, though direct access to SIRIUS XM's substantial cash flows is limited due to the noncontrolling interest.
Financial Highlights
48 data points| Revenue | $1.11B |
| SG&A Expenses | $207.00M |
| Operating Expenses | $862.00M |
| Operating Income | $248.00M |
| Interest Expense | $39.00M |
| Net Income | $76.00M |
| EPS (Basic) | $0.21 |
| EPS (Diluted) | $0.21 |
| Shares Outstanding (Basic) | 357.00M |
| Shares Outstanding (Diluted) | 363.00M |
Key Highlights
- 1Consolidation of SIRIUS XM: Liberty Media began consolidating SIRIUS XM as a majority-owned subsidiary in January 2013, a major event that significantly boosted reported revenues and operating income, shifting SIRIUS XM from an equity method investment to a consolidated entity.
- 2Significant Gain on SIRIUS XM Acquisition: The company recorded a substantial gain of approximately $7.5 billion in the nine-month period due to the application of purchase accounting for the SIRIUS XM acquisition, reflecting the difference between the fair value and carrying value of Liberty's prior interest.
- 3Increased Revenue and Adjusted OIBDA: Consolidated revenue and Adjusted OIBDA saw substantial increases, primarily driven by the inclusion of SIRIUS XM's financial performance, alongside modest growth from Atlanta National League Baseball Club (ANLBC).
- 4Substantial Investment in Charter Communications: Liberty Media invested approximately $2.6 billion in acquiring shares and warrants of Charter Communications, increasing its beneficial ownership to approximately 27%, funded by cash on hand and new loan arrangements.
- 5Elevated Stock-Based Compensation: The company reported a significant increase in stock-based compensation expense, attributable to both Liberty Media and SIRIUS XM equity awards, with substantial unrecognized costs expected to be recognized over the next 2-3 years.
- 6Strong Cash Position and Operating Cash Flow: As of September 30, 2013, Liberty Media maintained a solid liquidity position with significant cash and cash equivalents and experienced positive net cash from operating activities, though direct access to SIRIUS XM's cash is restricted.
- 7Legal Victory in SIRIUS XM Shareholder Litigation: The company's board designees were dismissed from consolidated shareholder litigation concerning the SIRIUS XM acquisition, marking a positive legal development.