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  1. MUSCLE13 is offline
    MUSCLE13's Avatar
    Joined: Jun 2007 Posts: 973
    01-04-2014, 03:18 AM #1

    Tremendous move by Liberty/Malone

    This is my take

    Sirius is valued at about 20 times EBITDA. Pretty fairly valued since it is growing EBITDA at a 20% clip. Malone is going to try to use Sirius cash flow to leverage up Liberty in a Charter move on Time Warner Cable which is trading at about 8 times EBITDA. The cable industry is largely undervalued because of recent TV defections but valuations have ignored the absolutely tremendous growth opportunity in broadband. Malone is trying to consolidate a beat up industry that has huge margins and huge growth ahead in broadband. There is absolutely no reason the cable industry shouldn't eventually trade at 15 times EBITDA not 8 times. The only company I can see standing in Malone's way on Time Warner Cable is Comcast ( which is my favorite media company).

    I am all for this Sirius merger into Liberty as I believe LMCA and Sirius will both rise into the merger. It's a stock deal. As LMCA rises so does Sirius. To say $3.68 is a set price is incorrect. Not a cash deal. It's on a ratio which may even be negotiated up.

    I don't understand how media investors could ever say a stock is tremendously undervalued that is trading at 20 times EBITDA. 8 times sure. Not 20 times. But after this is done all the penny stock investors will likely disappear from the stock and that is not a bad thing.

    I really like this. I want a part of Charter's growth if they get TWC and as a Sirius investor I get that in this deal along with Sirius growth.
    Last edited by MUSCLE13; 01-04-2014 at 03:24 AM.