Summary Judgement in Favor of Sirius XM in Shenk Case
The Shenk lawsuit was a class action suit on behalf of investors that carried the possible implications of “unwinding the merger” between Sirius and XM. Even if the lawsuit had been ruled in favor of Shenk, the likelihood of the merger being undone was remote. With this victory under its belt, Sirius XM can continue to move forward with the business of providing satellite and Internet radio to consumers.
The major legal issues with Sirius XM at this point are:
- The appeal in the Blessing suit. A Class Action on behalf of subscribers
- The appeal of the Howard Stern suit, an issue in which Stern seeks hundreds of millions of dollars he feels are due to him.
- The Sirius XM suit vs. Sound Exchange, where the satellite radio provider alleges that the music royalty collection service interfered with Sirius XM’s ability to negotiate direct deals with record labels.
- A potential appeal on the Shenk suit.
With most legal matter against them in the rear view mirror, Sirius XM can move forward with matters such as Liberty Media and the FCC.
Hey Spencer. Why cant we seem to get back to $1.90? especially with Liberty buying those shares at $2.15 next month? Have you ever seen a stock like SIRI? Any other company would be up on talks of a merger. This is our second merger, and we are down again. All the bashers are out in full force preaching doom and gloom aboit how Liberty is going to wipe out the siri shareholder. It drives me nuts. No other stock i have ever been in acts like this.
I have a few questions. What are your thoughts on the FCC? Do u think they will deny defacto control this time too? And if they do, isnt that good? I mean it will force Liberty to either make a tender offer OR buy shares on the open market right? Which should in theory raise the share price. But with siri ya never know.
And if the fcc gives Liberty defacto control, Liberty still needs Mel, the board and shareholder approval on an RMT right? If they have 51% of the company would the RMT be a one for one share swap in the new company most likely? Or would ones siri shares be drastically reduced?
And if Liberty takes control, do they need board and shareholder approval if they wanted to do a reverse split?
And what are the chances that Liberty does a share buyback after they take control? That would benefit us the most…but it would also increase their percentage.
Lastly, do you still think Liberty going for 80% ownership is off the table? Thanks
W…..
Had a busy day, but finally at a point where I can respond. I had to deal with spam comments by lacky’s from another site as well. It is a saaaaad situation with the desparation some of these other sites have. At any rate….to the questions
I feel that the FCC will indeed give de facto control to Liberty at some point. If not with this appeal, then as soon as Liberty goes to 49.9% and produces a contract to gain enough shares to go over 50%.
Liberty does not have to do a tender offer. They can buy on the open market, but that is not likely to drive the price up very much. Their buys will bring a spike, but that will correct out in short order.
If liberty goes over 50%, they can put in their own Board of Directors on a unilateral basis. I have written about this quite a bit on Seeking Alpha. Thus, things like a fairness test and a majority of the minority come into play. I discussed these terms in a Seeking Alpha piece as well.
A reverse split would require board approval, but remember, at that point the board would be one installed by liberty.
Liberty may well do a share buy back, but Sirius xm does not have enough cash to make it meaningfully at this point.
I do not see liberty going for 80%. There is no real reason for them to do it
At this point spencer, i just want to get back to $2.40 to $2.50 which is a price all the bulls scoffed at once. Now i would do anything to get back there.
With all that sirius has going for it, it just sucks to be hamstrung like this yet again. At the mercy of an outside entity.
Thanks Spencer. I guess The shareprice stays low until a deal is done.
Another question. Once a deal is done, both liberty and siri should be working together i imagine. That should take the pressure off the shareprice no?
I mean….there will be no more reason for liberty to keep the shareprice down anymore right?
We should be going up i hope. No pie in te sky hopes. I just wanna get back to $2.40 to $2.50 level. I think thats fair value. And with Liberty working WITH us instead of against us, its a good thing for our shareprice.
Thoughts?
What is happening with the Sirius stock is truly amazing.
Mel Karmazin did turn around the high tech broadcasting / entertainment platform into a profitable and innovative company.
Almost weekly we see announcements reflecting enhance market penetration.
One day Liberty announces a commitment to buy Sirius shares at 2,15 dollars and the stock declines in price.
Karmazin’s selling is revealed creating further turmoil. Karmazin claims that Siri is the only stick he owns, implying that this is the reason for done profit taking,
In the same breath he states that Liberty should pay up for the company- a very logical statement.F or some reason former bulls disseminate illogical bearish arguments in face of the Liberty’s take over announcements. Panic selling pressures the stock in the situation where one would expect panic short covering. Then we hear that in fact Liberty would like Karmazin to stay on-bullish enough.
Given the price reaction to a seemingly bullish developments stock price manipulation becomes a suspect. Sooner or later some regulatory agency will investigate the issues .
I don’t know if this was posted here yet, but this is a breakdown of the DTV RMT and how it affected the DTV shareholders. http://investor.dire…/cost_basis.cfm
As you can see, they got a 1 for 1 stock exchange in the new company.
And if you look at the DTV chart, the stock went from the mid 20s before the RMT in Oct 2009 to $52 a share in about a year. The share price is currently at $44. In fact the chart shows DTV going steadily up every month and year after the RMT.
So i think the RMT worked out pretty well for DTV shareholders who didn’t sell fearing an RMT. A double.
If you applied the same outcome to SIRIUS after a potential RMT…based on Liberty’s forward purchase of shares in July at $2.15 that would put us close to $5 a share. Of course this is just speculation, but not too bad. Not to mention that SIRIUS is doing much much better than DTV.
Factor in continued growth and a potential share buyback after an RMT, and who knows how high we can go.
I am just so tired of all the doom & gloomers around the net concerning an RMT. None of them mention what happened to DTV. None of them. Guess they are the ones afraid.
While some of the legal issues may intermittently dominate the market focus , these are not logically relevant issues . Liberty ,the largest share holder in the Sirius , invested in the company to make money not to undermine its own investment .
The Sirius bears all of the sudden became the global investors and are utilizing the European turmoil to paint a bearish scenario for the US economy and therefore Sirius .
This is a nonsense to which the investment universe was subjected to since 2009.
In fact the European turmoil had strengthened the US economy as an American economic platform does provides sense of security . In fact the empirical data reflects a moderate expansion throughout the current period of instability in Europe In fact the record global capital inflows into the US ( an expression of the global confidence in the US),will provide a major stimulus in the period ahead .
That brings us to another major bearish argument against Sirius -Pandora .
This is the most illogical argument pivotal bears came up with.
Pandora provides music entertainment – with commercials .
Every car has a radio with numerous radio stations providing music funded by commercials .
What Sirius provides is commercial free diverse entertainments and it can do it in the most inaccesible areas .While some legal issues in the period ahead deserve the focus ,
it is the ability of the pivotal bears to divert the focus from the Sirius evolution that has created some price pressure on Sirius stock.
Don’t forget that institutional ownership has gone UP, not down. This tells you all you need to know. Obviously the big boys don’t fear a Liberty takeover, they welcome it!
And about Pandora. What can one say? The more people who listsn to them, the more $ they lose! Yeah, GREAT business model. And with all the investors who got spanked over the FB IPO dibacle, wall street isn’t trusting ANY company that cannot monetize it’s product. And Pandora certainly cannot.
Sirius has been able to monetize it’s product very affectively. When this deal with Liberty gets done, and the dust settles…the focus can shift back to what a cash cow Sirius is, and this fear mongering will go away. Especially when the share buybacks begin. 🙂
Lastly, Sirius will be offering a radio personalization feature later this year, so not only will they do everything Pandora does, they will be doing so much more. Pandora will never be able to offer what sirius does tho. Buh-bye.