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Home » Liberty Media: Deal or No Deal
Analysis

Liberty Media: Deal or No Deal

Liberty Media: Deal or No Deal
May 16, 20223 Mins Read
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Liberty Media: Deal or No Deal
Liberty Media: Deal or No Deal
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Sports and media empires are expanding as team values soar and owners diversify. Analysts value the top 20 conglomerates at $120 billion. The biggest of them is Liberty Media, a $17 billion group.

The Liberty Media Group owns the satellite radio service SiriusXM (about 80% of revenues), the baseball team Atlanta Braves (5%), and Formula One racing (10%). It also has other interests.  

After Liberty Purchased Formula One in 2017, popularity has reached a point where many more cities want to host a race than the number of slots available. 

Its strengths are an established market position, improved SIRIUS XM business line performance, and a high liquidity position. But litigations and a decline in revenue could be causes for concern.

The company does not sell Liberty Media shares as a single stock. Instead, each business has a tracking stock that “tracks” its economic performance. All have Series A, B, and C stocks. Sirius XM has LSXMA, LSXMB, and LSXMK. Formula One has FWONA, FWONB, and FWONK. The Braves have BATRA, BATRB, and BATRK. 

Quantitative Analysis

According to PwC, the momentum regained by the $2 trillion global entertainment and media (E&M) industry post the pandemic will continue. It expects the industry to grow at 6.5% in 2021 and 6.7% in 2022, and revenue at a CAGR (Compound Annual Growth Rate) of 5% during 2019-24 to reach $2.6 trillion in 2025. 

Advertising accounted for 52.7% of the industry’s total value in 2019, followed by Broadcasting and Cable TV (21.2%), Publishing (19.1%), and Movies and Entertainment (7%). As a dominant provider of media services, the Group will benefit from the growth outlook for the global media industry.

Qualitative Analysis

Investors believe that sports empires have enormous upside because sports team investments have delivered better returns than stocks. The promoters behind the sporting superpowers have a proven track record of growth with a mix of sports teams, media, real estate, and other interests.

Media companies depend on ad revenues to supplement subscriber fees. There is cutthroat competition for an audience. 

New distribution methods and revenue streams offer the opportunity to regain lost revenue. Sports broadcasts (Olympics, Super Bowl) and live events (Oscars) are big money spinners.  

Recommendation

Competition and government regulations mean that companies need to be agile to adapt and thrive.

We have seen that the Liberty Media Group uses 3 tracking stocks. So, investors must separately analyse each stock. 

The SiriusXM stock has a current price of $39 (with a 52-week high and low of $37 and $56). The Formula One stock has a current price of $54 (yearly high and low of $38 and $64). The Atlanta Braves stock has a current price of $26 (in a 52-week range of $25 to $32).

Analysts currently rate all three as Buy. The media business is the largest and hence may be stable. Formula One and baseball may offer higher risks and rewards. Investors may consider buying one or all these shares.

Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only

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