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Liberty Media (LMCA) Saves On Costs, Competition Rife

By Zacks Investment ResearchStock MarketsAug 24, 2016 09:12PM ET
www.investing.com/analysis/liberty-media-(lmca)-saves-on-costs,-competition-rife-200150041
Liberty Media (LMCA) Saves On Costs, Competition Rife
By Zacks Investment Research   |  Aug 24, 2016 09:12PM ET
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On Aug 5, we issued an updated research report on Liberty Media Group (NASDAQ:LMCA) . The company reported mixed financial numbers in the second quarter of 2016 wherein the top line missed the Zacks Consensus Estimate while the bottom line surpassed the same.

Liberty Media is steadily restructuring its operations with an aim to control several subscription-based businesses.The company’s diversified investments in cable MSOs, satellite radio broadcasters and live concert operators should enhance its long-term growth prospects. The company holds a majority stake in satellite radio broadcaster, SIRIUS XM Radio, 27% in Live Nation Entertainment, the largest concert promoter and ticketing company in the U.S., and 27.3% in Charter Communications Inc (NASDAQ:CHTR). CHTR, the second largest cable MSO in the U.S. after Comcast Corp. (NASDAQ:CMCSA) .

Liberty Media is offering its exchangeable senior debentures for Time Warner's common stock privately in the form of stock or cash or a combination of the two and plans to use proceeds from the offering as additional funds for operations, acquisitions and general corporate purposes. Liberty Media also completed the recapitalization of its existing common stock into three new tracking stocks: the Liberty Braves common Stock, the Liberty Media common Stock and the Liberty SiriusXM common Stock. Additionally, the company made an announcement regarding the completion of the offering of its rights, which had expired as per its terms in New York, on Jun 16, 2016.

The Risks

Liberty Media’s dependence on subscription-based services of SIRIUS XM Holdings Inc. (NASDAQ:SIRI) , Live Nation Entertainment Inc. (NYSE:LYV) and Charter Communications is a major setback because these subscription-based services are vulnerable to economic downturns. Therefore, continuation of macroeconomic fluctuations in the U.S might significantly jeopardize Liberty Media’s financial results.Liberty Media’s businesses continue to remain susceptible to rapid technological changes and stiff competition from pay-TV operators.

A substantially leveraged balance sheet is again a major concern. Total debt, at second quarter-end, was $7,531 million compared with $6,881 million at 2015-end. The debt-to-capitalization ratio was 0.38 at the end of the second quarter, compared with 0.27 at the end of 2015. Such high debt levels raise concern and may impact the company’s investment plans.

Liberty Media currently has a Zacks Rank #3 (Hold).



SIRIUS XM HLDGS (SIRI): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

LIVE NATION ENT (LYV): Free Stock Analysis Report

LIBERTY MEDIA-A (LMCA): Free Stock Analysis Report

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Liberty Media (LMCA) Saves On Costs, Competition Rife

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