That's the word from a recent Wall Street Journal article, which points out that the allure of Sirius XM Radio Inc. to media moguls like John Malone could be all tax losses that the company carries with it.
Citing those famous "people familiar with the matter," the Journal reports that Sirius XM's $6 billion in losses were considered a key part of the company's appeal to Liberty Media.
Those tax losses could be used to offset future profits, but have less value to Sirius XM since profits aren't probable in the near-term (but bankruptcy was a high threat in the near term).
In 2006, John Malone acquired the Atlanta Braves in a way that enabled Liberty Media to effectively cash out its stake in Time Warner without incurring taxes. A similar strategy could be at play here.
Charlie Ergen's motives were different, says the WSJ, which looks at Sirius XM assets as a way to add to his satellite arsenal.
[Wall Street Journal]
Those tax losses could be used to offset future profits, but have less value to Sirius XM since profits aren't probable in the near-term (but bankruptcy was a high threat in the near term).
In 2006, John Malone acquired the Atlanta Braves in a way that enabled Liberty Media to effectively cash out its stake in Time Warner without incurring taxes. A similar strategy could be at play here.
Charlie Ergen's motives were different, says the WSJ, which looks at Sirius XM assets as a way to add to his satellite arsenal.
[Wall Street Journal]
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Unfortunately that seems to make a lot of sense
So Mel went with the ass that wanted to use the company as a tax deduction over the one who is dedicated to satellite broadcasting of all forms?
Jesus H. Christ, this company is led by a bunch of fools and/or crooks.
This is much ado about nothing. So what!
Ergen with 51% ownership could have used the tax loss this year. Although his company SATS isn't profitable. DISH is profitable, (but they owe 100 million to Tivo). His lawyers make real good money.
Malone will probably lose money with the Braves and the comparison is silly anyway since there was another asset involved in the minority stake in Time Warner. Malone doesn't have majority ownership in SIRI and there isn't a swap involved here. If he were to become 51% owner, then the debt is his to deal with.
This is about video in the car. I don't know why this is so hard to look out 2 years to see that.
AT&T was at the consumer electronics show all over this concept. Get with it people. SiriusXM is a good deal and Malone will make a ton.
I know a little about income taxes and see no way that SIRI's tax losses can benefit a forty percent shareholder. More importantly, the writer of the article makes no connection between SIRI's tax losses and Liberty's income taxes.
The basic premiss of the article is that the tax losses are worthless to SIRI because SIRI will not be profitable. And he tries to suggest that he got that info from SIRI own SEC filings.
The fact of the matter is, the tax losses are worth a lot of money to SIRI and its shareholders, including Liberty. The reason why is because the first several billion dollars of future profits for SIRI will be basically tax free. I am sure Malone realizes that. That means that SIRI can use all of its profits over the next few years to pay down and and all of the shareholders will benefit from that.
But that is just not negative enough for the auther of this article and wouldn't sell enough newspapers, so he writes this garbage without making any effort to connect the dots.
I am getting bored with all of the writings about SIRI. I think it is best for us all to turn this off (so to speak) and tune back in two years from now when SIRI is making money.
Good luck longs.
Ok, but how does Malone get to use the losses if he owns less than 50%. That doesn't make sense.
kingfrogcash: Yes! You have got it right. This is all about back seat TV.
Who cares? Go slacker!
I agree 100% with what Jon wrote above. I am a tax professional and the NOL is of no benefit to Liberty if they own less than 50%.
Oh, that old gag.
Unfortunately it doesn't addup enough.
DISH doesn't "owe" anything to TiVo. You make TiVo sound like a creditor to DISH, which they aren't.