Back to top

Analyst Blog

We reiterate our long-term Neutral recommendation on Liberty Media Corp. (LMCA - Analyst Report) following its mixed third-quarter 2012 results. The stock price soared neraly 54% in the last year and is currently trading at significant high multiples compared with S&P 500 and its peers with respect to several valuation metrics. We believe Liberty Media is fairly valued.

The company’s decision to spin-off Starz LLC segment will enable it to raise its stake in SIRIUS XM Radio Inc. (SIRI - Analyst Report), Barnes & Noble Inc. (BKS - Snapshot Report), and Live Nation Entertainment Inc. (LYV - Snapshot Report). We believe SIRIUS XM Radio will be the key player in the company’s growth story based on growing auto industry sales. Liberty Media is targeting full control of SIRIUS XM Radio. Moreover, management is pursuing a systematic share buy-back program to boost shareholders’ wealth. In November 2011, the company invested in Barnes & Noble, which we believe will benefit Liberty Media particularly under a volatile economic situation.

Liberty Media has decided to spin-off its Starz Entertainment segment as a separate entity by the end of 2012 or in early 2013. According to management, this move will unlock the latter’s value by optimizing its capital structure and enabling Starz to find several alternative ways and partnerships for both content creation and distribution. At the end of the third quarter, total subscribers base of Starz increased 9% to 20.8 million while its sister TV channel Encore had 34.3 million subscribers, up 5% year over year. The spin-off is envisioned to provide a cash dividend of $1.8 billion to Liberty Media.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 2.88 +3.22%
CENTURY ALU… CENX 22.25 +3.20%
UNITED CONT… UAL 48.86 +2.66%
ILLUMINA IN… ILMN 174.82 +2.54%
CITI TRENDS… CTRN 22.02 +2.28%