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Liberty Media Gets FIA Approval for Formula 1 Acquisition
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Liberty Media Corp. recently received the requisite consents and approvals from the Fédération Internationale de l'Automobile (FIA), the governing body of Formula 1, regarding its pending acquisition of Formula 1. The acquisition is expected to close this month. In Sep 2016, Liberty Media had agreed to purchase Formula 1 Group – the highest class of single-seat auto racing in the world endorsed by the FIA. Notably, the company in collaboration with Discovery Communications Inc. was vying for 49% stake in Formula 1 in 2014.
In Dec 2016, to draw support for this deal, Liberty Media entered into an agreement with several third-party investors. The company had issued series C common stock worth $1.55 billion at a rate of $25 per share for the purpose. The group of investors includes Coatue Management, L.L.C., the D. E. Shaw group, JANA Partners LLC, Ruane, Cunniff & Goldfarb Inc., Soroban Capital Partners LP, SPO Advisory Corp. and Viking Global Investors LP. The proceeds from this were utilized to buy back shares of CVC Capital Partners – the selling shareholders of Formula 1 Group. The third-party investors will collectively own 26% of Formula 1 Group.
Boasting the highest class of auto racing in the world, Formula 1 is popular and followed globally by motorsports fans as well as wealthy individuals. This makes the sport a great value proposition for pay-TV operators. Thus, Liberty Media can benefit from a stake in Formula One through increased revenues from the same. Additionally, Liberty Interactive Corporation’s subsidiaries like QVC can benefit from the online sales of Formula 1 related merchandise. However, the sport is expected to face tough competition from NASCAR and Verizon Communications Inc. (VZ - Free Report) sponsored INDYCAR series in the U.S.
Price Performance of Liberty Media
The last one year was not a good one for the Liberty Media. The stock price has fallen 16.60% in the same time frame compared with a gain of 18.75% for the Zacks categorized Media Conglomerates industry. Nevertheless, Liberty Media is focusing on its highly lucrative 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 going forward.
Liberty Media 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, the second largest cable MSO in the U.S. Further, Acquisition of Formula 1 should rake in more revenues for the company. We believe these are primary reasons behind the stock currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Liberty Media Gets FIA Approval for Formula 1 Acquisition
Liberty Media Corp. recently received the requisite consents and approvals from the Fédération Internationale de l'Automobile (FIA), the governing body of Formula 1, regarding its pending acquisition of Formula 1. The acquisition is expected to close this month. In Sep 2016, Liberty Media had agreed to purchase Formula 1 Group – the highest class of single-seat auto racing in the world endorsed by the FIA. Notably, the company in collaboration with Discovery Communications Inc. was vying for 49% stake in Formula 1 in 2014.
In Dec 2016, to draw support for this deal, Liberty Media entered into an agreement with several third-party investors. The company had issued series C common stock worth $1.55 billion at a rate of $25 per share for the purpose. The group of investors includes Coatue Management, L.L.C., the D. E. Shaw group, JANA Partners LLC, Ruane, Cunniff & Goldfarb Inc., Soroban Capital Partners LP, SPO Advisory Corp. and Viking Global Investors LP. The proceeds from this were utilized to buy back shares of CVC Capital Partners – the selling shareholders of Formula 1 Group. The third-party investors will collectively own 26% of Formula 1 Group.
Boasting the highest class of auto racing in the world, Formula 1 is popular and followed globally by motorsports fans as well as wealthy individuals. This makes the sport a great value proposition for pay-TV operators. Thus, Liberty Media can benefit from a stake in Formula One through increased revenues from the same. Additionally, Liberty Interactive Corporation’s subsidiaries like QVC can benefit from the online sales of Formula 1 related merchandise. However, the sport is expected to face tough competition from NASCAR and Verizon Communications Inc. (VZ - Free Report) sponsored INDYCAR series in the U.S.
Price Performance of Liberty Media
The last one year was not a good one for the Liberty Media. The stock price has fallen 16.60% in the same time frame compared with a gain of 18.75% for the Zacks categorized Media Conglomerates industry. Nevertheless, Liberty Media is focusing on its highly lucrative 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 going forward.
Liberty Media 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, the second largest cable MSO in the U.S. Further, Acquisition of Formula 1 should rake in more revenues for the company. We believe these are primary reasons behind the stock currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>