The request made March 20 fueled speculation Malone wants to increase his stake in Sirius, the largest U.S. satellite radio company, and spin it off. The application isn’t acceptable because Liberty Media couldn’t get passwords and other information from Sirius, the agency said today in a letter distributed by e-mail.
The request to the FCC displayed tension between Sirius Chief Executive Officer Mel Karmazin and Liberty, its biggest shareholder, that escalated after Malone, Liberty’s chairman, saved Sirius from bankruptcy in 2009 with a $530 million loan. Liberty owns preferred stock convertible into about 40 percent of New York-based Sirius’s common shares.
“After this filing, Liberty probably has to pursue other ways to get what they want, which means buying shares,” Amy Yong, an analyst at Macquarie Securities in New York, said in an interview. She called the FCC’s rejection positive for Sirius because Liberty buying more shares may drive up their value.
Control of Sirius’s licenses to use public airwaves may help Malone gain leverage for favorable terms if he seeks to end the alliance with Karmazin, James Ratcliffe, a New York-based analyst with Barclays Capital Inc., said in an April 3 note.
Sirius fell 2.3 percent to $2.16 at 4 p.m. today on the Nasdaq Stock Market.
Liberty, based in Englewood, Colorado, didn’t establish that it intends to convert stock or install a board majority, the FCC said in its letter. The document was signed by Roderick Porter, deputy chief of the FCC’s international bureau, and Julius Knapp, chief engineer of the office of engineering and technology.
Heather Oshiro-Lipp, a Liberty spokeswoman, didn’t immediately respond to a telephone call and Patrick Reilly, a Sirius spokesman, didn’t immediately return a call and e-mail.
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