How Sirius XM Could Fund a Liberty Deal for TWC

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Jan. 6 (Bloomberg) -- Bloomberg News’ Alex Sherman explains how Liberty Global’s offer to buy all of Sirius XM could fund a deal for Time Warner Cable on Bloomberg Television’s “In The Loop.”

The real brownie is time warner cable.

It is a multistep process.

I will try to take us back a step.

Liberty media owns 27% of charter communications.

Liberty media also once 52% of sirius satellite radio.

The offer on friday is trying to buy all of sirius satellite radio.

Some analysts thought they may end up selling their stake in sirius to get money in order to fund a time warner cable bid.

By trying to acquire all of sirius, they are signaling to investors that we believe in sirius, we believe in their positive free cash flow story.

That will give liberty more money to potentially find a deal for time warner cable.

Also, liberty thinks they can leverage up sirius' assets to borrow more money.

Wide and others figure this out?

-- why didn't others figure this out?

The issue is what is liberty's future.

The next step is that charter will make a bid to buy time warner cable.

I will be a $62 billion bid.

Most of that will be generated off of charter's balance sheet.

Some of that money will detect -- will be kicked in by liberty media.

The question is how much.

Liberty has said they want to have the same percentage and the new time warner cable, 27%, as they do with the current charter company.

They will have to kick in about $3 million.

That is at the 135 dollar price target we hear charter is going to offer.

That is coming at any moment.

It could come this week.

That said, the offer price may creep up.

If it does, liberty media's going to have to take in more money.

-- kick in more money.

What about the sirius shareholders?

Sirius has a special committee evaluating the bid.

Sirius shareholders are going to have to weigh in.

We have heard from ralph nader who says this is too low.

Even liberty has said they are willing to negotiate on price.

That may creep up, that is why sirius was trading higher than the offer price, three dollars, is -- $3.67 a share.

We will be back in two minutes "in the loop." ?

This text has been automatically generated. It may not be 100% accurate.


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