By Demian Russian
The Federal Communications Commission (FCC) has issued a reply to Liberty Media?s (NASDAQ:LMCA) March 20th application filing for consent to transfer de facto control of Sirius XM Radio (NASDAQ:SIRI). The FCC dismisses the applications as being ?unacceptable for filing.?
We find Liberty Media?s applications to be unacceptable for filing because they are defective with respect to ?execution? and ?other matters of a formal character.? Specifically, Liberty Media was unable to obtain the passwords, signatures, and other necessary information from Sirius to properly file an electronic transfer of control application. Furthermore, we conclude that a waiver of basic filing requirements is not warranted, as the facts disclosed in the referenced applications are not sufficient to establish that Liberty Media intends to take actions, such as conversion of preferred to common stock and installation of a board majority, that would constitute exercise of de facto or de jure control. We therefore dismiss Liberty Media?s applications.
? The Federal Communications Commission
Liberty Media?s applications with the FCC sought approval for a transfer of?de facto?control based upon the expiration of the restrictions in the 2009 investment agreement with Sirius XM Radio, in which they took an approximate 40% take in the satellite radio service provider.?Liberty Media stated in its applications that Sirius XM Radio would not provide the the company with its passwords, signatures and other information required to file an electronic transfer of control application.
On March 30th, 2012, Sirius XM Radio filed a Petition to Dismiss or Deny Liberty Media?s applications. Their argument claimed that there were deficiencies in Liberty Media?s applications that warranted dismissal. Sirius XM pointed to the fact that Liberty Media could not secure the signatures and information needed from Sirius XM as providing ?clear evidence that both a majority of Sirius XM?s board of directors and its management dispute Liberty Media?s assertion that the expiration of certain provisions of the Investment Agreement ? results in a de facto transfer of control .?
Sirius noted in its petition that now that the 2009 investment agreement restrictions have expired there are several actions that Liberty Media could take to move towards gaining de facto control, but Liberty Media has neither taken those actions nor indicated that it proposes to take those actions. Liberty Media filed an opposition on April 12th, 2012?and provided evidence that, based on prior Sirius XM shareholder voting behavior, if Liberty Media converted its Preferred Stock to Common Stock, Liberty Media?s interest would be sufficient to determine the outcome of matters submitted to a shareholder vote. Sirius filed a reply to Liberty Media?s opposition filing on April 20th, 2012.
The FCC detailed some of the reasons why Liberty Media application was?defective with respect to ?execution? and ?other matters of a formal character? in its letter of response:
Liberty Media filed the referenced IBFS application using the form for a request for special temporary authority, rather than for a transfer of control, and did not request a waiver of section 25.112(a)(1) of the Commission?s rules, which states that an application is unacceptable for filing if ?the application is defective with respect to completeness of answers to questions, informational showings, internal inconsistencies, execution, or other matters?of a formal character.? 47 C.F.R. ? 25.112(a)(1). The Experimental Radio Service also has a rule which states that ?applications that are defective with respect to completeness of answers to required questions, execution or other matters of a purely formal character may ? be returned to the applicant with a brief statement as to the omissions.? 47 C.F.R. ? 5.65(a). Liberty Media requested a waiver of this rule in its Experimental License transfer of control applications.
? The Federal Communications Commission
The full FFC response to Liberty Media can be viewed here:
FCC Liberty Media Corporation Application Dismissal
Disclosure: Long SIRI
Contact the author:?DemianRussian@SatelliteRadioPlayground.com
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