It was quarter at Liberty Media (LMCA/LMCK) and Liberty Broadband (LBRDA/LBRDK).  This was no surprise at Media as the slimmed down company is mostly now just a holding company for its 58% stake in Sirius XM Satellite Radio (SIRI).  SIRI had already reported a strong first quarter, including raising full year guidance on a number of key metrics.  The idea behind splitting Liberty into separate Media and Broadband companies was to eliminate the complexity discount and the competition for capital between two different businesses (SIRI for Media and Charter Communications for Broadband).  Thus far, this has not worked for Media, where the discount to net asset value has actually widened somewhat.  As a result, investors were listening closely to Media CEO Greg Maffei for hints at any actions the company might take.  Media has begun to accelerate its share repurchases, something investors would like to more of.  There was nothing new about possibly spinning off SIRI in a tax efficient transaction as Media once did with a similarly large position in DirecTV.  The idea of SIRI buying LMCA shares rather than its own to effectively buy back its own shares at a discount was discussed.  Interestingly, John Malone, who controls all the Liberty entities, seems to be in favor.  In the end, little new is happening at Liberty Media.  The shares will ride higher if SIRI shares lead the way.  Fortunately, SIRI continues to perform very well.

It is probably unfair to 2015 has been uneventful for Broadband.  As the controlling shareholder in Charter Communications, Broadband had a big stake in the now scrapped merger of Comcast and Time Warner Cable.  Charter was a major player in that merger, acquiring and swapping cable systems with Comcast.  Broadband is now a pivotal player as Charter is clearly looking to acquire Time Warner Cable itself.  Before Comcast entered the action, Charter was conducting a hostile takeover of the Time Warner Cable.  Charter is playing nice this time around.  Broadband will have a critical role if a deal is stuck as Broadband needs to maintain its 25% stake in Charter to avoid tax and regulatory complications.  Northlake likes the cable industry and, in particular, likes and trusts John Malone to realize value at Charter through Liberty Broadband.  A friendly merger between Charter and Time Warner Cable offers 20%+ upside for Charter shares.  Broadband shares should follow accordingly.

LMCA, LMCK, LBRDA, and LBRDK are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts.  Steve is sole proprietor of Northlake, a registered investment advisor.  Northlake’s regulatory filings can be found at www.sec.gov.  LMCA, LMCK, LBRDA, and LBRDK are net long positions in the Entermedia Funds.  Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.