Berkshire Hathaway has solidified its position in SiriusXM, now owning a substantial 32% of the satellite radio company based in New York. Recent filings with the Securities and Exchange Commission reveal that the Omaha-based conglomerate acquired approximately 3.6 million shares for around $87 million through a series of transactions conducted between Wednesday and Friday.
This strategic move comes on the heels of billionaire John Malone’s Liberty Media finalizing a deal in early September to merge its tracking stocks with SiriusXM’s overall operations. This merger is part of Malone’s broader strategy to reshape his extensive media empire, which also included the separation of the Atlanta Braves baseball team into a publicly traded entity—another investment that Berkshire holds.
Buffett’s Investment Philosophy
In early 2024, following the announcement of the merger, the company intensified its investment in SiriusXM, likely engaging in a merger arbitrage strategy. Interestingly, Buffett, who is now 94 years old, has not publicly discussed this particular investment. It remains unclear whether the decision stemmed from him directly or was driven by his trusted investing lieutenants, Ted Weschler or Todd Combs.
Challenges Facing SiriusXM
Despite Berkshire Hathaway’s bullish stance, SiriusXM faces significant hurdles that have made it less popular among investors. The company has been struggling with subscriber losses and adverse demographic trends, resulting in a generally unfavorable perception on Wall Street. Out of 14 analysts monitoring the stock, only five have issued a buy rating, according to data from FactSet.
JPMorgan analyst Sebastiano Petti recently resumed coverage of SiriusXM, assigning it an underweight rating. He expressed concerns regarding the radio giant’s long-term growth potential and its effectiveness in appealing to a broader audience. The recent merger transaction has also reduced the company’s share count by 12%, which may lead to a pause in stock buybacks until 2027—an action that could further depress stock prices.
Market Reactions and Historical Context
Following Berkshire’s investment disclosure, SiriusXM’s stock saw an uptick of 8%. However, it is important to note that the shares are still down over 50% this year, reflecting the broader challenges the company faces in a competitive audio entertainment market.
Looking Ahead
As Buffett and his team navigate the complexities of the media landscape, the future of SiriusXM will likely depend on its ability to innovate and attract a wider subscriber base. While Berkshire’s increased stake signals confidence in the company’s potential, the broader market sentiment remains cautious, highlighting the need for effective strategies to address ongoing challenges in the satellite radio industry.
Read Also: Saudi Arabia Aims to Become a Global Logistics Hub, Says GACA President
