Auto Sales to Drive SiriusXM Past Liberty Media M&A Chatter

(SiriusXM story updated to reflect additional analyst comments and earnings estimates)

NEW YORK (TheStreet) -- Three years after catching the market bottom with a 40% stake in SiriusXM(SIRI) , Liberty Media(LMCA) chairman John Malone would likely concede that the easy money has been made on the satellite radio giant.

Investors who've watched SiriusXM gain roughly 1,500% since a March 2009 bottom would be wise to have the same perspective, as speculation of a Liberty Media buyout has driven Sirius shares to a near 30% gain in 2012. In fact, long-term SiriusXM investors may benefit more from keeping an eye on auto sales as a source of subscriber growth while tuning out what could be an uncertain and complicated prospective buyout by Liberty Media.

In March 2009, Liberty Media took a 40% stake in SiriusXM after providing the company with $530 million in bankruptcy-averting financing. The "bailout" paved the way for a Sirius share recovery from 14 cents a share to $2.35. A standstill agreement that prevented Liberty Media from increasing its SiriusXM stake expired after three years, and on March 20, a petition to the Federal Communications Commission paved the way for Liberty Media to build a controlling stake in the satellite radio company.

Deal speculation centers on whether Liberty Media will look to buy SiriusXM through a merger and tax-free spinoff transaction called a Reverse Morris Trust, or through a direct acquisition to take advantage of billions of net operating losses NOLs. However, the petition and a subsequent request by SiriusXM to block the prospective stake increase revived speculation of a takeover by the highly acquisitive Liberty Media, and portrayed two companies at odds over the M&A end game.