Formula 1 Owner Liberty Media Is Seeking Its True Valuation — By Selling or Spinning Off Everything It Owns
Every company seems to be aiming for simplicity — just look at GE, Honeywell, and CVS. Over the past year, these companies have worked to break up their complex businesses to unlock individual value, hoping to eliminate the so-called “conglomerate discount.” Why? Because, as one company shows with its 81% year-to-date rally, a makeover can be quite profitable.
Liberty, begone: You know Warren Buffett, but we’d bet a buck or two that you might not have heard of billionaire John Malone, chairman and founder of Liberty Media. The firm owns the majority of Formula 1 and Sirius XM, along with stakes in Live Nation, sport-exposed investments, and cable/media properties. Confused? So is everybody else. That’s why, in recent weeks, 83-year-old Malone has been shifting his decades-old empire around, aiming to simplify it in a final hurrah.
- Over the years, Liberty Media has sold off many large media holdings — including a 48% stake in DirecTV, a 75% stake in Starz, and its regional sports networks.
- Recently, the selloff has accelerated: it divested the Atlanta Braves, spun off Sirius XM, and announced plans to sell its broadband business to Charter Communications.
At Liberty to Change
As if cutting down on holdings hasn’t been enough, Liberty Media announced big changes on Wednesday — including the departure of the CEO Greg Maffei, who has led the company since 2005. Malone will take over as interim CEO to accelerate the corporate makeover.
- Liberty Media also revealed a spinoff called Liberty Live, which will own 69.6M shares of Live Nation and interests in the event platform Quint.
- Meanwhile, Liberty Media will retain its ownership in racing interests like Formula 1 and MotoGP, which it acquired for $4.5B in Apr. 2024.
Bargain buying: Malone’s consolidations and slice-and-dicing have been seen as a way to realize the full value of Liberty’s expansive, often confusing holdings. He explained that the changes are designed to remove “structural discounts at Liberty Media” while “growing our attractive, cash generative businesses.” Malone added, “Consolidation is really the right direction,” after years of cheap money and excess competition. Based on the strong returns this year, the market seems to agree.
