| Investments In Affiliates Accounted For Using The Equity Method |
Investments in Affiliates Accounted for Using the Equity Method
Liberty has various investments accounted for using the equity method. The following table includes the Company's carrying amount and percentage ownership of the more significant investments in affiliates at December 31, 2011, and the carrying amount at December 31, 2010:
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December 31, 2011 |
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December 31, 2010 |
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Percentage
ownership
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Market
Value
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Carrying
amount
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|
Carrying
amount
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|
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dollar amounts in millions |
SIRIUS XM |
41 |
% |
|
$ |
4,708 |
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|
$ |
64 |
|
|
5 |
|
Live Nation(a) |
21 |
% |
|
$ |
326 |
|
|
377 |
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|
— |
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Other |
various |
|
|
N/A |
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|
126 |
|
|
86 |
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$ |
567 |
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|
91 |
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The following table presents the Company's share of earnings (losses) of affiliates:
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Years ended December 31, |
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2011 |
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2010 |
|
2009 |
SIRIUS XM |
$ |
68 |
|
|
(41 |
) |
|
(28 |
) |
Live Nation(a) |
(34 |
) |
|
— |
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|
— |
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Other |
15 |
|
|
(23 |
) |
|
(16 |
) |
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$ |
49 |
|
|
(64 |
) |
|
(44 |
) |
___________________________
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(a) |
During June 2011, Liberty acquired an additional 5.5 million shares of Live Nation which increased our ownership percentage above 20% of the outstanding voting shares. Due to the presumption that an entity with an ownership percentage greater than 20% has significant influence absent other factors to rebut that presumption, the Company is accounting for the investment as an equity method affiliate. The Company has elected to record its share of earnings (loss) for Live Nation on a three-month lag due to timeliness considerations. Increases in ownership which result in a change to the equity method of accounting generally require retroactive recognition of an investment's share of earnings (loss) in prior periods. Due to the relative insignificance of our share of losses for Live Nation in previous periods, both quantitatively and qualitatively, the Company has recorded such amounts in the current year. Approximately $12 million of the losses recorded for the year ended December 31, 2011 relate to the prior year.
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Sirius XM Radio Inc.
Based on the Company's voting rights and its conclusion that the SIRIUS XM Preferred Stock is in-substance common stock, the Company accounts for its investment in the SIRIUS XM Preferred Stock using the equity method of accounting. The Company has elected to record its share of earnings (loss) for SIRIUS XM on a three-month lag due to timeliness considerations.
Summarized unaudited financial information for SIRIUS XM is as follows:
SIRIUS XM Consolidated Balance Sheet
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September 30,
2011
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December 31,
2010
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amounts in millions |
Current assets |
$ |
1,033 |
|
|
992 |
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Property and equipment, net |
1,703 |
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|
1,761 |
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Intangible assets |
2,588 |
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|
2,633 |
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Goodwill |
1,835 |
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|
1,835 |
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Other assets |
166 |
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|
162 |
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Total assets |
$ |
7,325 |
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|
7,383 |
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Current liabilities |
$ |
2,158 |
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|
2,350 |
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Deferred income taxes |
936 |
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|
915 |
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Long-term debt |
2,678 |
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|
2,696 |
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Other liabilities |
938 |
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|
1,214 |
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Stockholders' equity |
615 |
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|
208 |
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Total liabilities and equity |
$ |
7,325 |
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|
7,383 |
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SIRIUS XM Consolidated Statement of Operations
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Trailing Twelve months ended
September 30,
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Nine months ended
December 31,
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2011 |
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2010 |
|
2009 |
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amounts in millions |
Revenue |
$ |
2,967 |
|
|
2,757 |
|
|
1,796 |
|
Cost of services |
(1,114 |
) |
|
(1,081 |
) |
|
(791 |
) |
Selling, general and administrative expenses |
(931 |
) |
|
(907 |
) |
|
(599 |
) |
Restructuring, impairments and related costs |
(60 |
) |
|
(7 |
) |
|
(30 |
) |
Depreciation and amortization |
(268 |
) |
|
(285 |
) |
|
(231 |
) |
Operating income |
594 |
|
|
477 |
|
|
145 |
|
Interest expense |
(303 |
) |
|
(289 |
) |
|
(240 |
) |
Loss on extinguishment of debt |
(92 |
) |
|
(39 |
) |
|
(264 |
) |
Other income (loss), net |
85 |
|
|
(1 |
) |
|
5 |
|
Income tax expense |
(9 |
) |
|
(9 |
) |
|
(3 |
) |
Net income (loss) from continuing operations |
275 |
|
|
139 |
|
|
(357 |
) |
Preferred stock beneficial conversion feature |
— |
|
|
— |
|
|
(186 |
) |
Net income attributable to SIRIUS XM stockholders |
$ |
275 |
|
|
139 |
|
|
(543 |
) |
As of December 31, 2011, the SIRIUS XM Preferred Stock had a market value of $4,708 million based on the value of the common stock into which it is convertible.
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