| 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 March 31, 2012 and the carrying amount at December 31, 2011:
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March 31, 2012 |
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December 31, 2011 |
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Percentage
ownership
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Market
Value (level 1)
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Carrying
amount
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Carrying
amount
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dollar amounts in millions |
SIRIUS XM |
41 |
% |
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$ |
5,976 |
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$ |
80 |
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|
64 |
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Live Nation(a) |
21 |
% |
|
$ |
368 |
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|
349 |
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|
377 |
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Other |
various |
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|
N/A |
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|
121 |
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|
126 |
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$ |
550 |
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|
567 |
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The following table presents the Company's share of earnings (losses) of affiliates:
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Three months ended March 31, |
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2012 |
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2011 |
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amounts in millions |
SIRIUS XM |
$ |
18 |
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|
(7 |
) |
Live Nation(a) |
(22 |
) |
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(23 |
) |
Other |
(5 |
) |
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2 |
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$ |
(9 |
) |
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(28 |
) |
___________________________
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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 and no other factors would 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 not presented, both quantitatively and qualitatively, the Company has recorded approximately $12 million of these losses in the three months ended March 31, 2011.
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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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December 31, 2011 |
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December 31,
2010
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amounts in millions |
Current assets |
$ |
1,277 |
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|
992 |
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Property and equipment, net |
1,674 |
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|
1,761 |
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Intangible assets |
2,574 |
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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 |
136 |
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162 |
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Total assets |
$ |
7,496 |
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|
7,383 |
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Current liabilities |
$ |
2,248 |
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|
2,350 |
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Deferred income taxes |
1,011 |
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|
915 |
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Long-term debt |
2,684 |
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2,696 |
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Other liabilities |
849 |
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1,214 |
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Stockholders' equity |
704 |
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|
208 |
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Total liabilities and equity |
$ |
7,496 |
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|
7,383 |
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SIRIUS XM Consolidated Statement of Operations
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Three months ended
December 31,
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2011 |
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2010 |
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amounts in millions |
Revenue |
$ |
784 |
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|
736 |
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Costs of services |
(299 |
) |
|
(292 |
) |
Selling, general and administrative expenses |
(264 |
) |
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(245 |
) |
Restructuring, impairments and related costs |
— |
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|
(60 |
) |
Depreciation and amortization |
(67 |
) |
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(67 |
) |
Operating income |
154 |
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|
72 |
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Interest expense |
(75 |
) |
|
(73 |
) |
Loss on extinguishment of debt |
— |
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(85 |
) |
Other income (loss), net |
(4 |
) |
|
3 |
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Income tax expense |
(4 |
) |
|
2 |
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Net income (loss) attributable to SIRIUS XM stockholders |
$ |
71 |
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(81 |
) |
As of March 31, 2012, the SIRIUS XM Preferred Stock had a market value of $5,976 million based on the value of the common stock into which it is convertible (level 1).
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