Liberty Media Corp has filed a new application with the U.S. Federal Communications Commission saying it plans to take full control of Sirius XM and its board by increasing its stake in the satellite operator above 50 percent.
Liberty said in the filing that it is applying to take "de jure" or absolute control of the company, which includes "the ability to control the membership of the Sirius Board of Directors." It currently holds five out of 13 seats on the board.
Liberty had previously applied to take "de facto" control of Sirius XM but the FCC rejected that bid, saying its application was not "sufficient." At the time, Liberty's stake in the satellite radio operator was about 40 percent.
A company can apply to take "de facto" control of another company when its stake is below 50 percent, but once above that threshold it can then move to take "de jure" control.
Liberty on Wednesday boosted its stake in Sirius XM to about 48 percent by acquiring additional shares on the open market. The company, owned by billionaire cable television pioneer John Malone, previously said it was considering a tax-free spinoff of its Sirius stake.
Sirius XM shares recently hit 52-week highs after analysts said Liberty had been dropping hints that it planned to embark on an aggressive share buyback.
"Our view is that Sirius is under-leveraged and there's plenty of opportunity for share repurchase and other financial actions at the company, which we deem is ultimately positive," said Liberty Chief Executive Greg Maffei on the company's earnings call earlier this month.
Liberty acquired its initial stake in Sirius in 2009 as part of a deal in which it loaned the satellite radio provider $530 million to help it avoid bankruptcy. Though it has been buying Sirius XM shares on the open market in recent months, the bulk of its stake is in the preferred shares it acquired in the 2009 transaction.
Liberty is planning on converting those preferred shares into common stock, but said it will not convert them above the 50 percent ownership threshold until the FCC accepts its application to take control. The company said it would be able to convert its shares within 60 days of the FCC granting its application.
"Liberty Media is qualified to control Sirius XM. Liberty Media and its current and previous subsidiaries have held numerous classes of FCC licenses," Liberty said in its filing.
Sirius XM, led by CEO Mel Karmazin, said in a regulatory filing on Friday that it would cooperate fully with the FCC in its evaluation of Liberty's application.
Sirius XM posted higher-than-expected second quarter revenue earlier this month, boosted by price increases for its service, and raised its earnings outlook for the year.
Liberty declined comment beyond its FCC filing. A Sirius XM representative could not be reached.
(Reporting By Liana B. Baker; Editing by Peter Lauria and Jim Marshall)