Sirius XM / Liberty: change the station Shareholders in the satellite radio provider Sirius XM have had a grand five years. Now they must decide if they want to diversify into baseball, bookstores, concerts and cable TV. Liberty Media, a John Malone investment vehicle that contains these diverse interests, is offering its shares in exchange for the 47 per cent of Sirius that it does not already own. Liberty's shares have gained 35 per cent in the past year, more than twice Sirius's return. But Liberty's key investments also happen to be publicly traded. So why put Mr Malone, rather than investors, in charge of capital allocation? Stalk radio Liberty Media share price and market cap Liberty's market value is $17bn. Its stake in Sirius is worth $12bn. Alongside, it has minority stakes in concert promoter Live Nation ($1bn), cable TV provider Charter ($4bn) and bookstore Barnes & Noble ($200m). Cash and other investments, including the Atlanta Braves baseball team, essentially net to zero against Liberty's debt. The premium that Liberty is offering for Sirius shares is just 5 per cent, but this is not grounds for complaint. Liberty already has control, so Sirius shareholders are just exchanging a minority stake in one company for another. The question for Sirius holders, then, is whether they want to own the new Liberty. Post-merger, Liberty will have an equity value of $27bn, of which $22bn reflects the radio business. But then there is its rumoured buyout of Time Warner Cable via Charter. Full consolidation of Sirius will enable Liberty to raise debt more easily, putting the cable company, with its $37bn market cap, within reach. Such a deal would be complex and pricey. And if Sirius investors want that risk (and potential reward), they can buy Charter shares directly. Similarly, Barnes & Noble and Live Nation are also listed companies. So take the modest premium, sell the Liberty shares and make your own portfolio choices. As for what was lost - a satellite radio pure play - its heyday may have passed. The shares are up 2,500 per cent since 2009.