Warren Buffett’s Berkshire Hathaway has strategically boosted its stake in SiriusXM, now holding an impressive 32% of the significant satellite radio entity. This aggressive move reflects a calculated bid by Berkshire to capitalize on the evolving audio entertainment market. Over the course of recent transactions spanning Wednesday to Friday, the company acquired approximately 3.6 million shares, amounting to an investment of around $87 million. This bold financial maneuver was officially disclosed through a filing with the Securities and Exchange Commission.
This investment comes on the heels of billionaire John Malone’s Liberty Media restructuring. Following Malone’s decision to merge tracking stocks from his robust media holdings with the broader audio entertainment company, Berkshire found a compelling opportunity. Malone’s media empire restructuring also involved the separation of the Atlanta Braves’ baseball team into a distinct, publicly traded entity—a development that caught Berkshire’s attention, as it holds shares in both ventures. Berkshire’s initial interest in Liberty Media’s trackers dates back to 2016, but the real surge in investment began early in 2024, presumably as part of a merger arbitrage strategy following the announcement of consolidation.
Interestingly, while Buffett’s commitment to this investment has caught the market’s attention, he has not publicly commented on it. This raises questions about whether the decision reflects his direct influence or if it stems from the actions of his key investing associates, Ted Weschler or Todd Combs. Regardless, this recent acquisition takes place against a backdrop of challenges for SiriusXM, which struggles with declining subscriber numbers and shifting demographics—factors that have made the stock less enticing to Wall Street investors.
Current market sentiment towards SiriusXM is cautious at best, highlighted by the fact that out of 14 analysts reviewing the company, only five endorsing it with a buy rating. Recently, JPMorgan analyst Sebastiano Petti initiated coverage with an underweight rating, spotlighting apprehensions regarding SiriusXM’s long-term growth prospects and its effectiveness in appealing to a wider audience. Furthermore, the merger activity that sliced share count by 12% may deter stock buybacks until 2027, raising worries about further detriment to share value.
In a surprising turn, the stock climbed 8% upon Berkshire’s disclosure, although it still remains more than 50% down year-to-date. This volatile performance evokes memories of Berkshire’s past media investment foray in 2022, when it acquired a nonvoting stake in Paramount Global. That venture ended poorly, resulting in a complete divestment at a significant loss—an experience that prompted Buffett to reconsider the competitiveness of the streaming sector and the multitude of players vying for consumer attention.
As we examine Buffett’s recent actions, it’s clear that while the approach may seem risky given SiriusXM’s market hurdles, it demonstrates Berkshire Hathaway’s enduring penchant for long-term value assessments. Whether this investment will yield substantial returns remains uncertain, but it will undoubtedly provide crucial insights into how Buffett navigates the intricate dynamics of the ever-changing media landscape.