Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

OR

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                to                

Commission File Number 001-35707

LIBERTY MEDIA CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

 

State of Delaware

 

37-1699499

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

12300 Liberty Boulevard
Englewood, Colorado

 

80112

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (720) 875-5400

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes     No 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

Large accelerated filer 

 

Accelerated filer 

 

Non-accelerated filer 
(do not check if smaller
reporting company)

 

Smaller reporting company 

 

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes     No 

The number of outstanding shares of Liberty Media Corporation's common stock as of October 31, 2014 was:

 

 

 

 

Series A common stock

 

104,473,079 

Series B common stock

 

9,873,972 

Series C common stock

 

228,698,276 

 

 

 

 

 

 


 

Table of Contents

 

Table of Contents

 

 

 

 

LIBERTY MEDIA CORPORATION Condensed Consolidated Balance Sheets (unaudited) 

I-3

LIBERTY MEDIA CORPORATION Condensed Consolidated Balance Sheets (Continued) (unaudited) 

I-4

LIBERTY MEDIA CORPORATION Condensed Consolidated Statements Of Operations (unaudited) 

I-5

LIBERTY MEDIA CORPORATION Condensed Consolidated Statements Of Operations (Continued) (unaudited) 

I-6

LIBERTY MEDIA CORPORATION Condensed Consolidated Statements Of Comprehensive Earnings (Loss) (unaudited) 

I-7

LIBERTY MEDIA CORPORATION Condensed Consolidated Statements Of Cash Flows (unaudited) 

I-8

LIBERTY MEDIA CORPORATION Condensed Consolidated Statement of Equity (unaudited) 

I-9

LIBERTY MEDIA CORPORATION Notes to Condensed Consolidated Financial Statements 

I-10

 

 

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-28

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

I-38

 

Item 4. Controls and Procedures.

I-38

 

 

 

Part II - Other Information 

II-1

 

Item 1. Legal Proceedings

II-1

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-1

 

Item 6. Exhibits

II-2

 

 

 

SIGNATURES 

II-3

EXHIBIT INDEX 

II-4

 

 

I-2


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

September 30, 2014

    

December 31, 2013

 

 

amounts in millions

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

377 

 

1,088 

 

Trade and other receivables, net

 

243 

 

206 

 

Short term marketable securities (note 4)

 

296 

 

15 

 

Deferred income tax assets

 

915 

 

916 

 

Other current assets

 

340 

 

269 

 

Total current assets

 

2,171 

 

2,494 

 

Investments in available-for-sale securities and other cost investments (note 5)

 

1,099 

 

1,324 

 

Investments in affiliates, accounted for using the equity method (note 6)

 

3,298 

 

3,299 

 

 

 

 

 

 

 

Property and equipment, at cost

 

2,282 

 

2,149 

 

Accumulated depreciation

 

(496)

 

(341)

 

 

 

1,786 

 

1,808 

 

Intangible assets not subject to amortization (note 7):

 

 

 

 

 

Goodwill

 

14,391 

 

14,365 

 

FCC licenses

 

8,600 

 

8,600 

 

Other

 

1,073 

 

1,073 

 

 

 

24,064 

 

24,038 

 

Intangible assets subject to amortization, net (note 7)

 

1,145 

 

1,200 

 

Other assets, at cost, net of accumulated amortization

 

282 

 

379 

 

Total assets

$

33,845 

 

34,542 

 

 

(continued)

 

See accompanying notes to condensed consolidated financial statements.

I-3


 

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LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

 

 

 

 

 

 

 

 

 

    

September 30, 2014

    

December 31, 2013

 

 

 

amounts in millions,

 

 

 

except share amounts

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

699 

 

670 

 

Current portion of debt (note 8)

 

 

754 

 

777 

 

Deferred revenue

 

 

1,621 

 

1,575 

 

Other current liabilities

 

 

157 

 

150 

 

Total current liabilities

 

 

3,231 

 

3,172 

 

Long-term debt (note 8)

 

 

5,320 

 

4,778 

 

Deferred income tax liabilities

 

 

2,325 

 

2,312 

 

Other liabilities

 

 

375 

 

398 

 

Total liabilities

 

 

11,251 

 

10,660 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued

 

 

 —

 

 —

 

Series A common stock, $.01 par value. Authorized 2,000,000,000 shares; issued and outstanding 104,464,363 shares at September 30, 2014 and 104,421,488 shares at December 31, 2013

 

 

 

 

Series B common stock, $.01 par value. Authorized 75,000,000 shares; issued and outstanding 9,873,972 shares at September 30, 2014 and 9,876,178 shares at December 31, 2013

 

 

 —

 

 —

 

Series C common stock, $.01 par value. Authorized 2,000,000,000 shares; issued and outstanding 228,680,643 shares at September 30, 2014 and retroactive issued and outstanding 228,595,332 December 31, 2013

 

 

 

 

Additional paid-in capital

 

 

2,057 

 

2,215 

 

Accumulated other comprehensive earnings (loss), net of taxes

 

 

(3)

 

 

Retained earnings

 

 

11,964 

 

11,859 

 

Total stockholders' equity

 

 

14,021 

 

14,081 

 

Noncontrolling interests in equity of subsidiaries

 

 

8,573 

 

9,801 

 

Total equity

 

 

22,594 

 

23,882 

 

Commitments and contingencies (note 9)

 

 

 

 

 

 

Total liabilities and equity

 

$

33,845 

 

34,542 

 

 

See accompanying notes to condensed consolidated financial statements.

I-4


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

    

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

amounts in millions

 

Revenue:

 

 

 

 

 

 

 

 

 

 

Subscriber revenue

 

$

892 

 

832 

 

2,602 

 

2,280 

 

Other revenue

 

 

292 

 

278 

 

753 

 

697 

 

Total Revenue

 

 

1,184 

 

1,110 

 

3,355 

 

2,977 

 

Operating costs and expenses, including stock based compensation (note 2):

 

 

 

 

 

 

 

 

 

 

Cost of subscriber services (exclusive of depreciation shown separately below):

 

 

 

 

 

 

 

 

 

 

Revenue share and royalties

 

 

204 

 

175 

 

600 

 

469 

 

Programming and content

 

 

66 

 

64 

 

194 

 

179 

 

Customer service and billing

 

 

94 

 

77 

 

276 

 

224 

 

Other

 

 

33 

 

25 

 

97 

 

74 

 

Subscriber acquisition costs

 

 

120 

 

131 

 

367 

 

367 

 

Other operating expense

 

 

119 

 

104 

 

274 

 

254 

 

Selling, general and administrative

 

 

209 

 

207 

 

640 

 

548 

 

Depreciation and amortization

 

 

90 

 

79 

 

272 

 

237 

 

 

 

 

935 

 

862 

 

2,720 

 

2,352 

 

Operating income (loss)

 

 

249 

 

248 

 

635 

 

625 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(70)

 

(39)

 

(185)

 

(78)

 

Dividend and interest income

 

 

 

12 

 

22 

 

37 

 

Share of earnings (losses) of affiliates, net (note 6)

 

 

(6)

 

(8)

 

(53)

 

(12)

 

Realized and unrealized gains (losses) on financial instruments, net (note 4)

 

 

(15)

 

64 

 

(55)

 

222 

 

Gains (losses) on transactions, net (note 1)

 

 

(1)

 

 —

 

 

7,481 

 

Other, net

 

 

(13)

 

(67)

 

(69)

 

(73)

 

 

 

 

(99)

 

(38)

 

(339)

 

7,577 

 

Earnings (loss) before income taxes

 

 

150 

 

210 

 

296 

 

8,202 

 

Income tax (expense) benefit

 

 

(63)

 

(94)

 

(31)

 

170 

 

Net earnings (loss)

 

 

87 

 

116 

 

265 

 

8,372 

 

Less net earnings (loss) attributable to the noncontrolling interests

 

 

54 

 

40 

 

160 

 

144 

 

Net earnings (loss) attributable to Liberty stockholders

 

$

33 

 

76 

 

105 

 

8,228 

 

 

(continued)

See accompanying notes to condensed consolidated financial statements.

I-5


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations (Continued)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

amounts in millions,

 

 

 

except per share amounts

 

Basic net earnings (loss) attributable to Liberty stockholders per common share (note 3):

 

 

 

 

 

 

 

 

 

 

Series A, B and C common stock

 

$

0.10 

 

0.21 

 

0.31 

 

23.05 

 

Diluted net earnings (loss) attributable to Liberty stockholders per common share (note 3):

 

 

 

 

 

 

 

 

 

 

Series A, B and C common stock

 

$

0.10 

 

0.21 

 

0.30 

 

22.67 

 

 

See accompanying notes to condensed consolidated financial statements.

I-6


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Comprehensive Earnings (Loss)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

amounts in millions

 

Net earnings (loss)

 

$

87 

 

116 

 

265 

 

8,372 

 

Other comprehensive earnings (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period

 

 

(1)

 

 

(4)

 

 

Recognition of previously unrealized (gains) losses on available-for-sale securities, net

 

 

 —

 

 

 —

 

(25)

 

Share of other comprehensive earnings (loss) of equity affiliates

 

 

(8)

 

 

(3)

 

 

Other comprehensive earnings (loss)

 

 

(9)

 

11 

 

(7)

 

(19)

 

Comprehensive earnings (loss)

 

 

78 

 

127 

 

258 

 

8,353 

 

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

 

54 

 

40 

 

160 

 

144 

 

Comprehensive earnings (loss) attributable to Liberty stockholders

 

$

24 

 

87 

 

98 

 

8,209 

 

 

See accompanying notes to condensed consolidated financial statements.

I-7


 

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LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

 

September 30,

 

 

    

2014

    

2013

 

 

 

amounts in millions

 

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings

 

$

265 

 

8,372 

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

272 

 

237 

 

Stock-based compensation

 

 

151 

 

141 

 

Cash payments for stock-based compensation

 

 

(2)

 

(2)

 

Share of (earnings) loss of affiliates, net

 

 

53 

 

12 

 

Realized and unrealized (gains) losses on financial instruments, net

 

 

55 

 

(222)

 

Losses (gains) on transactions, net

 

 

(1)

 

(7,481)

 

Losses (gains) on dilution of investment in affiliate

 

 

67 

 

55 

 

Deferred income tax expense (benefit)

 

 

 

(190)

 

Noncash interest expense

 

 

(27)

 

(54)

 

Other, net

 

 

 

15 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Current and other assets

 

 

(72)

 

142 

 

Payables and other liabilities

 

 

28 

 

(136)

 

Net cash provided (used) by operating activities

 

 

801 

 

889 

 

Cash flows from investing activities:

 

 

 

 

 

 

Cash proceeds from sale of investments

 

 

247 

 

12 

 

Cash (paid) for acquisitions, net of cash acquired

 

 

(47)

 

408 

 

Proceeds (payments) on financial instruments, net

 

 

(30)

 

(59)

 

Investments in and loans to cost and equity investees

 

 

(169)

 

(2,584)

 

Repayments of loans by cost and equity investees

 

 

35 

 

71 

 

Capital expended for property and equipment

 

 

(153)

 

(132)

 

Purchases of short term investments and other marketable securities

 

 

(349)

 

(178)

 

Sales of short term investments and other marketable securities

 

 

68 

 

229 

 

Other investing activities, net

 

 

(3)

 

(7)

 

Net cash provided (used) by investing activities

 

 

(401)

 

(2,240)

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings of debt

 

 

2,218 

 

4,211 

 

Repayments of debt

 

 

(1,660)

 

(1,731)

 

Repurchases of Liberty common stock

 

 

 —

 

(140)

 

Subsidiary shares repurchased by subsidiary

 

 

(1,650)

 

(1,602)

 

Other financing activities, net

 

 

(19)

 

(19)

 

Net cash provided (used) by financing activities

 

 

(1,111)

 

719 

 

Net cash provided (used) by discontinued operations:

 

 

 

 

 

 

Cash provided (used) by operating activities

 

 

 —

 

 

Cash provided (used) by investing activities

 

 

 —

 

 

Cash provided (used) by financing activities

 

 

 —

 

550 

 

Change in available cash held by discontinued operations

 

 

 —

 

650 

 

Net cash provided (used) by discontinued operations

 

 

 —

 

1,200 

 

Net increase (decrease) in cash and cash equivalents

 

 

(711)

 

568 

 

Cash and cash equivalents at beginning of period

 

 

1,088 

 

603 

 

Cash and cash equivalents at end of period

 

$

377 

 

1,171 

 

 

See accompanying notes to condensed consolidated financial statements.

I-8


 

Table of Contents

 

 

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement Of Equity

(unaudited)

Nine months ended September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

    

 

    

 

    

 

    

 

    

 

    

Accumulated

    

 

    

Noncontrolling

    

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

interest in

 

 

 

 

 

Preferred

 

 

 

 

 

 

 

Paid-in

 

comprehensive

 

Retained

 

equity of

 

Total

 

 

    

Stock

    

Series A

    

Series B

    

Series C

    

Capital

    

earnings

    

earnings

    

subsidiaries

    

equity

 

 

 

amounts in millions

 

Balance at January 1, 2014

 

$

 

 

 

 

2,215 

 

 

11,859 

 

9,801 

 

23,882 

 

Net earnings

 

 

 

 

 

 

 

 

105 

 

160 

 

265 

 

Other comprehensive loss

 

 

 

 

 

 

 

(7)

 

 

 

(7)

 

Stock-based compensation

 

 

 

 

 

 

91 

 

 

 

50 

 

141 

 

Minimum withholding taxes on net share settlements of stock-based compensation

 

 

 

 

 

 

(30)

 

 

 

 

(30)

 

Shares repurchased by subsidiary

 

 

 

 

 

 

(208)

 

 

 

(1,390)

 

(1,598)

 

Shares issued by subsidiary

 

 

 

 

 

 

(20)

 

 

 

20 

 

 

Remaining balance available on funds allocated for subsidiary accelerated share repurchase

 

 

 

 

 

 

 

 

 

(68)

 

(68)

 

Other

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2014

 

$

 

 

 

 

2,057 

 

(3)

 

11,964 

 

8,573 

 

22,594 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

I-9


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1)   Basis of Presentation

The accompanying condensed consolidated financial statements include all the accounts of Liberty Media Corporation and its controlled subsidiaries (formerly named Liberty Spinco, Inc.) ("Liberty" or the "Company" unless the context otherwise requires).  All significant intercompany accounts and transactions have been eliminated.

Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the media, communications and entertainment industries primarily in North America.  The significant subsidiaries include Sirius XM Holdings, Inc. ("SIRIUS XM"), the Atlanta National League Baseball Club, Inc. ("ANLBC") and TruePosition, Inc. ("TruePosition").  Our significant investments accounted for under the equity method include Charter Communications, Inc. ("Charter") and Live Nation Entertainment, Inc. ("Live Nation").  See the discussion below regarding the subsequent completion of the spin-off of Liberty Broadband Corporation.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2013, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty's Annual Report on Form 10-K for the year ended December 31, 2013.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) fair value measurement, (ii) accounting for income taxes, (iii) assessments of other-than-temporary declines in fair value of its investments and (iv) the expected depreciable lives of satellites and spacecraft control facilities to be its most significant estimates.

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers.  The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.   The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have its financial statements and related disclosures.

Liberty holds investments that are accounted for using the equity method. Liberty does not control the decision making process or business management practices of these affiliates. Accordingly, Liberty relies on management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty relies on audit reports that are provided by the affiliates' independent auditors on the financial statements of such affiliates. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a material effect on Liberty's condensed consolidated financial statements.

Liberty has entered into certain agreements with Liberty Interactive Corporation (“Liberty Interactive”), Starz and Liberty TripAdvisor Holdings, Inc. (“TripCo”) all of which are separate publicly traded companies, in order to govern relationships between the companies. None of these entities have any stock ownership, beneficial or otherwise, in any of

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Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

the others. These agreements include Reorganization Agreements, Services Agreements, Facilities Sharing Agreements, a Lease Agreement (in the case of Starz only) and Tax Sharing Agreements.

The Reorganization Agreements provide for, among other things, provisions governing the relationships between Liberty and each of Liberty Interactive, Starz and TripCo, respectively, including certain cross-indemnities. Pursuant to the Services Agreements, Liberty provides Liberty Interactive, Starz and TripCo with general and administrative services including legal, tax, accounting, treasury and investor relations support. Liberty Interactive, Starz and TripCo reimburse Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services and, in the case of Liberty Interactive and Starz, Liberty Interactive's and Starz's respective allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to each respective company, while TripCo pays an annual fee for the provision of these services. Under the Facilities Sharing Agreements, Liberty shares office space and related amenities at its corporate headquarters with Liberty Interactive and TripCo.  Under these various agreements approximately $4 million and $6 million of these allocated expenses were reimbursed to Liberty during the three months ended September 30, 2014 and 2013, respectively, and $12 million and $15 million for the nine months ended September 30, 2014 and 2013 respectively.  Under the Lease Agreement, Starz leases its corporate headquarters from Liberty.  The Lease Agreement with Starz for their corporate headquarters requires a payment of approximately $3 million annually, subject to certain increases based on the Consumer Price Index.

On January 18, 2013, Liberty settled a block transaction with a financial institution taking possession of an additional 50,000,000 common shares of SIRIUS XM as well as converting its remaining SIRIUS XM Convertible Perpetual Preferred Stock, Series B-1, into 1,293,509,076 shares of SIRIUS XM Common Stock.  As a result of these transactions Liberty holds more than 50% of the capital stock of SIRIUS XM entitled to vote on any matter, including the election of directors.  This resulted in the application of purchase accounting and the consolidation of SIRIUS XM in the first quarter of 2013 and the recognition of a $7.5 billion gain on the transaction.  We note that in periods prior to a controlling interest, SIRIUS XM was treated as an equity method affiliate.

On October 9, 2013, Liberty entered into a share repurchase agreement with SIRIUS XM pursuant to which SIRIUS XM agreed to acquire 136,600,826 SIRIUS XM shares for $500 million, in three separate tranches between the fourth quarter of 2013 and second quarter of 2014, at a price of $3.6603 per share (which was based on a 1.5% discount to the average of the daily volume weighted average price ("VWAP") per share of SIRIUS XM common stock over a period of ten days beginning on the third trading day following the date of the public release of SIRIUS XM's third quarter 2013 earnings subject to a cap on the average VWAP of $4.18 and a floor on the average VWAP of $3.64). The repurchase of shares approximated 2% of the outstanding shares of SIRIUS XM on an as adjusted basis as the shares were retired at the SIRIUS XM level.  The first tranche of shares in the amount of 43,712,265 was repurchased on November 14, 2013. The second tranche was delayed and the final two tranches were settled on April 25, 2014 for total proceeds of $340 million. The retirement of SIRIUS XM shares on a consolidated basis did not significantly impact the consolidated results as it only required an adjustment to noncontrolling interest as the shares were repurchased and retired. Liberty still retains a controlling interest in SIRIUS XM following the completion of the share repurchases.

In May 2014, SIRIUS XM entered into an accelerated share repurchase agreement ("May ASR agreement") with a third-party financial institution to repurchase up to $600 million of its common stock.  Under the May ASR agreement SIRIUS XM prepaid $600 million to a financial institution and received an initial delivery of 112,500,000 shares of its common stock and final delivery, during August 2014, of 39,346,125 shares.  Approximately $94 million of the prepaid May ASR Agreement was returned upon the final settlement.  In August 2014, SIRIUS XM entered into another accelerated share repurchase agreement (“August ASR agreement” and together with the May ASR Agreement, the “ASR Agreements”) to repurchase up to $250 million of its common stock.  Under the August ASR Agreement SIRIUS XM prepaid $250 million and received 51,884,795 shares of its common stock prior to September 30, 2014 which were retired upon receipt.  The remaining $68 million under this ASR agreement is included in noncontrolling interest within the unaudited condensed consolidated balance sheets as of September 30, 2014.   The August ASR agreement settled in October 2014 and SIRIUS XM retired an additional 19,431,708 shares of its common stock.  The aggregate purchase price paid under these ASR agreements and the total aggregate number of shares repurchased under the ASR agreements

I-11


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

which were determined based on the VWAP of SIRIUS XM common stock minus a discount during the term of the ASR agreements.

Liberty’s board previously approved the issuance of shares of its Series C common stock to holders of its Series A and Series B common stock, effected by means of a dividend. On July 23, 2014, holders of Series A and Series B common stock as of 5:00 p.m., New York City, time on July 7, 2014, the record date for the dividend, received a dividend of two shares of Series C common stock for each share of Series A or Series B common stock held by them as of the record date. The impact of the Series C common issuance has been reflected retroactively due to the treatment of the dividend as a stock split for accounting purposes.  Additionally, in connection with the Series C common stock issuance, outstanding Series A common stock warrants have been adjusted.  There are 15,776,000 warrants with a strike price of $87.35 per share, at September 30, 2014

Liberty’s board previously authorized management to pursue a plan to spin-off to its stockholders common stock of a newly formed company to be called Liberty Broadband Corporation ("Liberty Broadband") (the “Broadband Spin”) and to distribute subscription rights to acquire shares of Liberty Broadband’s Series C common stock. Liberty Broadband would be comprised of, among other things, Liberty’s (i) interest in Charter, (ii) wholly owned subsidiary TruePosition,  (iii) minority equity investment in Time Warner Cable, Inc. ("Time Warner"), (iv) certain deferred tax liabilities, as well as liabilities related to the Time Warner call option and (v) initial indebtedness, pursuant to a credit arrangement entered into prior to the completion of the spin-off. 

On November 4, 2014 the Broadband Spin was completed and shares of Liberty Broadband were distributed to the shareholders of Liberty as of a record date of October 29, 2014.  The Broadband Spin and rights offering are intended to be tax-free to stockholders of Liberty.  In the Broadband Spin, record holders of Liberty’s Series A, Series B and Series C common stock received one share of the corresponding series of Liberty Broadband common stock for every four shares of common stock held by them as of the record date for the Broadband Spin, with cash paid in lieu of fractional shares. In addition, Liberty Broadband stockholders, at a future date to be determined by Liberty Broadband’s board of directors, are expected to receive a subscription right to acquire one share of Series C Liberty Broadband common stock for every five shares of Liberty Broadband common stock they received in the Broadband Spin (irrespective of the series of common stock received).  Prior to the transaction, Liberty Broadband borrowed funds under a credit arrangement and made a final distribution to Liberty of approximately $300 million in cash. Liberty expects to account for the Broadband Spin at historical cost due to the pro rata nature of the distributions and Liberty Broadband will be treated as discontinued operations at the time of the transaction in the fourth quarter.

The subscription rights will be issued to raise capital for general corporate purposes of Liberty Broadband and will enable the holders to acquire shares of Series C Liberty Broadband common stock at a 20% discount to the 20-trading day volume weighted average trading price of the Series C Liberty Broadband common stock following the completion of the Broadband Spin.

 

(2)   Stock-Based Compensation

Liberty grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock, stock options and stock appreciation rights ("SARs") to purchase shares of its common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award (such as SARs that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

I-12


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation, a portion of which relates to SIRIUS XM, as discussed below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

(amounts in millions)

 

Cost of subscriber services:

 

 

 

 

 

 

 

 

 

 

Programming and content

 

$

 

 

13 

 

11 

 

Customer service and billing

 

 

 

 

 

 

Other

 

 

 

 

 

 

Other operating expense

 

 

 

 

12 

 

10 

 

Selling, general and administrative

 

 

41 

 

41 

 

116 

 

112 

 

 

 

$

53 

 

52 

 

151 

 

141 

 

 

During the nine months ended September 30, 2014, the Company granted approximately 1 thousand options to purchase shares of Series A Liberty common stock at a weighted average grant-date fair value of $38.86 per share.  These options vest quarterly over a 4 year vesting period.

Liberty  calculates the grant-date fair value for all of its equity classified awards and the subsequent remeasurement of its liability classified awards using the Black-Scholes Model. Liberty estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of Liberty common stock and the implied volatility of publicly traded Liberty options. Liberty uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject Awards.

Liberty—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of Awards to purchase Liberty common stock granted to certain officers, employees and directors of the Company and certain Awards of employees of Starz.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A

 

 

    

    

    

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Liberty

 

 

 

remaining

 

value

 

 

 

Awards (000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2014

 

3,656 

 

$

30.58 

 

 

 

 

 

 

Granted

 

 

$

45.10 

 

 

 

 

 

 

Exercised

 

(206)

 

$

28.71 

 

 

 

 

 

 

Forfeited/Cancelled

 

(1)

 

$

24.03 

 

 

 

 

 

 

Outstanding at September 30, 2014

 

3,450 

 

$

30.70 

 

4.5 years

 

$

57 

 

Exercisable at September 30, 2014

 

2,337 

 

$

30.11 

 

4.3 years

 

$

40 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I-13


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

 

 

Series C

 

 

    

    

    

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Liberty

 

 

 

remaining

 

value

 

 

 

Awards (000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2014

 

 —

 

$

 —

 

 

 

 

 

 

Series C Dividend Adjustment

 

6,942 

 

$

46.01 

 

 

 

 

 

 

Granted

 

 —

 

$

 —

 

 

 

 

 

 

Exercised

 

(47)

 

$

23.98 

 

 

 

 

 

 

Forfeited/Cancelled

 

(1)

 

$

41.81 

 

 

 

 

 

 

Outstanding at September 30, 2014

 

6,894 

 

$

30.72 

 

4.5 years

 

$

112 

 

Exercisable at September 30, 2014

 

4,668 

 

$

30.14 

 

4.3 years

 

$

79 

 

 

On July 23, 2014 a dividend of Series C common stock was distributed and adjustments to the Awards outstanding were required to reflect the changes to the capital structure of the Company.  For every Series A Award held, two Series C Awards were issued with an exercise price equal to one third the exercise price of the outstanding Award.  Additionally, the exercise price of the outstanding Series A Awards was adjusted to one third the exercise price associated with such Award.  The change to outstanding Awards did not change the aggregate intrinsic value associated with the Awards outstanding just prior to the distribution and immediately following the distribution.

As of September 30, 2014, the total unrecognized compensation cost related to unvested Liberty Awards was approximately $32 million, including compensation associated with the option exchange that occurred in December 2012. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.8 years.

As of September 30, 2014, Liberty reserved 10.3 million shares of Series A and Series C common stock for issuance under exercise privileges of outstanding stock Awards.

SIRIUS XM - Stock-based Compensation

During the nine months ended September 30, 2014, SIRIUS XM granted stock options and restricted stock units to its employees and members of its board of directors.  As of September 30, 2014, SIRIUS XM has approximately 282 million options outstanding of which approximately 134 million are exercisable, each with a weighted-average exercise price per share of $2.67 and $2.21, respectively. The aggregate intrinsic value of SIRIUS XM options outstanding and exercisable as of September 30, 2014 is $270 million and $204 million, respectively. The stock-based compensation related to SIRIUS XM stock options was $39 million and $38 million for the three months ended September 30, 2014 and 2013, respectively, and $110 million and $97 million for the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014, the total unrecognized compensation cost related to unvested SIRIUS XM stock options was $274 million.  The SIRIUS XM unrecognized compensation cost will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.5 years.

(3)   Earnings Attributable to Liberty Media Corporation Stockholders Per Common Share

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented.

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Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Series A, Series B and Series C Common Stock

The basic and diluted EPS calculations are based on the following weighted average outstanding shares of common stock.  As discussed in note 1, on July 23, 2014 the Company completed a stock dividend of two shares of Series C common stock for every share of Series A or Series B common stock held as of the record date.  Therefore, all prior period outstanding share amounts for purposes of the calculation of EPS have been retroactively adjusted for comparability.

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Common Stock

 

 

 

Three months

 

Nine months

 

Three months

 

Nine months

 

 

 

ended

 

ended

 

ended

 

ended

 

 

    

September 30, 2014

    

September 30, 2014

    

September 30, 2013

    

September 30, 2013

 

 

 

numbers of shares in millions

 

Basic EPS

 

341 

 

341 

 

357 

 

357 

 

Potentially dilutive shares

 

 

 

 

 

Diluted EPS

 

346 

 

345 

 

363 

 

363 

 

 

 

 

 

 

 

(4)   Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.  Liberty does not have any assets or liabilities required to be measured at fair value considered to be Level 3.

Liberty's assets and liabilities measured at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

Fair Value Measurements at

 

 

 

September 30, 2014

 

December 31, 2013

 

 

    

 

 

    

Quoted

    

 

    

 

    

Quoted

    

 

  

 

 

 

 

 

prices

 

 

 

 

 

prices

 

 

 

 

 

 

 

 

in active

 

Significant

 

 

 

in active

 

Significant

 

 

 

 

 

 

markets

 

other

 

 

 

markets

 

other

 

 

 

 

 

 

for identical

 

observable

 

 

 

for identical

 

observable

 

 

 

 

 

 

assets

 

inputs

 

 

 

assets

 

inputs

 

Description

 

Total

 

(Level 1)

 

(Level 2)

 

Total

 

(Level 1)

 

(Level 2)

 

 

 

amounts in millions

 

Cash equivalents

 

$

244 

 

214 

 

30 

 

859 

 

859 

 

 —

 

Short term marketable securities

 

$

296 

 

 —

 

296 

 

15 

 

15 

 

 —

 

Available-for-sale securities

 

$

1,062 

 

987 

 

75 

 

1,293 

 

978 

 

315 

 

Financial instrument assets

 

$

330 

 

31 

 

299 

 

397 

 

 —

 

397 

 

Debt

 

$

983 

 

 —

 

983 

 

1,002 

 

 —

 

1,002 

 

 

The majority of Liberty's Level 2 financial assets are primarily investments in debt related instruments and certain derivative instruments. The Company notes that these assets are not always traded publicly or not considered to be traded on "active markets," as defined in GAAP.  The fair values for such instruments are derived from a typical model using observable market data as the significant inputs.  Accordingly, those available-for-sale securities and debt related instruments are reported in the foregoing table as Level 2 fair value.

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Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

amounts in millions

 

Fair Value Option Securities

 

$

(30)

 

53 

 

33 

 

189 

 

Cash convertible notes (a)

 

 

41 

 

 —

 

18 

 

 —

 

Other derivatives (b)

 

 

(26)

 

11 

 

(106)

 

33 

 

 

 

$

(15)

 

64 

 

(55)

 

222 

 

 


(a)

Liberty issued $1 billion of cash convertible notes in October 2013 which are accounted for at fair value (Level 2), as elected by Liberty at the issuance of the notes.

(b)

Derivatives, including the Charter warrants (as discussed in note 6) and the bond hedge (as discussed in note 8), are marked to market based on the trading price of underlying securities and other observable market data as the significant inputs (Level 2).

 

(5)   Investments in Available-for-Sale Securities and Other Cost Investments

All marketable equity and debt securities held by the Company are classified as available-for-sale ("AFS") and are carried at fair value generally based on quoted market prices. GAAP permits entities to choose to measure many financial instruments, such as AFS securities, and certain other items at fair value and to recognize the changes in fair value of such instruments in the entity's statement of operations (the "fair value option"). The Company previously entered into economic hedges for certain of its non-strategic AFS securities (although such instruments were not accounted for as fair value hedges by the Company). Changes in the fair value of these economic hedges were reflected in the Company's statement of operations as unrealized gains (losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value of the corresponding economic hedges in the Company's financial statements, the Company elected the fair value option for those of its AFS securities which it considers to be non-strategic ("Fair Value Option Securities"). Accordingly, changes in the fair value of Fair Value Option Securities, as determined by quoted market prices, are reported in realized and unrealized gains (losses) on financial instruments in the accompanying condensed consolidated statements of operations.

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Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Investments in AFS securities, including Fair Value Option Securities separately aggregated, and other cost investments are summarized as follows:

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

 

 

2014

 

2013

 

 

 

amounts in millions

 

Fair Value Option Securities

 

 

 

 

 

 

Time Warner, Inc. (a)

 

$

320 

 

297 

 

Time Warner Cable, Inc. (a)

 

 

339 

 

320 

 

Viacom, Inc. (a)

 

 

279 

 

317 

 

Barnes & Noble, Inc. (b)

 

 

25 

 

255 

 

Other equity securities

 

 

47 

 

37 

 

Other debt securities

 

 

27 

 

27 

 

Total Fair Value Option Securities

 

 

1,037 

 

1,253 

 

AFS and cost investments

 

 

 

 

 

 

Live Nation Entertainment, Inc. ("Live Nation") debt securities

 

 

24 

 

24 

 

Other AFS and cost investments

 

 

38 

 

47 

 

Total AFS and cost investments

 

 

62 

 

71 

 

 

 

$

1,099 

 

1,324 

 

 


(a)

See note 8 for details regarding the number and fair value of shares pledged as collateral pursuant to certain margin loan agreements as of September 30, 2014.

(b)

In April 2014 Liberty reduced its overall ownership interest in Barnes & Noble, Inc. to less than 2% through the sale of approximately 90% of the preferred stock held by Liberty as of such date for $247 million in proceeds.

Unrealized Holding Gains and Losses

Unrealized holding gains and losses related to investments in AFS securities are summarized below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

December 31, 2013

 

 

    

Equity

    

Debt

    

Equity

    

Debt

 

 

 

securities

 

securities

 

securities

 

securities

 

 

 

amounts in millions

 

Gross unrealized holding gains

 

$

 

 

 

 

Gross unrealized holding losses

 

$

 

 

 

 

 

 

 

 

 

 

 

I-17


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(6)   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 September 30, 2014 and the carrying amount at December 31, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

December 31, 2013

 

 

    

Percentage

    

Fair Value

    

Carrying

    

Carrying

 

 

 

ownership

 

(Level 1)

 

amount

 

amount

 

 

 

dollar amounts in millions

 

Charter (a)

 

25 

%  

$

4,201 

 

$

2,376 

 

2,395 

 

Live Nation (b) (c)

 

27 

%

$

1,291 

 

 

452 

 

409 

 

SIRIUS XM Canada

 

37 

%

$

304 

 

 

239 

 

273 

 

Other

 

various

 

 

NA

 

 

231 

 

222 

 

 

 

 

 

 

 

 

$

3,298 

 

3,299 

 

 

The following table presents the Company's share of earnings (losses) of affiliates:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2014

    

2013

    

2014

    

2013

 

 

 

amounts in millions

 

Charter (a)

 

$

(34)

 

(37)

 

(87)

 

(74)

 

SIRIUS XM

 

 

 —

 

 —

 

 

 

Live Nation

 

 

21 

 

13 

 

18 

 

 

SIRIUS XM Canada

 

 

 

 

 

 

Other

 

 

 

14 

 

13 

 

46 

 

 

 

$

(6)

 

(8)

 

(53)

 

(12)

 

 


(a)

As discussed below, Liberty acquired its interest in Charter during the nine months ended September 30, 2013 for approximately $2.6 billion. Additionally, during the nine months ended September 30, 2014 Liberty acquired 896,845 shares of Charter for $124 million.

(b)

See note 8 for details regarding the number and fair value of shares pledged as collateral pursuant to certain margin loan agreements as of September 30, 2014.  

(c)

During the nine months ended September 30, 2014, Liberty acquired approximately 1.7 million shares of Live Nation for approximately $39 million.

 

Charter Communications, Inc.

 

In May 2013, Liberty completed a transaction with investment funds managed by, or affiliated with, Apollo Management, Oaktree Capital Management and Crestview Partners to acquire approximately 26.9 million shares of common stock and approximately 1.1 million warrants in Charter for approximately $2.6 billion, which represented an approximate 27% beneficial ownership, including warrants on an as if converted basis, in Charter, at the time of purchase, and a price per share of $95.50.   Liberty accounts for the investment in Charter as an equity method affiliate based on the ownership interest obtained and the board seats held by Liberty appointed individuals.  Liberty allocated the purchase price between the shares of common stock and the warrants acquired in the transaction by determining the fair value of the publicly traded warrants and allocating the remaining balance to the shares acquired, which resulted in an excess basis in the investment of $2.5 billion.  The excess basis was primarily allocated to franchise fees, customer

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Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

relationships, debt and goodwill based on a valuation of Charter's assets and liabilities. Due to the amortization of amortizable assets acquired and losses due to warrant and stock option exercises at Charter, the excess basis has decreased to $2.4 billion as of September 30, 2014.  During the three and nine months ended September 30, 2014, the Company recognized $11 million and $61 million, respectively, in losses in its investment in Charter shares and warrants due to warrant and stock option exercises at Charter below Liberty's book basis per share. Liberty recognized $55 million in dilution losses on its investment in Charter shares and warrants during the three and nine months ended September 30, 2013. Dilution losses are included in the other, net line in the accompanying condensed consolidated statements of operations. 

 

SIRIUS XM Canada

 

In 2005, SIRIUS XM entered into agreements to provide SIRIUS XM Canada with the right to offer SIRIUS XM satellite radio service in Canada. The agreements have an initial ten year term and Sirius XM Canada has the unilateral option to extend the agreements for an additional five year term. SIRIUS XM receives a percentage based royalty for certain types of subscription revenue earned by SIRIUS XM Canada each month for the distribution of Sirius and XM channels, royalties for activation fees and reimbursement for other charges. At September 30, 2014, SIRIUS XM has approximately $6 million and $18 million in related party assets and liabilities, respectively, related to these agreements described above with SIRIUS XM Canada which are recorded in other assets and other liabilities, respectively, in the condensed consolidated balance sheet.  Additionally, SIRIUS XM recorded approximately $12 million and $36 million in revenue, for the three and nine months ended September 30, 2014, associated with these various agreements in the other revenue line in the condensed consolidated statements of operations.  SIRIUS XM Canada declared dividends to SIRIUS XM of $5 million during the three months ended September 30, 2014 and 2013, and $39 million and $12 million for the nine months ended September 30, 2014 and 2013, respectively.

 

(7)   Intangible Assets

Goodwill

Changes in the carrying amounts of goodwill are as follows:

 

 

 

 

 

 

 

 

 

 

 

    

SIRIUS XM

    

Other

    

Total

 

 

 

amounts in millions

 

Balance at January 1, 2014

 

$

14,165 

 

200 

 

14,365 

 

Acquisitions (1)

 

 

 —

 

26 

 

26 

 

Balance at September 30, 2014

 

$

14,165 

 

226 

 

14,391 

 

 


(1)

TruePosition made an acquisition during the nine months ended September 30, 2014.

Other major intangible assets not subject to amortization, not separately disclosed are SIRIUS XM tradenames ($930 million) and ANLBC franchise rights ($143 million) at September 30, 2014.  

I-19


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Intangible Assets Subject to Amortization