Quarterly report pursuant to Section 13 or 15(d)

Investments In Affiliates Accounted For Using The Equity Method

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Investments In Affiliates Accounted For Using The Equity Method
 6 Months Ended
Jun. 30, 2014
Investments In Affiliates Accounted For Using The Equity Method  
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 June 30, 2014 and the carrying amount at December 31, 2013:
 
June 30, 2014
 
December 31, 2013
 
Percentage
ownership
 
Fair Value (Level 1)
 
Carrying
amount
 
Carrying
amount
 
 
 
dollar amounts in millions
Charter (a)
26
%
 
$
4,396

 
$
2,420

 
2,395

Live Nation (b) (c)
27
%
 
$
1,327

 
448

 
409

 SIRIUS XM Canada
37
%
 
$
310

 
242

 
273

 Other
various

 
NA

 
228

 
222

 
 

 
 

 
$
3,338

 
3,299


The following table presents the Company's share of earnings (losses) of affiliates:
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2014
 
2013
 
2014
 
2013
 
amounts in millions
Charter (a)
$
(25
)
 
(37
)
 
(53
)
 
(37
)
SIRIUS XM
—

 
—

 
—

 
8

Live Nation
11

 
11

 
(3
)
 
(8
)
SIRIUS XM Canada
—

 
—

 
1

 
1

Other
2

 
5

 
8

 
32

 
$
(12
)
 
(21
)
 
(47
)
 
(4
)

(a)
As discussed below, Liberty acquired its interest in Charter during the three months ended June 30, 2013 for approximately $2.6 billion. Additionally, during the three months ended June 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 June 30, 2014.

(c)
During the three months ended June 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 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 June 30, 2014. During the three and six months ended June 30, 2014, the Company recognized $4 million and $50 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 $3 million in dilution losses on its investment in Charter shares and warrants during the three and six months ended June 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 June 30, 2014, SIRIUS XM has approximately $5 million and $20 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 $24 million in revenue, for the three and six months ended June 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 $30 million and $4 million during the three months ended June 30, 2014 and 2013, respectively, and $34 million and $7 million for the six months ended June 30, 2014 and 2013, respectively.