Adventures in leverage, Liberty Media edition

By Felix Salmon
July 28, 2009
John Malone is feeling bearish:

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John Malone is feeling bearish:

Mr Malone agreed with Mr Murdoch on the economy. “I think he is particularly bearish on the economy . . . I agree with him. I think this is going to be a long slog. There is just way too much debt in the west and we are starting to be borne down by that debt.”

I agree with both of them. But it’s worth noting that in the first quarter of 2009, Malone increased Liberty Media’s total consolidated debt to $14.09 billion from $12.23 billion at the end of 2008 — that’s an increase of more than 15% over the course of just three months. I guess Malone knows at first hand what he’s talking about.


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Why wouldn’t a company borrow money now? With the Treasury printing cash day and night, inflation will reduce the obligation dramatically. (And credit won’t stay this cheap for long.)

Posted by Sterling | Report as abusive

I see that cash is up nearly as much. Liquidity is perhaps a bigger concern than debt; I think their March 31 position looks more conservative than their December 31 position, based solely on these numbers.

It’s possible to at once thunk there is too much debt generally and at the same time believe that your company can generate sufficient revenues going forward to service more debt.

Whether this latter belief is justified in Malone’s case, I have no idea.