A Battle of Biblical Proportions

If there were a TMZ for stocks, it would be called CNBC. OK, but seriously, in terms of rumors and speculation, few stories get more airtime than the never-ending Liberty Media (NYS: LMCA) and SiriusXM (NAS: SIRI) battle. I could give you my opinion as to whether the deal will go through and when, but that would make me no different from Perez Hilton on the Tom and Kate divorce scandal. Instead, I'll just tell you which horse to bet on.

That's the name of my newest screenplay. It stars Liberty Media as the proverbial Goliath taking on the underdog Sirius XM, which plays the role of a satellite-radio-providing David. The story is a modern interpretation of the biblical story, and -- spoiler alert -- Goliath wins.

Goliath's victory does not suggest a takeover of David's business -- it doesn't have to. Liberty Media will win no matter what happens with the Sirius fight because Liberty has more going on than just Sirius, and the company is cheap to begin with.

Liberty Media is run by the John Malone of media: John Malone. Say what you will about his somewhat caustic public front; Malone is a warrior. His media empire has already spun off into two companies and could feasibly do so again if the Sirius acquisition takes place. His empire is too big to fail, but not in the morbidly obese manner that the major banks are. The spun-off Liberty Interactive (NAS: LINTA) has an impressive portfolio itself: It owns a stake in QVC networks, as well as 26% of TripAdvisor. Parent company Liberty Media owns a bevy of cable networks, a large portion of LiveNation (the live entertainment promoter), and 46% of Sirius XM. The man knows how to buy companies. And he wears a wool vest like no other man on Earth.

If the FCC allows the acquisition to take place -- and it's looking more and more like it will happen -- Liberty will essentially own the satellite radio space. The opinions of the satellite radio industry are as numerous as they are obnoxious, but if you buy a car, any car, it probably has satellite radio installed, and you'll probably sign up for it. In the second quarter of this year, Sirius added 600,000 subscribers. That's around the same number DIRECTV added, and I absolutely love DIRECTV as a stock pick right now.

The nearly $8 billion company that is Sirius would certainly be a great value driver for the near-$11 billion Liberty Media, but a failure to acquire all of Sirius will not hurt Liberty.

Screenplays aside, where do you invest?
The Sirius board has been fighting adamantly against this impending takeover. When the FCC originally ruled to forbid the merger, people thought the little guy had won. But they failed to factor in the power that is John Malone's iron fist. FCC ruling? More like FCC drooling!

I am going to try and succinctly state my opinion: Invest in Liberty Media. By investing in Liberty, you are already investing in 46% percent of Sirius, and likely more as time goes on. Put another way, let's say someone comes up to you with the choice of buying a beer or a tequila sunrise. The beer is big and delicious, but it's just not as exciting as the tequila sunrise. But then this mystery alcohol dealer says, "Well, informed drinker, if you buy this beer, I'll give you a shot of tequila anyway, just not with all the added sugar and fruitiness." I don't need to tell you your answer to that proposition.

John Malone is 71 years old. He's been, off and on, a chief executive of a company since 1973, but he won't be around forever. Either way, Liberty looks to me like a great way to have your cake and eat it, too. You, too, can retire a wealthy individual if you take a look at these three stocks our analysts have identified as retirement-makers. Check the free report here.

At the time thisarticle was published Fool contributor Michael Lewis owns none of the stocks mentioned. You can follow him on Twitter @mikeylewy. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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