Sirius XM Radio Inc. (NASDAQ: SIRI) now are at a crossroads about their future. Liberty Media Corporation (NASDAQ: LMCA) is now even closer to getting that 50% plus one vote that it needs to assume control over Sirius. All prior efforts were for a de fact control, but those were blocked at the regulatory level as the message was made pretty clear that if John Malone wants control over Sirius XM then he has to go get more than half of the voting control.

A fresh SEC filing (Form 4) shows that Liberty purchased 11,097,162 more shares on Wednesday at an average weighted price of $2.436, but the real issue is that the media firm has some 569,735,799. Liberty has previously disclosed in filings that it intends to take control.

Mel Karmazin was quoted this week saying that he doubts that Liberty Media will keep him on after they assume control. Here is another thing to consider: what about Howard Stern and other top high-priced media talents at Sirius? Will John Malone want to keep forking over endless millions for what might be talent that can be replaced? If Malone gets the right to distribute all of those shares that Liberty won the rights to when it bailed Sirius XM out during the recession, he might not care if a couple million subscribers decide to walk away from Sirius.

Usually investors do well when the company they hold shares in get taken over. It is impossible to know what John Malone’s true ambitions are here, so we cannot say exactly what he will do. Whatever it is, chances are high that he will do whatever is the most tax-advantaged strategy possible. Long-term capital gains and dividends are taxed at 15% through the end of 2012. With the fiscal cliff coming shortly, will that 15% tax remain the same in 2012?

This is one of those situations where shareholders have gotten one massive run higher since Liberty’s rescue financing. New shareholders buying today may find out the hard way that Liberty and John Malone are not necessarily in it keeping their best interests in mind. Billions of dollars are at stake.

JON C. OGG

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