UPDATE: Liberty Media Reports Higher Starz Earnings
01 3월 2011 - 2:43AM
Dow Jones News
Liberty Media Corp., the conglomerate controlled by mogul John
Malone, reported a slight decline in fourth-quarter operating
profit at the interactive division that includes home-shopping
network QVC, while its Starz and media-investment divisions showed
gains.
The company said it remains on track in its efforts to overhaul
its corporate structure, with a shareholder vote scheduled for
April where Liberty will seek approval to split off the tracking
stocks of Liberty Starz (LSTZA) and Liberty Capital (LCAPA), and
converting Liberty Interactive (LINTA) shares into an asset-backed
equity.
Liberty Interactive posted fourth-quarter operating profit of
$396 million, down slightly from its year-earlier result of $397
million. Liberty Starz, which includes premium cable network
business Starz Entertainment, posted operating profit for the
quarter of $62 million, up 26.5%, while Liberty Capital--a
collection of media investments in companies like Time Warner Inc.
(TWX) and Sirius XM Radio Inc. (SIRI)--swung to an operating profit
of $24 million from a year-earlier loss of $97 million.
Shares of Liberty Interactive recently slid 2.4% to $16.43
following the earnings release. Liberty Starz shares rose 3.8% to
$71.50, while those of Liberty Capital added 2% to $70.29.
As a collection of tracking stocks that don't provide investors
with any legal claim on their underlying assets, Liberty doesn't
follow the reporting practices required of most public companies.
Instead of releasing consolidated earnings results based on
generally accepted accounting principles, the company details the
results of its individual businesses.
QVC, Liberty's largest business, posted fourth-quarter revenue
of $2.52 billion, up 4%, while its operating profit edged up 1.3%
to $393 million. The business has rebounded recently after slumping
when consumer spending slowed in 2008, but the sustainability of
its latest growth streak remains a concern for investors.
Benjamin Swinburne, analyst with Morgan Stanley, said QVC's
revenue gains in North America and overseas fell below
expectations, due in part to disappointing results in Italy.
Starz's revenue jumped 33% to $405 million, helped by the shift
in the attribution of the Starz Media business to the Liberty Starz
division from Liberty Capital. Excluding the change, revenue rose
5%. Operating income climbed 27% to $62 million. Subscriptions to
Starz and Encore rose 8% and 7%, respectively.
Thomas Eagan, analyst with Collins Stewart LLC, said Starz's
subscription gains were "surprisingly strong," adding that the
performance could tamp down concerns that the company's
distribution deal with Netflix Inc. (NFLX) poses a competitive risk
to its pay-TV business.
The pay-TV industry has been hit by a wave of fear that
consumers may begin dropping their traditional TV subscriptions
from cable and satellite providers as cheaper, online alternatives
arise. Netflix recently reported that its subscriber count
surpassed 20 million, ahead of Starz's year-end tally of 17.2
million.
Starz's distribution agreement with Netflix, which is considered
a key source of content for Netflix's streaming video service,
expires early next year, and the two companies are discussing a
potential renewal on terms likely to be more favorable to Starz.
Investors view the outcome of that negotiation as a key indicator
of the direction of the emerging online video business, which could
become a more-disruptive force in the media and entertainment
industry in the years ahead.
Liberty Capital group's revenue declined 41% in the quarter to
$91 million, mainly due to the reattribution of Starz Media to
Liberty Starz. The company repurchased three million Liberty
Capital shares in the quarter for $185 million.
-By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com
--Matt Jarzemsky contributed to this article.
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