UPDATE: Liberty Media's 1Q QVC, Starz Earnings Improve
May 06 2011 - 12:00PM
Dow Jones News
Liberty Media Corp., the media empire controlled by John Malone,
reported a decline in first-quarter operating profit from its
interactive division as its largest business, home-shopping network
QVC, suffered financial setbacks in Japan due to the natural
disaster there.
The company's other divisions showed gains, and the three
tracking stocks issued by the media conglomerate were trading
higher after the results were released Friday amid a broader stock
market rally.
A Delaware court recently ruled in favor of Liberty Media in a
dispute with Bank of New York Mellon over Liberty Media's plan to
split off the tracking stocks of Liberty Capital Group (LCAPA) and
Liberty Starz Group (LSTZA), clearing the way for an overhaul of
the company's corporate structure.
A vote for approval from shareholders is scheduled for May 23,
and following the spinoffs Liberty plans to covert shares of
Liberty Interactive (LINTA) into an asset-backed equity.
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 based on generally
accepted accounting principles, the company details the results of
its individual businesses.
Liberty Interactive posted a first-quarter operating profit of
$213 million, down from year-earlier earnings of $218 million.
Liberty Starz, which includes premium cable network business Starz
Entertainment, posted operating profit for the quarter of $116
million, up 26%, while Liberty Capital--a collection of investments
in media companies such as Time Warner Inc. (TWX) and Sirius XM
Radio Inc. (SIRI)--swung to an operating profit of $343 million
from a year-earlier loss of $70 million.
Shares of Liberty Interactive were recently trading up 4.3% a
$18.29, while shares of Liberty Starz added 6.7% to $79.25 and
Liberty Capital shares gained 3.2% to $87.28.
QVC's first-quarter revenue rose 4%, to $1.8 billion while
operating profit edged up 1% to $363 million. The company estimated
that $24 million in revenue was lost due to the earthquake and
tsunami-related turmoil in Japan, causing QVC Japan to go off the
air for 12 days and suffer damage at its distribution center.
Since QVC Japan has resumed its broadcast, the company said
sales have been running roughly 10% below prior year sales and it's
currently unable to determine when QVC Japan will return to sales
levels it was experiencing before the earthquake and resulting
nuclear radiation scares in Japan.
Despite the tragedy in Japan, QVC's international revenue
increased 7% in the first quarter to $643 million thanks to
strength in Germany.
U.S. revenue, which accounts for the bulk of the total, rose 3%.
The average selling price increased 7% while total units sold slid
3%.
Starz's revenue jumped 28% to $391 million, helped by the Starz
Media business move to Liberty Media from Liberty Capital.
Excluding the Starz Media contribution, it was up roughly 7%.
Subscriptions to Starz rose 9.9%, while Encore subscriptions were
up 6.4%.
Starz, as well as Walt Disney Co. (DIS), recently sued satellite
TV provider Dish Network Corp. (DISH), alleging that the pay-TV
company's practice of giving free access to Starz to all of its 14
million subscribers violated their distribution agreement. The move
has been viewed as a response by Dish to Starz's controversial
video streaming deal with Netflix Inc. (NFLX), which has emerged as
a potential competitor to cable and satellite TV companies.
-By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com
--Matt Jarzemsky contributed to this article
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