Liberty Media reverses loss

0 Comments | Deseret News (Salt Lake City), May 9, 2007 | by Sandy Shore Associated Press

DENVER -- Liberty Media Corp., an entertainment and interactive services company, reversed its loss and posted a first-quarter profit Tuesday despite a weak international performance from its QVC shopping channel.

Greg Maffei, president and chief executive officer, said revenue was up for both business units -- Liberty Interactive Group and Liberty Capital Group -- as the company founded by cable pioneer John Malone worked to narrow its holdings to core assets and eliminate complexity.

Liberty Media announced Monday that it was buying a controlling stake in Park City-based Backcountry.com. The Web-based retailer of outdoors and sports equipment will be part of the Liberty Interactive Group.

Shares of Liberty Interactive, which encompasses QVC shopping channel, dropped 6.4 percent while Liberty Capital shares fell 1.7 percent.

Cathay Financial analyst Andrew Baker speculated the stock prices declined because of lower-than-anticipated results in Liberty's international operations and the fact the company bought back less stock than was anticipated.

"There is weakness in the international business and not a lot of visibility as to where it comes from," he said.

For the quarter ended March 31, Liberty Media reported net income of $369 million, compared with a net loss of $26 million in the first quarter of 2006. The company created tracking stocks for the two business units on May 9, 2006, so per-share figures could not be compared.

Consolidated revenue totaled $2.1 billion, up from $1.9 billion in the previous first quarter.

During a call with analysts, Liberty controller Chris Sheehan said QVC's international revenue declined 3 percent excluding the effect of the exchange rate. He cited a number of factors for the decline, including an increase in the German tax rate and a change in Japan's regulation for marketing health and beauty aids.

"We continue to be pleased with the solid performance of QVC's domestic operations, but we're disappointed with the soft performance in QVC's international markets," Sheehan said.

Maffei told analysts they repurchased 1.5 million shares this year but acknowledged the amount should have been higher and that they would look for opportunities to buy back more shares when market conditions are favorable.

Liberty expects its deal to acquire a stake in satellite television provider DirecTV to be final in August or September once it clears regulatory hurdles.

Under the terms, Liberty would exchange its roughly $11 billion stake in News Corp. plus $550 million in cash for News Corp.'s stake in DirecTV.

Liberty Interactive's assets include video and online commerce businesses, including QVC, and Liberty's stake in Expedia and IAC/ InterActiveCorp.

Liberty Interactive stock fell $1.63 to $23.81 in Tuesday's trading. The price has ranged from $15.84 a share to $25.89 a share in the past year.

Liberty Capital represents the remaining assets, including Starz Entertainment and Wild Blue Communications, a satellite television company, as well as interests in other companies.

Liberty Capital shares closed down $1.98 at $116.67 a share. In the past year, the price has ranged from $77 a share to $120.74 a share.