Liberty Media Corp., the company controlled by cable TV investor John Malone, had a first-quarter loss of $10 million as some investments declined in value and profit fell at its Starz Encore movie networks.
The loss of less than 1 cent a share compares with net income of $132 million, or 5 cents a share, a year earlier, the Colorado-based company said in a regulatory filing. Reported sales jumped more than fourfold, to $2.37 billion, because Liberty now includes results from QVC shopping network, which it has owned in full since September.
Starz Encore's operating income fell 41% as the unit spent more to market its network and license films. Operating income at Starz is profit before interest, taxes and some other items.
Revenue rose 1.3%, compared with a 34% jump in costs. Starz pays more to show movies that have done well at the box office, and movie ticket sales have been rising. The unit is the second-largest contributor to Liberty's sales, after QVC.
"Starz still has to prove itself," said Robert Routh, an analyst with Natexis Bleichroeder Inc. in New York, who owns Liberty shares. He said Malone was likely to sell Starz Encore. "I expect him to try to sell it and merge it with some other entity that can make it much more economically viable."
Starz has struggled since last year when Malone lost a contract dispute with Comcast Corp., the biggest U.S. cable television service. Comcast, after buying AT&T Corp.'s cable unit, demanded a new agreement with Starz. Under the old agreement, Starz was allowed to raise the price it charged AT&T as its own costs rose for licensing movies.
Liberty shares fell 19 cents to $10.61 on the New York Stock Exchange. The stock has dropped 11% this year.
Liberty's first-quarter results included $222 million in losses on investments. The investments that fell in value included options to buy or sell shares of other media companies, spokesman Michael Erickson said.
Starz has said it expects its movie-licensing expenses to rise by $175 million this year and increase again next year, partly because of agreements taking effect that require Starz to pay more to movie studios.
Routh and other analysts have said that Malone, 63, might sell Starz Encore to focus on Liberty's other operations, including cable TV systems outside the U.S. that he is spinning off into a separate company.
Liberty executives are expected to discuss their strategy at a meeting with investors in New York on Thursday.