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Earnings Roundup

Profit more than doubles at Liberty

August 09, 2007|From Times Wire Services

John Malone's Liberty Media Corp. said Wednesday that second-quarter net income more than doubled despite slower growth at home-shopping channel QVC and a 4% revenue drop for Starz Entertainment.

The media holding company announced plans to create a third tracking stock for entertainment assets including a stake in DirecTV Group Inc. that it is acquiring from Rupert Murdoch's News Corp. in a deal expected to close this year.

"It will give our investors the opportunity to further focus their investment and will create a currency to give us enhanced financial flexibility at Liberty Entertainment," Chief Executive Greg Maffei told analysts.

Englewood, Colo.-based Liberty Media divided its assets into two tracking stocks in May 2006 to make it easier for shareholders to follow its disparate parts. Liberty Interactive Group, the first tracking stock, includes QVC and other interactive businesses. Liberty Capital Group includes Starz and other entertainment businesses.

For the quarter ended June 30, Liberty Media reported net income of $1 billion, up from $478 million in the second quarter of 2006. Revenue totaled $2.2 billion, up from $2 billion in the year-earlier quarter. Per-share figures were not calculated for the company as a whole.

Liberty Interactive's second-quarter operating income rose 1% to $244 million from $242 million a year earlier. Revenue rose 4% to $1.69 billion.

QVC faced operational and market challenges in Japan and Germany while business picked up in Britain, the company said. The U.S. business grew at a slower rate.

Janco Partners analyst April Horace, who follows Liberty Media, said Liberty Interactive's results were "a tad light" domestically and internationally, which caused a drop in its stock price.

Operating income for Liberty Capital Group in the second quarter slipped to $42 million from $44 million, while revenue dropped to $254 million from $264 million. The declines were caused by a drop in the effective rate for the network's services.

Liberty Media has agreed to exchange its stake in News Corp. and $550 million in cash for a 38.5% interest in El Segundo-based DirecTV, the No. 1 satellite television provider in the U.S.

With the expected acquisition, Liberty Media said, it would create a tracking stock called Liberty Entertainment Group that also would include interests in Starz; WildBlue Communications Inc., a rural satellite broadband company; and Fun Technologies Inc., among other assets. Although some of these assets are being pulled from Liberty Capital, that tracking stock will continue to represent a small group of assets.

Shares of Liberty Interactive fell 38 cents to $19.82. Liberty Capital shares rose $3.57 to $115.27.

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