Liberty's 4th-quarter loss narrows

Tue, 03/25/2003 - 7:00pm

The media company has amassed a war chest and is expected to be active in acquisitions this year.

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Los Angeles Times

March 26, 2003 Wednesday Home Edition

Liberty Media Corp., controlled by cable mogul John Malone, said Tuesday that it narrowed its fourth-quarter loss to $692 million, thanks to fewer write-downs on its investment portfolio than a year earlier.

Liberty lost 26 cents a share, compared with $1.43 a year earlier. Revenue rose 2.9 percent, to $536 million, as Liberty's Starz Encore cable networks gained subscribers and advertising rebounded at channels such as those owned by Discovery Communications Inc., another Liberty holding.

During the same period last year, Liberty wrote down the value of its investments in AOL Time Warner Inc. and other entertainment companies.

Based in Englewood, Colo., Liberty is mostly a portfolio of media assets, although the company has outlined plans in recent months to focus on taking operating control of more assets in a drive to exert greater control over its future.

The company owns 100 percent of Starz Encore but holds smaller stakes in most of its holdings, including 42.5 percent of QVC, 18 percent of News Corp., 49.8 percent of Discovery and 50 percent of Court TV, along with several other minority stakes.

In recent months, Liberty has amassed a war chest as it eyes several big deals. During a conference call with analysts Tuesday, Liberty Chief Executive Robert Bennett reiterated the company's interest in DirecTV parent Hughes Electronics Corp., the studio and cable assets of Vivendi Universal and the remainder of QVC, now owned by Comcast Corp.

Buying control of any of the three properties could cost $5 billion or more. But after a stock offering in December, Liberty has $2.6 billion in cash on its books. Through a sale of notes last week, convertible into AOL Time Warner shares, Liberty expects to raise as much as $1.75 billion more. Liberty holds a 4 percent stake in the ailing entertainment giant. Analysts say Liberty also has $7 billion in nonstrategic assets that could be liquidated to prepare for a major acquisition.

"This is the year they have to be active," said Jessica Reif Cohen, an analyst at Merrill Lynch & Co. "They have a huge amount of liquidity."

Malone formed Liberty as the programming arm of cable operator Tele-Communications Inc. Malone sold TCI to AT&T Corp. in 1999 but kept Liberty.

Now he is scrambling to remain relevant as distributors consolidate and threaten his programming revenue.

For instance, Liberty said last week that a legal dispute with Comcast over cable-programming fees will reduce revenue at Starz Encore this year by $80 million. Although Bennett said Tuesday that the company expected to win its court fight against Comcast, he said revenue and operating cash flow at Starz would be flat for 2003, even while projecting double-digit gains for Discovery and QVC for the year.

Liberty shares rose 29 cents to $10.09 in New York Stock Exchange trading. The stock had fallen 18 percent in the last year.

In a separate negotiation, Liberty and Comcast are trying to end their joint ownership of QVC. Three weeks ago, Liberty exercised a buy-or-sell option in its contract with Comcast, QVC's majority owner.

Liberty may acquire QVC if Comcast passes at an estimated cost of $5 billion or more.


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