Malone Eyes Land of Rising Sun

8/16/2004 9:12 AM Eastern

John Malone didn’t waste any time in his first conference call with analysts as chairman and CEO of Liberty Media International Inc.: The cable legend said he is on the prowl for more Japanese cable assets.

LMI -- the international assets of Liberty Media Corp., which were spun off in June -- includes a controlling interest in European MSO UnitedGlobalCom Inc.; a 45% interest in the largest Japanese MSO, Jupiter Telecommunications Co. Ltd.; and a 50% interest in Japanese programming giant Jupiter Programming Co. Ltd.

“There are literally hundreds of smaller cable operators throughout [Japan],” Malone said on the conference call. “We believe there exists an opportunity to consolidate a significant number of these smaller operators.”

Malone said LMI could acquire those smaller operators with cash -- it has about $1.4 billion of cash and cash equivalents and another $1 billion in financial assets. LMI also launched a rights offering in July that could raise $730 million.

The company could also make acquisitions using a public-stock offering of its Japanese assets as a deal currency -- a move LMI has discussed in the past.

Malone said no decision has been made about initiating a public offering for the Japanese assets, but it is a possibility. “We have said in the past that it would be useful to have a Japanese public security with which to acquire smaller cable operators and roll them in,” he added.

J-Com and JPC were the main drivers for LMI’s successful second quarter. Revenue at J-Com was up 25% to $367 million and operating cash flow increased 16% to $146 million. At JPC, revenue was up 38% to $138 million and operating cash flow was up 85% to $24 million.

At UGC, which reported earnings last week, revenue was up 17% to $545 million and operating cash flow rose 31% to $195 million.

LMI stock rose 43 cents each to $31.50 per share and Liberty Media’s stock was up 4 cents to $8.67 in Monday trading.

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