Liberty Has Mixed 2Q


Liberty Media reported mixed second quarter results Monday, with an increasingly weak economy impacting growth at its cable shopping juggernaut QVC, somewhat offset by strong performance by its Starz Entertainment and electronic commerce units.

Liberty Media’s assets are held in three separate tracking stocks—Liberty Interactive, Liberty Entertainment; and Liberty Capital. Liberty Interactive includes QVC and its other e-commerce businesses. Liberty Entertainment includes its 49% interest in DirecTV Group and its 100% interest in Starz Entertainment while Liberty Capital includes several small investments in Time Warner Inc., Viacom and Sprint Nextel.

QVC reported 4% revenue growth to $1.76 billion and adjusted operating income before depreciation and amortization rose (AOIBDA) 1% in the period to $387 million, reflecting continued weakness in the U.S. economy. Domestic sales for QVC were decreased slight to $1.181 billion from $1.184 billion in 2007 and AOIBDA fell 2% to $286 million in the period.

Like its brethren in the home shopping space, QVC has struggled during the past few quarters with slower than expected sales growth. On a conference call with analysts, QVC president Mike George said that while he was not satisfied with QVC’s second quarter results in the U.S., he said there are some signs of encouragement.

George said that several retail categories showed strong results—cookware sales were up double digits as were consumer electronics, garden and beauty. But they were offset by declines in jewelry—particularly gold—and apparel categories.

“This reconfirms for us that our customers are willing to treat themselves when we provide compelling products and presentations,” George said on the conference call. “We need to deliver on that promise more consistently.”

To that end, George said that QVC is introducing several new brands from Cesar Millan (of National Geographic Channel’s Dog Whisperer) and London Fog. Upcoming launches include new lines from Anne Klein, Izod and Calvin Klein. In addition, QVC is entering the wine business through a partnership with

Liberty Entertainment was driven by strong results at DirecTV—which reported earnings last week—and Starz. DirecTV added 129,000 net new subscribers in the period while increasing revenue by 16% to $4.81 billion. AOIBDA rose 20% to $1.36 billion.

At the premium movie channel, revenue was up 8% to $275 million and AOIBDA rose 24% to $68 million.

On the call, Starz chairman and CEO Robert Clasen said that Starz finished first in total day ratings for premium networks for 10 of the first 26 weeks of this year, the first time the network had ever finished first in the weekly premium network ratings. That should bode well for the network’s first foray into original programming—its new Crash series—which is set to debut Oct. 17.

Clasen said that Starz plans to promote the series on several platforms including sample episodes via promotional channels, on-demand and the Internet. The CEO added that Starz also has a concentrated multimedia advertising plan slated for the end of September.