Liberty Posts 1Q Figures, Addresses Spinoff Issue

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Revenue at Liberty Media Group fell 50 percent to $235 million, but cash flow rose in the first quarter ended March 31. For the period, revenue was $235 million compared with $353 million in the same period last year. Cash flow rose to $84 million in the quarter, up 17 percent from $72 million last year.

Liberty president Robert Bennett said the company had a "great quarter" despite the downturn in the stock market over the past several weeks.

"In contrast to the erratic behavior of the stock market, our businesses have performed very well," Bennett said in a conference call with analysts. "We had a great quarter."

He pointed to the company's nonpublic assets-such as Discovery Communications Inc., Starz Encore Media Group LLC, QVC and BET Holdings Inc.-which saw revenue increase 18 percent and cash flow rise 22 percent in the period.

Bennett said revenue was up 15 percent at Starz Encore, 33 percent at DCI and 37 percent at BET. BET also had cash-flow growth of 29 percent in the period.

He also tried to dispel rumors that Liberty's parent, AT & T Corp., was looking to spin off Liberty in order to comply with conditions imposed on its pending merger with MediaOne Group Inc.

"[AT & T has] a period to come into compliance," Bennett said. "There is no plan or intention to spin off Liberty." However, he added, hypothetically, a divestiture wouldn't be that bad.

"There are benefits and costs. I don't think either of them are dramatic," Bennett said. "Right now, we benefit from being under the same tax-consolidated group with AT & T because they reimburse us for tax losses we generate. The detriments might be to the extent we stumble over each other as we pursue our agenda and they pursue theirs, that those may occasionally come into conflict or create regulatory issues."

Bennett added that if AT & T were to spin off the Liberty subsidiary, it would owe a substantial cash payment to the programming unit resulting from AT & T's acquisition of Tele-Communications Inc.

"If for any reason we are no longer a consolidated subsidiary [of AT & T], they are required to reimburse us for the NOL [net operating loss] we inherited through that transaction." Bennett said. "TCI's NOL was allocated to Liberty. That NOL is about $1.5 billion to $2 billion. We would do a net-present value of the tax benefit over some period of time."

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