Q2 Results Are Mixed Bag for Liberty


Liberty Media reported mixed second-quarter results last week, 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, such as 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 decreased slightly 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., 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 the 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.”

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 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 No. 1 in the weekly premium network ratings. That should bode well for the network's initial foray into original programming — Crash — 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.