QVC Drives Strong Year For Liberty

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Merrill Lynch & Co. media analyst Jessica Reif Cohen restated her “buy” rating and $10.75 price target for Liberty Media Corp. stock, after the Denver-based media giant reported strong fourth-quarter results.

Liberty reported 13% revenue and 10% cash-flow growth in the fourth quarter — for the full year, revenue and cash flow was up 13% and 10%, respectively — fueled mainly by strong performance at its QVC Inc. home-shopping channel. QVC reported 14% revenue and cash-flow growth in the fourth quarter, and 13% revenue and 16% cash-flow growth for the full year.

Liberty’s other major operating asset — Starz Entertainment Group — reported more disappointing results (revenue was flat at $247 million and cash flow declined 37% to $29 million). Still, it outperformed Reif Cohen’s estimates. Starz beat her fourth-quarter cash-flow estimate by about $5 million.

Liberty also gave further clarity on plans to create a tracking stock for interactive assets QVC, Provide Commerce and its holdings in IAC/InterActiveCorp and Expedia Inc. To be called Liberty Interactive, the tracker is scheduled to be issued sometime in May.

Although Liberty declined to give financial guidance for 2006 — it will provide its 2006 outlook to investors prior to the trackers issuance in May — Reif Cohen expects the strong growth to continue. She estimated 2006 revenue would rise 10.5% to $8.8 billion and cash flow would grow 10.9% to $1.8 billion.