QVC, Starz Drive Liberty Q4

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As it nears a planned spin-off of two tracking stocks, Liberty Media reported strong results in the fourth quarter, fueled by subscriber gains at its Starz Entertainment premium channels and a needed boost at its QVC home shopping channel.
Liberty announced plans earlier last year to spin out its two tracking stocks - Liberty Capital (which houses several minority investments in media companies) and Liberty Starz (basically the Starz premium cable channel). While Liberty Capital and Liberty Starz would remain tracking stocks, the transaction would essentially convert a third tracker (Liberty Interactive (which houses QVC and other assets) into an asset-backed security. On a conference call with analysts to discuss results, Liberty Media CEO Greg Maffei said a Delaware lawsuit that was holding up the spin is winding down. He estimated a decision would be made in about six weeks, in time for an April shareholders meeting to vote on the spins.
"We remain optimistic of obtaining a favorable outcome," Maffei said.
Overall, excluding the effects of a debt refinancing and the launch of a new channel in Italy, QVC's revenue increased 5% in the quarter to $2.5 billion and 10% for the year to $7.8 billion. Domestically, revenue rose 3% to $1.7 billion in the quarter and 5% to $5.2 billion for the year. Operating income before depreciation and amortization declined 1% in the U.S. for the period, but was up 8% for the year. Driving the fourth quarter decline were tough comparisons to the prior year (when OIBDA was up 32%) and changes to terms relating to its QCard credit card with GE Money Bank. Without that change, OIBDA would have been up 1% in the quarter.
QVC president Mike George said the shopping channel was continuing to build on momentum from the prior periods, with new customers up 18% in the fourth quarter.
"We've been on a six-to-eight quarter run of really healthy new customer growth," George said on the call, adding that strong brands and a good product mix "bring customers with them."
At Starz, an increase in subscribers helped drive results. Excluding the effects of Starz Media (a film production arm that was consolidated into Liberty Starz late last year) revenue rose 6% in the quarter and 5% for the year. OIBDA was up 31% in the quarter and 6% for the year. Subscription units at Starz were up 8% in the fourth quarter to 18.2 million from 17.4 million in the prior period. At Encore, subscription units rose from 32 million in the third quarter to 32.8 million in the most recent period.

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