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Liberty Media Reports Q3 Results

Nov 9, 2004  •  Post A Comment

Liberty Media President Robert Bennett on Tuesday dismissed the suggestion that his company was angling to launch a hostile takeover of Rupert Murdoch’s News Corp., saying that the relationship between the two companies has been nothing but “friendly” and “supportive.”

“We view our relationship with News Corp. as productive,” Mr. Bennett said during a conference call to discuss Liberty’s third-quarter results. “We are supportive and friendly shareholders with all the respect in the world for the Murdoch family, for [News Corp. Chief Operating Officer] Peter Chernin and the management team.”

Mr. Bennett’s comments came a day after News Corp. announced it had adopted a “poison-pill” plan designed to prevent a shareholder from accumulating more than 15 percent of the voting stock in News Corp. Liberty last week said in a filing that it was trading nonvoting shares for voting shares in a transaction that will give it a 17 percent stake in News Corp., up from its current level of 9 percent. Liberty’s stake increase would not trigger the poison pill unless it raises its stake further.

A poison pill is a move made by a company to dilute the stake of a shareholder accumulating large chunks of shares. It works by allowing other shareholders to buy more shares at a significant discount, thus reducing the aggressive buyer’s stake.

Mr. Bennett told analysts and investors that its motives for raising its stake were straightforward. As part of News Corp.’s reincorporation to the United States, the company saw an opportunity to buy voting shares on the cheap. Mr. Bennett added that Liberty Chairman John Malone has had several conversations with Mr. Murdoch in the last week to quell any worries News Corp. might have about Liberty’s move.

Liberty on Tuesday also reported that its profit soared in the third quarter to $372 million from a year-earlier figure of $41 million, driven by the addition of home-shopping channel QVC, which the company acquired control of last year, as well as subscriber growth at Discovery Communications and Starz Encore Group.

Revenue was $1.8 billion from a year-earlier $877 million.

Though QVC was a major contributor, the channel itself reported slightly weaker revenue growth compared with historical levels, in part due to its sale of fewer higher priced items in favor of lower priced merchandise such as apparel and accessories. Revenue was up 12 percent in the quarter to $1.3 billion.

Discovery posted an increase of 18 percent in revenue in the quarter to $557 million, driven by affiliate-fee growth. Advertising was up slightly, as higher CPMs were partially offset by lower ratings at The Learning Channel, and in particular TLC’s series “Trading Spaces.”

Starz Encore Group, meanwhile, reported a 13 percent increase in revenue to $245 million, driven largely by a rise in subscription units brought on by new affiliation agreements. Those gains were offset partially by a 26 percent rise in expenses, mainly attributed to higher programming costs.