Malone May Buy Nat Geo Channel

May 16, 2005  •  Post A Comment

Liberty Media Chairman John Malone said last week that he would consider purchasing the National Geographic Channel and perhaps using that purchase as part of a larger transaction that would resolve the issue of Liberty owning voting rights to Rupert Murdoch’s News Corp.

“It makes a lot of sense to consider that a lot,” Mr. Malone told analysts and investors last Thursday at Liberty’s annual investor conference. However, he added that Liberty and News Corp. “haven’t gone very far down that road, in terms of [discussing such a transaction’s] feasibility.”

Mr. Malone acknowledged that while selling the idea to News Corp. officials might not be too difficult, such a deal would require approval from other parties with stakes in the channel. News Corp. holds a 50 percent stake, while the National Geographic Society and NBC Universal each own 25 percent.

Liberty and News Corp. have been holding a series of talks in recent weeks about ways that News Corp. can regain Liberty’s voting control in Mr. Murdoch’s company.

Liberty late last year doubled its stake in News Corp. and managed to acquire voting rights that come second only to those of Mr. Murdoch and his family. And while Liberty officials have maintained that they have no plans to exert control over the company, News Corp. has been trying to come up with a way to regain that control.

“In terms of working together and having good conversations and trying to find alignment, I can report that relationship is in good condition,” Mr. Malone said.

Meanwhile, Mr. Malone confirmed that the planned Discovery Communications spinoff is expected to take place in June pending approval from the Internal Revenue Service. Liberty announced earlier this year that it will merge its 50 percent stake in Discovery with its wholly owned company Ascent Media to create the publicly traded Discovery Holdings.

Also last week, Liberty reported that it swung to a first-quarter profit, lifted by gains at Discovery Communications and the home-shopping network QVC.

Liberty reported a profit of $254 million for the period, compared with a year-earlier loss of $10 million. Revenue rose to $2 billion from $1.7 billion a year ago.

A primary driver of Liberty’s growth was the performance of Discovery, which reported a 14 percent increase in revenue to $601 million. Operating cash flow rose to $148 million from a year-earlier figure of $137 million. Growth came from several areas, including higher advertising revenue and higher affiliate fees, both domestically and internationally.

QVC’s revenue rose 14 percent to $1.5 billion, while operating cash flow advanced 20 percent to $323 million, largely the result of higher sales.

Liberty-owned Starz Entertainment Group, meanwhile, reported a 9 percent increase in revenue to $254 million, while operating cash flow sank 30 percent to $48 million.