Liberty Media Execs Keep Options for Starz, Sirius XM Open
Chairman John Malone and CEO Greg Maffei say a combination of the Liberty Starz and Capital tracking stocks will allow the company to stay opportunistic on future investments or spin-offs as CEOs of Liberty investment companies make bullish presentations.
NEW YORK - Liberty Media CEO Greg Maffei said Thursday that with the combination of tracking stocks Liberty Starz and Liberty Capital the company, known for complex deals and ownership structures, has become a little simpler. But he didn't commit to potential future spin-offs of premium TV firm Starz or the firm's stake in satellite radio firm Sirius XM Radio.
Talking about the simplification, the CEO quipped at Liberty's annual investor day: "Like Herman Cain, Liberty is all about simplicity." He then showed a slide saying that Liberty had a 9-9-9 strategy, which includes such things as nine original shows at premium TV firm Starz and nine tracking stocks in recent years.
Asked how he feels about investors' disappointment that fully-owned Starz wasn't fully spun off, but will now be lumped in with other investments, Maffei pointed out that both the Liberty Starz and Liberty Capital stocks were actually up in a down market. Investors seem to appreciate the planned combination, he concluded.
Discussing hopes of some investors that Liberty could spin off Starz, and maybe sell it to a big media group, and spin off Sirius, Maffei said he can't predict future spins or acquisitions at this stage.
"We have no plans, no announcement to make on a spin of Starz or Sirius," he said. "But I can't tell you they aren't potentials" down the line.
Management also highlighted Thursday that a stronger capital structure for Liberty following the combination of the trackers will allow the company to potentially increase its stakes in some companies or make new investments.
In that context, Liberty Media chairman John Malone said Thursday morning's news of the combination of the two tracking stocks gives his firm "more flexibility" to pursue any path that seems smart and opportunistic.
Starz CEO Chris Albrecht earlier in the day had outlined future focus areas for his firm and promised growth.
"Starz has been having a great run," Maffei said at the end of the event, highlighting that subscribers and operating profit have been trending higher in recent years. Next year though, the bottom line will likely take "a breather" because of the end of a Netflix deal, possibly offset by another digital deal, and investments in original programming, he said.
2013 and 2014 will be "a lot better" given Starz look at digital deals and investments in original shows, Maffei said.
Several media and entertainment companies, in which Liberty Media is an investor, gave bullish presentations to a Wall Street crowd here at the firm's annual investor day.
"We are looking forward to a very strong 2012," Sirius XM Radio CEO Mel Karmazin told investors.
Next year will see revenue growth, lower interest expense and lower capital expenditures, which will all boost the bottom line. Karmazin said the company's board will only have to decide how to use the firm's free cash flow, signaling smart acquisitions are less likely as they are difficult to find, meaning that returns of money to shareholders are a likelier option. Analysts have suggested stock buybacks could be in the cards for Sirius.
Also at Thursday's investor event, William Lynch, CEO of Barnes & Noble, touted the growth of e-books, the company's Nook e-reader and opportunities to do better business in stores following the collapse of competitor Borders.
Live Nation CEO Michael Rapino told the Liberty Media investor day that the live events firm has seen October and November ticket sales hold up well. "Consumers are going to concerts," if priced right, he said.
He also mentioned several growth drivers. Among them are an increase in the number of concerts in more international markets, the opportunity to grow ad and sponsorship revenue and a focus on selling more tickets and capturing better grosses via loyalty programs and social offers rewarding people for bringing friends.
As he walked off the stage, Rapino also quipped that he upstaged Albrecht, who had presented earlier, at a recent Liberty Media board meeting by bringing Shakira and introducing her to Malone and Maffei.
Maffei earlier in the day had also said that his team is happy with how his firm's investments are doing, pointing out room for upside in many of them.
Even Sirius, which he called a "tremendous investment" and a slide behind him called a "killer investment," has more upside, Maffei argued. He cited the launch of Sirius 2.0 services and a previously announced price increase as two of the reasons.
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