Liberty talks shop in earnings call

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Scenarios for a possible acquisition of IAC/InterActiveCorp's HSN by John Malone's Liberty Media, which already owns home-shopping network QVC, were the focus of Liberty's recent quarterly earnings call.

Meanwhile, Bob Clasen, CEO of Liberty's Starz Entertainment, said the unit already is in production or set for production on key projects, meaning that the current writers strike will mean "business as usual for Starz" over the near term. However, he also warned that after a "minimal" fourth-quarter impact, effects could become more pronounced if the strike goes on for a while.

Liberty management Friday also said they hope to complete a swap of Liberty's stake in News Corp. for cash and assets -- including satellite TV giant DirecTV -- before year's end.

Chairman Malone on the call reiterated that he and Diller have had "a mild disagreement" over the appropriate debt leverage for IAC, in which Liberty holds more than 20%.

With Diller having announced a separation of IAC into five parts -- with HSN being one of them -- Wall Street observers have in recent days suggested that Liberty will swap part of its stake in IAC for HSN.

Liberty CEO Greg Maffei said during Friday's call that the two companies had talks before the IAC split-up announcement and that those conversations continue. Which of the entities Liberty will stay invested in, and where Diller's supervoting stock goes, is going to be part of the talks, he added.

QVC CEO Mike George said there would be "some benefit" for Liberty from owning both HSN and QVC if it got HSN at the right price, but he predicted synergies would be limited.

QVC reported soft third-quarter figures, with George citing a sluggish retail environment, especially in Japan and Germany, and difficult year-over-year comparisons. "However, we chose not to adopt a heavily promotional focus in the quarter and were able to maintain stable margin rates despite the slower sales growth," George said

QVC's third-quarter revenue of $1.69 billion meant a 2% increase, but operating cash flow was down 1% to $364 million.

Starz Entertainment posted a revenue gain of 11% to $253 million, while operating cash flow nearly doubled to $88 million. Continued subscriber growth and reduced programming costs boosted the unit.

Maffei said his team is "very satisfied" with DirecTV's performance, arguing that he felt observers overstated the health of the cable industry and "over-reacted to the power of the bundle" when Liberty negotiated the swap with News Corp.

"Satellite appears to have run room in the marketplace" and could bring in several more quarters of good growth," he said.
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